SILICON LABORATORIES INC. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We have performed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act). Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective as of January 2, 2021 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Such disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures. Changes in Internal Control over Financial Reporting There was no change in our internal controls during the fiscal quarter ended January 2, 2021 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements. Our management assessed the effectiveness of our internal control over financial reporting as of January 2, 2021. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework). Based on our assessment we concluded that, as of January 2, 2021, our internal control over financial reporting is effective based on those criteria. Our independent registered public accounting firm, Ernst & Young LLP, issued an attestation report on our internal control over financial reporting. This report appears on page F-1. ​ Item 9B. Other Information None. ​ ​ 42 Table of Contents Part III ​ Certain information required by Part III is omitted from this report because we intend to file a definitive Proxy Statement pursuant to Regulation 14A (the “Proxy Statement”) no later than 120 days after the end of the fiscal year covered by this report, and certain information to be included therein is incorporated herein by reference. Item 10. Directors, Executive Officers and Corporate Governance The information required by this Item is incorporated by reference to the Proxy Statement under the sections captioned “Proposal One: Election of Directors,” “Executive Compensation,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Code of Ethics.” ​ Item 11. Executive Compensation The information under the caption “Executive Compensation” and “Proposal One: Election of Directors” appearing in the Proxy Statement, is incorporated herein by reference. ​ Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information under the caption “Ownership of Securities” and “Equity Compensation Plan Information” appearing in the Proxy Statement is incorporated herein by reference. ​ Item 13. Certain Relationships and Related Transactions, and Director Independence The information under the caption “Certain Relationships and Related Transactions, and Director Independence” appearing in the Proxy Statement is incorporated herein by reference. ​ Item 14. Principal Accounting Fees and Services The information under the caption “Proposal Two: Ratification of Appointment of Independent Registered Public Accounting Firm” appearing in the Proxy Statement is incorporated herein by reference. ​ 43 Table of Contents Part IV Item 15. Exhibits and Financial Statement Schedules (a) 1. Financial Statements Index ​ ​ ​ Page Report of independent registered public accounting firm F-1 Report of independent registered public accounting firm F-2 Consolidated Balance Sheets at January 2, 2021 and December 28, 2019 F-4 Consolidated Statements of Income for the fiscal years ended January 2, 2021, December 28, 2019 and December 29, 2018 F-5 Consolidated Statements of Comprehensive Income for the fiscal years ended January 2, 2021, December 28, 2019 and December 29, 2018 F-6 Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended January 2, 2021, December 28, 2019 and December 29, 2018 F-7 Consolidated Statements of Cash Flows for the fiscal years ended January 2, 2021, December 28, 2019 and December 29, 2018 F-8 Notes to Consolidated Financial Statements F-9 ​ 2. Schedules All schedules have been omitted since the information required by the schedule is not applicable, or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements and notes thereto. 3. Exhibits The exhibits listed on the accompanying index to exhibits immediately following the Consolidated Financial Statements are filed as part of, or hereby incorporated by reference into, this Form 10-K. ​ 44 Table of Contents (b) Exhibits ​ Exhibit Number 2.1* ​ Asset Purchase Agreement, dated March 11, 2020, by and among Silicon Laboratories Inc., Silicon Laboratories International Pte. Ltd. and Redpine Signals, Inc. (filed as Exhibit 2.1 to the Form 8-K filed on March 12, 2020). 3.1* ​ Form of Fourth Amended and Restated Certificate of Incorporation of Silicon Laboratories Inc. (filed as Exhibit 3.1 to the Registration Statement on Form S-1 (Securities and Exchange Commission File No. 333-94853) (the “IPO Registration Statement”)). 3.2* ​ Fourth Amended and Restated Bylaws of Silicon Laboratories Inc. (filed as Exhibit 3.2 to the Form 8-K filed on January 27, 2017). 4.1* ​ Specimen certificate for shares of common stock (filed as Exhibit 4.1 to the IPO Registration Statement). 4.2* ​ Indenture between Silicon Laboratories Inc. and Wilmington Trust, National Association, as trustee, dated March 6, 2017 (filed as Exhibit 4.1 to the Form 8-K filed on March 6, 2017). 4.3* ​ Form of 1.375% Convertible Senior Note due 2022 (filed as Exhibit 4.2 to the Form 8-K filed on March 6, 2017). 4.4* ​ Indenture between Silicon Laboratories Inc. and Wilmington Trust, National Association, as trustee, dated June 1, 2020 (filed as Exhibit 4.1 to the Form 8-K filed on June 1, 2020). 4.5* ​ Form of 0.625% Convertible Senior Note due 2025 (filed as Exhibit 4.2 to the Form 8-K filed on June 1, 2020). 10.1* + Form of Indemnification Agreement between Silicon Laboratories Inc. and each of its directors and executive officers (filed as Exhibit 10.1 to the IPO Registration Statement). 10.2* ​ Credit Agreement, dated July 31, 2012, by and among Silicon Laboratories Inc., the subsidiaries of the borrower identified therein, Bank of America, N.A., Wells Fargo Bank, National Association, and Regions Bank (filed as Exhibit 10.1 to the Form 8-K filed August 1, 2012). 10.3* ​ First Amendment to Credit Agreement, dated July 24, 2015, by and among Silicon Laboratories Inc., the subsidiaries of the borrower identified therein, Wells Fargo Bank, National Association, Citibank, N.A., Regions Bank, Bank of America, N.A. and the lenders party thereto (filed as Exhibit 10.1 to the Form 8-K filed on July 29, 2015). 10.4* ​ Second Amendment to Credit Agreement, dated February 27, 2017, by and among Silicon Laboratories Inc., the subsidiaries of the borrower identified therein, Wells Fargo Bank, National Association and the lenders party thereto (filed as Exhibit 10.1 to the Form 8-K filed on February 27, 2017). 10.5* ​ Third Amendment to Credit Agreement, dated August 7, 2019, by and among Silicon Laboratories Inc., the subsidiaries of the borrower identified therein, Wells Fargo Bank, National Association and the lenders party thereto (filed as Exhibit 10.1 to the Form 8-K filed on August 7, 2019). 10.6* ​ Fourth Amendment to Credit Agreement, dated May 26, 2020, by and among Silicon Laboratories Inc., the subsidiaries of the borrower identified therein, Wells Fargo Bank, National Association and the lenders party thereto (filed as Exhibit 10.1 to the Form 8-K filed on May 27, 2020). 10.7* ​ Security and Pledge Agreement, dated July 31, 2012, by and among Silicon Laboratories Inc., with the other parties identified as “Obligors” (as defined therein) and such other parties that may become Obligors thereunder after the date thereof, and Bank of America, N.A (filed as Exhibit 10.2 to the Form 8-K filed August 1, 2012). 10.8* + Silicon Laboratories Inc. 2009 Stock Incentive Plan, as amended and restated on April 20, 2017 (filed as Exhibit 10.1 to the Form 10-Q filed on July 26, 2017). 10.9* + Silicon Laboratories Inc. 2009 Employee Stock Purchase Plan, as amended and restated on April 20, 2017 (filed as Exhibit 10.2 to the Form 10-Q filed on July 26, 2017). 10.10* + Form of Restricted Stock Units Grant Notice and Global Restricted Stock Units Award Agreement under Registrant’s 2009 Stock Incentive Plan, as amended and restated (filed as Exhibit 10.7 to the Form 10-K filed on February 1, 2017). 10.11* + Form of Market Stock Units Grant Notice and Global Market Stock Units Award Agreement under Registrant’s 2009 Stock Incentive Plan, as amended and restated (filed as Exhibit 10.8 to the Form 10-K filed on February 1, 2017). 45 Table of Contents ​ Exhibit Number 10.12* + Form of Stock Option Grant Notice and Global Stock Option Award Agreement under Registrant’s 2009 Stock Incentive Plan, as amended and restated (filed as Exhibit 10.9 to the Form 10-K filed on February 1, 2017). 10.13* + Form of Performance Stock Units Grant Notice and Global PSU Award Agreement under Registrant’s 2009 Stock Incentive Plan, as amended and restated (filed as Exhibit 10.10 to the Form 10-K filed on February 1, 2017). 10.14* ​ Purchase Agreement between Silicon Laboratories Inc. and Goldman, Sachs & Co. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers named therein, dated February 28, 2017 (filed as Exhibit 10.1 to the Form 8-K filed on March 6, 2017). 10.15* + CEO Change in Control Agreement dated October 23, 2018 between Silicon Laboratories Inc. and G. Tyson Tuttle (filed as Exhibit 10.1 to the Form 8-K filed on October 24, 2018). 10.16* + Silicon Laboratories Inc. Form of Change in Control Agreement (filed as Exhibit 10.2 to the Form 8-K filed on October 24, 2018). 10.17* + Silicon Laboratories Inc. 2020 Bonus Plan (filed as Exhibit 10.1 to the Form 8-K filed on January 24, 2020). 21 ​ Subsidiaries of the Registrant. 23.1 ​ Consent of Independent Registered Public Accounting Firm. 24 ​ Power of Attorney (included on signature page to this Form 10-K). 31.1 ​ Certification of the Principal Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 ​ Certification of the Principal Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 ​ Certification as required by Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS ​ Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH ​ Inline XBRL Taxonomy Extension Schema Document 101.CAL ​ Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB ​ Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE ​ Inline XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF ​ Inline XBRL Taxonomy Extension Definition Linkbase Document 104 ​ Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Incorporated herein by reference to the indicated filing. + Management contract or compensatory plan or arrangement Item 16. Form 10-K Summary None. ​ 46 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Austin, Texas, on February 3, 2021. ​ ​ ​ ​ SILICON LABORATORIES INC. ​ ​ ​ ​ By: /s/ G. Tyson Tuttle ​ ​ G. Tyson Tuttle President and Chief Executive Officer ​ ​ POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints G. Tyson Tuttle and John C. Hollister and each of them, acting individually, as his or her attorney-in-fact, each with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this annual report on Form 10-K and other documents in connection herewith and therewith, and to file the same, with all exhibits thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection herewith and therewith and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Name ​ Title ​ Date ​ ​ ​ ​ ​ /s/ Navdeep S. Sooch Chairman of the Board February 3, 2021 Navdeep S. Sooch ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ G. Tyson Tuttle ​ President, Chief Executive Officer and Director (Principal Executive Officer) ​ February 3, 2021 G. Tyson Tuttle ​ ​ ​ ​ ​ ​ ​ /s/ John C. Hollister ​ Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) ​ February 3, 2021 John C. Hollister ​ ​ ​ ​ ​ ​ ​ /s/ William G. Bock ​ Director ​ February 3, 2021 William G. Bock ​ ​ ​ ​ ​ ​ ​ /s/ Jack R. Lazar ​ Director ​ February 3, 2021 Jack R. Lazar ​ ​ ​ ​ ​ ​ ​ /s/ Gregg Lowe ​ Director ​ February 3, 2021 Gregg Lowe ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Nina Richardson ​ Director ​ February 3, 2021 Nina Richardson ​ ​ ​ ​ ​ ​ ​ /s/ Sumit Sadana ​ Director ​ February 3, 2021 Sumit Sadana ​ ​ ​ ​ ​ ​ ​ /s/ William P. Wood ​ Director ​ February 3, 2021 William P. Wood ​ ​ ​ ​ ​ ​ ​ /s/ Christy Wyatt ​ Director ​ February 3, 2021 Christy Wyatt ​ ​ ​ ​ ​ 47 Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of Silicon Laboratories Inc. Opinion on Internal Control Over Financial Reporting We have audited Silicon Laboratories Inc.’s internal control over financial reporting as of January 2, 2021, based on criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Silicon Laboratories Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 2, 2021, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Silicon Laboratories Inc. as of January 2, 2021 and December 28, 2019, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended January 2, 2021, and the related notes and our report dated February 3, 2021 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ​ ​ /s/ Ernst & Young LLP Austin, Texas ​ February 3, 2021 ​ ​ F- 1 Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of Silicon Laboratories Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Silicon Laboratories Inc. (the Company) as of January 2, 2021 and December 28, 2019, the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for each of the three years in the period ended January 2, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 2, 2021 and December 28, 2019, and the results of its operations and its cash flows for each of the three years in the period ended January 2, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 2, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 3, 2021 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ ​ ​ ​ ​ Recognition of Variable Consideration Description of the Matter ​ At January 2, 2021, the Company’s revenue returns liability, which is included in the Deferred revenues and returns liability in the consolidated balance sheet, was $13 million. As discussed in Note 2 of the consolidated financial statements, when recording revenue for its contracts with customers the Company estimates variable consideration at the most likely amount to which it expects to be entitled. Variable consideration that does not meet revenue recognition criteria is deferred and a revenue returns liability is recorded. The variable consideration estimate considers both the likelihood of a return and the amount of potential price concession. ​ ​ Auditing management’s estimate of the revenue returns liability was judgmental because the calculation involves subjective management assumptions about the estimates of expected future price concessions and/or product returns. For example, the estimated variable consideration included in the transaction price reflects management’s evaluation of contractual terms, historical experience, assumptions about future economic conditions and the quantity of products distributors are expected to sell. Changes in those assumptions can have a material effect on the amount of variable consideration recognized. F- 2 Table of Contents How We Addressed the Matter in Our Audit ​ We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the measurement and valuation of the variable consideration recognized as revenue and the revenue returns liability. For example, we tested controls over management’s review of the variable consideration methodology, the significant assumptions and the historical data utilized in the estimate for assumed product returns and expected price concessions. To test the variable consideration recognized as revenue and the revenue returns liability, we performed audit procedures that included, among others, an evaluation of the Company’s methodology and significant assumptions, and tested the completeness and accuracy of the historical data utilized in the estimate. In our assessment of the methodology, we considered changes in the business, changes to specific distributor contracts and evaluated significant assumptions used by comparison to current trends and recent transactions. We also evaluated the accuracy of management’s assumed product returns and expected price concessions from prior periods by comparing to subsequent actual activity. ​ ​ Accounting for Acquisition Description of the Matter ​ As discussed in Note 8 of the financial statements, on April 28, 2020, the Company acquired the Wi-Fi and Bluetooth business of Redpine Signals, Inc. for total acquisition consideration of $317 million. The transaction was accounted for as a business combination in accordance with Accounting Standards Codification (ASC) 805. Auditing the Company’s accounting for the Redpine Signals acquisition was complex and judgmental due to the significant estimation required by management to determine the fair value of the acquired intangible assets, including developed technology and in-process research and development assets of $62 million and $12 million, respectively. The Company used variations of the income valuation approach, including the discounted expected future cash flow method, to measure the fair value of these intangible assets. Significant assumptions used to estimate the fair value of these intangible assets included revenue growth rates, technology migration curves and discount rates. These assumptions are forward-looking and could be affected by future economic and market conditions. How We Addressed the Matter in Our Audit ​ We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for acquisitions. For example, we tested controls over management’s review of the valuation of acquired intangible assets, including the review of the valuation models and significant assumptions used in the valuation models. To test the estimated fair value of these intangible assets, our audit procedures included, among others, evaluating the Company’s valuation methodology, evaluating the significant assumptions used by the Company and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. For example, we compared the significant assumptions used to current industry, market and economic trends, to the assumptions used to value similar assets in other acquisitions, and to the historical results of both the Company and the acquiree. We also involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates. ​ ​ /s/ Ernst & Young LLP We have served as the Company’s auditor since 1996. ​ Austin, Texas ​ February 3, 2021 ​ ​ ​ ​ F- 3 Table of Contents Silicon Laboratories Inc. Consolidated Balance Sheets (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 2, ​ December 28, ​ 2021 2019 Assets ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 202,720 ​ $ 227,146 Short-term investments ​ 521,963 ​ 498,825 Accounts receivable, net ​ 95,169 ​ 75,639 Inventories ​ 66,662 ​ 73,057 Prepaid expenses and other current assets ​ 89,307 ​ 69,192 Total current assets ​ 975,821 ​ 943,859 Property and equipment, net ​ 139,439 ​ 135,939 Goodwill ​ 631,932 ​ 398,402 Other intangible assets, net ​ 166,084 ​ 134,279 Other assets, net ​ 80,211 ​ 62,374 Total assets ​ $ 1,993,487 ​ $ 1,674,853 Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 54,949 ​ $ 38,899 Current portion of convertible debt, net ​ ​ 134,480 ​ ​ — Deferred revenue and returns liability ​ ​ 12,986 ​ ​ 19,251 Other current liabilities ​ 82,083 ​ 79,551 Total current liabilities ​ 284,498 ​ 137,701 Convertible debt, net ​ ​ 428,945 ​ ​ 368,257 Other non-current liabilities ​ 80,203 ​ 53,844 Total liabilities ​ 793,646 ​ 559,802 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; 43,925 and 43,496 shares issued and outstanding at January 2, 2021 and December 28, 2019, respectively ​ 4 ​ 4 Additional paid-in capital ​ 204,359 ​ 133,793 Retained earnings ​ 993,664 ​ 980,608 Accumulated other comprehensive income ​ 1,814 ​ 646 Total stockholders' equity ​ 1,199,841 ​ 1,115,051 Total liabilities and stockholders' equity ​ $ 1,993,487 ​ $ 1,674,853 ​ The accompanying notes are an integral part of these Consolidated Financial Statements. ​ F- 4 Table of Contents Silicon Laboratories Inc. Consolidated Statements of Income (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 Revenues ​ $ 886,677 ​ $ 837,554 ​ $ 868,267 Cost of revenues ​ 359,151 ​ 327,270 ​ 346,868 Gross profit ​ 527,526 ​ 510,284 ​ 521,399 Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 287,887 ​ 257,150 ​ 238,347 Selling, general and administrative ​ 201,339 ​ 196,437 ​ 197,844 Operating expenses ​ 489,226 ​ 453,587 ​ 436,191 Operating income ​ 38,300 ​ 56,697 ​ 85,208 Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income and other, net ​ 11,143 ​ 13,185 ​ 6,647 Interest expense ​ ( 34,142 ) ​ ( 20,233 ) ​ ( 19,694 ) Income before income taxes ​ 15,301 ​ 49,649 ​ 72,161 Provision (benefit) for income taxes ​ 2,770 ​ 30,384 ​ ( 11,430 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 12,531 ​ $ 19,265 ​ $ 83,591 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.29 ​ $ 0.44 ​ $ 1.94 Diluted ​ $ 0.28 ​ $ 0.43 ​ $ 1.90 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 43,775 ​ 43,346 ​ 43,159 Diluted ​ 44,372 ​ 44,290 ​ 44,044 ​ The accompanying notes are an integral part of these Consolidated Financial Statements. ​ F- 5 Table of Contents Silicon Laboratories Inc. Consolidated Statements of Comprehensive Income (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 Net income ​ $ 12,531 ​ $ 19,265 ​ $ 83,591 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss), before tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net changes to available-for-sale securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains arising during the period ​ 1,131 ​ 2,564 ​ 376 Reclassification for (gains) losses included in net income ​ ​ ( 510 ) ​ ​ ( 218 ) ​ ​ 49 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net changes to cash flow hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains (losses) arising during the period ​ 33 ​ ( 321 ) ​ ( 953 ) Reclassification for losses included in net income ​ 825 ​ 784 ​ 316 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss), before tax ​ 1,479 ​ 2,809 ​ ( 212 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision (benefit) for income taxes ​ 311 ​ 589 ​ ( 45 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) ​ 1,168 ​ 2,220 ​ ( 167 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive income ​ $ 13,699 ​ $ 21,485 ​ $ 83,424 ​ The accompanying notes are an integral part of these Consolidated Financial Statements. ​ F- 6 Table of Contents Silicon Laboratories Inc. Consolidated Statements of Changes in Stockholders’ Equity (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Accumulated Other ​ Total ​ ​ ​ ​ Common ​ Paid-In ​ Retained ​ Comprehensive ​ Stockholders’ ​ Shares Stock Capital Earnings Income (Loss) Equity Balance as of December 30, 2017 ​ 42,707 ​ $ 4 ​ $ 102,862 ​ $ 851,307 ​ $ ( 1,157 ) ​ $ 953,016 Cumulative effect of adoption of accounting standard — ​ ​ — ​ ​ — ​ ​ 26,445 ​ ​ ( 250 ) ​ ​ 26,195 Net income — ​ ​ — ​ ​ — ​ ​ 83,591 ​ ​ — ​ ​ 83,591 Other comprehensive loss — ​ — ​ — ​ ​ — ​ ​ ( 167 ) ​ ​ ( 167 ) Stock issuances, net of shares withheld for taxes 815 ​ — ​ ( 6,180 ) ​ ​ — ​ ​ — ​ ​ ( 6,180 ) Repurchases of common stock ( 434 ) ​ ​ — ​ ​ ( 39,276 ) ​ ​ — ​ ​ — ​ ​ ( 39,276 ) Stock-based compensation — ​ ​ — ​ ​ 50,111 ​ ​ — ​ ​ — ​ ​ 50,111 Balance as of December 29, 2018 ​ 43,088 ​ ​ 4 ​ ​ 107,517 ​ ​ 961,343 ​ ​ ( 1,574 ) ​ ​ 1,067,290 Net income — ​ — ​ — ​ ​ 19,265 ​ ​ — ​ ​ 19,265 Other comprehensive income — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,220 ​ ​ 2,220 Stock issuances, net of shares withheld for taxes 709 ​ ​ — ​ ​ ( 1,799 ) ​ ​ — ​ ​ — ​ ​ ( 1,799 ) Repurchases of common stock ( 301 ) ​ ​ — ​ ​ ( 26,716 ) ​ ​ — ​ ​ — ​ ​ ( 26,716 ) Stock-based compensation — ​ ​ — ​ ​ 54,791 ​ ​ — ​ ​ — ​ ​ 54,791 Balance as of December 28, 2019 ​ 43,496 ​ ​ 4 ​ ​ 133,793 ​ ​ 980,608 ​ ​ 646 ​ ​ 1,115,051 Cumulative effect of adoption of accounting standard ​ — ​ — ​ — ​ ​ 525 ​ ​ — ​ ​ 525 Net income — ​ — ​ — ​ ​ 12,531 ​ ​ — ​ ​ 12,531 Other comprehensive income — ​ — ​ — ​ ​ — ​ ​ 1,168 ​ ​ 1,168 Stock issuances, net of shares withheld for taxes ​ 639 ​ ​ — ​ ​ ( 3,109 ) ​ ​ — ​ ​ — ​ ​ ( 3,109 ) Repurchases of common stock ​ ( 210 ) ​ ​ — ​ ​ ( 16,287 ) ​ ​ — ​ ​ — ​ ​ ( 16,287 ) Stock-based compensation ​ — ​ ​ — ​ ​ 60,065 ​ ​ — ​ ​ — ​ ​ 60,065 Convertible debt activity ​ — ​ ​ — ​ ​ 29,897 ​ ​ — ​ ​ — ​ ​ 29,897 Balance as of January 2, 2021 ​ 43,925 ​ $ 4 ​ $ 204,359 ​ $ 993,664 ​ $ 1,814 ​ $ 1,199,841 ​ The accompanying notes are an integral part of these Consolidated Financial Statements. ​ F- 7 Table of Contents Silicon Laboratories Inc. Consolidated Statements of Cash Flows (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 Operating Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 12,531 ​ $ 19,265 ​ $ 83,591 Adjustments to reconcile net income to cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation of property and equipment ​ 17,780 ​ 16,883 ​ 15,912 Amortization of other intangible assets and other assets ​ 44,733 ​ 39,584 ​ 44,102 Amortization of debt discount and debt issuance costs ​ ​ 21,433 ​ ​ 13,485 ​ ​ 12,892 Loss on extinguishment of convertible debt ​ ​ 4,060 ​ ​ — ​ ​ — Stock-based compensation expense ​ 60,091 ​ 54,799 ​ 50,077 Deferred income taxes ​ ( 6,533 ) ​ 23,048 ​ ( 8,210 ) Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ ( 17,612 ) ​ ( 2,401 ) ​ 3,931 Inventories ​ 10,748 ​ 2,171 ​ 7,660 Prepaid expenses and other assets ​ ( 51,839 ) ​ 8,965 ​ ( 4,960 ) Accounts payable ​ 15,263 ​ 7,830 ​ 5,952 Other current liabilities and income taxes ​ 3,257 ​ ( 6,826 ) ​ ( 21,828 ) Deferred revenue and returns liability ​ ( 6,694 ) ​ ( 3,243 ) ​ ( 6,202 ) Other non-current liabilities ​ ​ 28,500 ​ ​ ( 7,038 ) ​ ​ ( 9,375 ) Net cash provided by operating activities ​ 135,718 ​ 166,522 ​ 173,542 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchases of available-for-sale investments ​ ( 519,567 ) ​ ( 424,524 ) ​ ( 395,904 ) Sales and maturities of available-for-sale investments ​ 497,357 ​ 344,937 ​ 474,129 Purchases of property and equipment ​ ( 20,422 ) ​ ( 16,279 ) ​ ( 24,462 ) Purchases of other assets ​ ( 1,570 ) ​ ( 8,396 ) ​ ( 11,063 ) Acquisitions of businesses, net of cash acquired ​ ( 316,809 ) ​ ( 2,510 ) ​ ( 239,729 ) Net cash used in investing activities ​ ( 361,011 ) ​ ( 106,772 ) ​ ( 197,029 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from issuance of debt ​ 845,000 ​ — ​ — Payments on debt ​ ​ ( 624,737 ) ​ ​ ( 1,132 ) ​ ​ — Repurchases of common stock ​ ​ ( 16,287 ) ​ ​ ( 26,716 ) ​ ​ ( 39,276 ) Payment of taxes withheld for vested stock awards ​ ​ ( 18,124 ) ​ ​ ( 16,295 ) ​ ​ ( 19,483 ) Proceeds from the issuance of common stock ​ ​ 15,015 ​ ​ 14,496 ​ ​ 13,303 Payment of acquisition-related contingent consideration ​ ​ — ​ ​ — ​ ​ ( 3,380 ) Net cash provided by (used in) financing activities ​ 200,867 ​ ( 29,647 ) ​ ( 48,836 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase (decrease) in cash and cash equivalents ​ ( 24,426 ) ​ 30,103 ​ ( 72,323 ) Cash and cash equivalents at beginning of period ​ 227,146 ​ 197,043 ​ 269,366 Cash and cash equivalents at end of period ​ $ 202,720 ​ $ 227,146 ​ $ 197,043 Supplemental Disclosure of Cash Flow Information: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest paid ​ $ 8,662 ​ $ 6,367 ​ $ 6,227 Income taxes paid ​ $ 7,217 ​ $ 10,291 ​ $ 20,599 ​ The accompanying notes are an integral part of these Consolidated Financial Statements. ​ ​ F- 8 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements January 2, 2021 1. Description of Business Silicon Laboratories Inc. (the “Company”), a Delaware corporation, 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 (IoT), internet infrastructure, industrial automation, consumer and automotive markets. Within the semiconductor industry, the Company is known as a "fabless" company meaning that the integrated circuits (ICs) incorporated in its products are manufactured by third-party foundry semiconductor companies. ​ 2. Significant Accounting Policies Basis of Presentation and Principles of Consolidation The Company prepares financial statements on a 52 - or 53 -week fiscal year that ends on the Saturday closest to December 31. Fiscal 2020 had 53 weeks with the extra week occurring in the first quarter of the year and ended on January 2, 2021. Fiscal 2019 and 2018 had 52 weeks and ended on December 28, 2019 and December 29, 2018, respectively. The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Foreign Currency Transactions The Company's foreign subsidiaries are considered to be extensions of the U.S. Company. The functional currency of the foreign subsidiaries is the U.S. dollar. Accordingly, gains and losses resulting from remeasuring transactions denominated in currencies other than U.S. dollars are included in interest income and other, net in the Consolidated Statements of Income. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Among the significant estimates affecting the financial statements are those related to inventories, goodwill, acquired intangible assets, other long-lived assets, revenue recognition, stock-based compensation and income taxes. Actual results could differ from those estimates, and such differences could be material to the financial statements. Adoption of New Financial Instruments Accounting Standard The Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , on December 29, 2019, the first day of its fiscal year ended January 2, 2021. The adoption did not have a material impact on its financial statements. ​ F- 9 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 2. Significant Accounting Policies (Continued) Fair Value of Financial Instruments The fair values of the Company's financial instruments are recorded using a hierarchical disclosure framework based upon the level of subjectivity of the inputs used in measuring assets and liabilities. The three levels are described below: Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 - Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 - Inputs are unobservable for the asset or liability and are developed based on the best information available in the circumstances, which might include the Company’s own data. Cash and Cash Equivalents Cash and cash equivalents consist of cash deposits, certificates of deposit, money market funds and investments in debt securities with original maturities of ninety days or less when purchased. Investments The Company's investments typically have original maturities greater than ninety days as of the date of purchase and are classified as either available-for-sale or trading securities. Investments in available-for-sale securities are reported at fair value, with unrealized gains and losses, net of tax, recorded as a component of accumulated other comprehensive income (loss) in the Consolidated Balance Sheet. Investments in trading securities are reported at fair value, with both realized and unrealized gains and losses recorded in interest income and other, net in the Consolidated Statement of Income. Investments in which the Company has the ability and intent, if necessary, to liquidate in order to support its current operations (including those with contractual maturities greater than one year from the date of purchase) are classified as short-term. ​ The Company reviews its available-for-sale investments as of the end of each reporting period for declines in fair value based on the specific identification method. The Company records an allowance for credit loss when a decline in fair value is due to credit-related factors. The Company considers various factors in determining whether an investment is impaired, including the severity of the impairment, changes in underlying credit ratings, forecasted recovery, its intent to sell or the likelihood that it would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. When the Company concludes that a credit-related impairment has occurred, the Company assesses whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery. If either of these two conditions is met, the Company recognizes a charge in earnings equal to the entire difference between the security’s amortized cost basis and its fair value. If the Company does not intend to sell a security and it is not more likely than not that it will be required to sell the security before recovery, the unrealized loss is separated into an amount representing the credit loss, which is recognized in earnings, and the amount related to all other factors, which is recorded in accumulated other comprehensive income (loss). ​ In addition, the Company has made equity investments in non-publicly traded companies. Equity investments in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. The Company’s proportionate share of income or loss is recorded in interest income and other, net in the Consolidated Statement of Income. All other non-marketable equity investments are recorded at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. The Company periodically reviews its equity investments for declines in fair value based on the specific identification method and writes down investments to their fair values when it determines that a decline has occurred. ​ F- 10 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 2. Significant Accounting Policies (Continued) Derivative Financial Instruments The Company uses derivative financial instruments to manage certain exposures to the variability of foreign currency exchange rates and interest rates. The Company’s objective is to offset increases and decreases in expenses resulting from these exposures with gains and losses on the derivative contracts, thereby reducing volatility of earnings. The Company does not use derivative contracts for speculative or trading purposes. The Company recognizes derivatives, on a gross basis, in the Consolidated Balance Sheet at fair value. Cash flows from derivatives are classified according to the nature of the cash receipt or payment in the Consolidated Statement of Cash Flows. Cash flow hedges used by the Company include foreign currency forward contracts and interest rate swap agreements. Foreign currency forward contracts are used to reduce the earnings impact that exchange rate fluctuations have on operating expenses denominated in currencies other than the U.S. dollar. Interest rate swap agreements are used to manage exposure to interest rate risks. The Company also uses foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on non-U.S. dollar balance sheet exposures. The Company does not apply hedge accounting to these foreign currency forward contracts. Inventories Inventories are stated at the lower of cost, determined using the first-in, first-out method, or net realizable value. The Company writes down the carrying value of inventory to net realizable value for estimated obsolescence or unmarketable inventory based upon assumptions about the age of inventory, future demand and market conditions. Inventory impairment charges establish a new cost basis for inventory and charges are not subsequently reversed to income even if circumstances later suggest that increased carrying amounts are recoverable. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the useful lives of the assets ranging from three to fifteen years . Leasehold improvements are depreciated over the lease term or their useful life, whichever is shorter. The Company owns the facilities for its headquarters in Austin, Texas. The buildings are located on land which is leased through 2099 from a third party. The rents for these ground leases were prepaid for the term of the leases. The buildings and leasehold interest in ground leases are being depreciated on a straight-line basis over their estimated useful lives of 40 years and 86 years , respectively. Business Combinations The Company records business combinations using the acquisition method of accounting and, accordingly, allocates the fair value of acquisition consideration to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed is recorded as goodwill. The results of operations of the businesses acquired are included in the Company's consolidated results of operations beginning on the date of the acquisition. Long-Lived Assets Purchased intangible assets are stated at cost, net of accumulated amortization, and are amortized using the straight-line method over their estimated useful lives, ranging from two to twelve years . Fair values are determined primarily using the income approach, in which the Company projects future expected cash flows and applies an appropriate discount rate. ​ F- 11 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 2. Significant Accounting Policies (Continued) Long-lived assets “held and used” by the Company are reviewed for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets and is recorded in the period in which the determination was made. The Company tests goodwill for impairment annually as of the first day of its fourth fiscal quarter and in interim periods if events occur that would indicate that the carrying value of goodwill may be impaired. The Company assesses goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount. In determining fair value, several valuation methodologies are allowed, although quoted market prices are the best evidence of fair value. If the fair value of the reporting unit is less than its carrying amount, an impairment loss is recognized equal to that excess amount. ​ Leases At the commencement date of a lease, the Company recognizes a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The lease liability is measured at the present value of lease payments over the lease term. As its leases typically do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date taking into consideration necessary adjustments for collateral, depending on the facts and circumstances of the lessee and the leased asset, and term to match the lease term. The right-of-use (“ROU”) asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred by the Company and excludes lease incentives. Lease liabilities are recorded in other current liabilities and other non-current liabilities. ROU assets are recorded in other assets, net. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease costs are recognized on a straight-line basis over the lease term. Lease agreements that contain both lease and non-lease components are generally accounted for separately. Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Substantially all of the Company’s contracts with customers contain a single performance obligation, the sale of mixed-signal integrated circuit (IC) products. This performance obligation is satisfied when control of the product is transferred to the customer, which typically occurs upon delivery. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates. The Company has opted to not disclose the amount of unsatisfied performance obligations as these contracts have original expected durations of less than one year . The transaction price reflects the Company’s expectations about the consideration it will be entitled to receive from the customer and may include fixed or variable amounts. Variable consideration primarily includes sales made to distributors under agreements allowing certain rights of return, referred to as stock rotation, and credits issued to the distributor due to price protection. The Company estimates variable consideration at the most likely amount to which it expects to be entitled. The estimate is based on information available to the Company, including recent sales activity and pricing data. The Company applies a constraint to its variable consideration estimate which considers both the likelihood of a return and the amount of a potential price concession. Variable consideration that does not meet revenue recognition criteria is deferred. The Company records a right of return asset in prepaid expenses and other current assets for the costs of distributor inventory not meeting revenue recognition criteria. A corresponding deferred revenue and returns liability amount is recorded for unrecognized revenue associated with such costs. The Company’s products carry a one-year replacement warranty. Payments are typically due within 30 days of invoicing and do not include a significant financing component. ​ F- 12 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 2. Significant Accounting Policies (Continued) Shipping and Handling Shipping and handling costs are classified as a component of cost of revenues in the Consolidated Statements of Income. Stock-Based Compensation The Company has stock-based compensation plans, which are more fully described in Note 15, Stock-Based Compensation . The Company accounts for those plans using a fair-value method and recognizes the expense in its Consolidated Statement of Income. ​ Research and Development Research and development costs are expensed as incurred. Research and development expense consists primarily of personnel-related expenses, including stock-based compensation, as well as new product masks, external consulting and services costs, equipment tooling, equipment depreciation, amortization of intangible assets, and an allocated portion of our occupancy costs. Assets purchased to support the Company's ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or have an alternative future use, and are amortized over their estimated useful lives. Advertising Advertising costs are expensed as incurred. Advertising expenses were not material for any of the periods presented. Income Taxes The Company accounts for income taxes using the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax laws and related rates that will be in effect when the differences are expected to reverse. These differences result in deferred tax assets and liabilities, which are included in the Company’s Consolidated Balance Sheet. The Company then assesses the likelihood that the deferred tax assets will be realized. A valuation allowance is established against deferred tax assets to the extent the Company believes that it is more likely than not that the deferred tax assets will not be realized, taking into consideration the level of historical taxable income and projections for future taxable income over the periods in which the temporary differences are deductible. Uncertain tax positions must meet a more-likely-than-not threshold to be recognized in the financial statements and the tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon final settlement. See Note 17, Income Taxes , for additional information. Recent Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) . This ASU simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity's own equity and requires the use of the if-converted method for calculating diluted earnings per share. The ASU removes separation models for convertible debt with a cash conversion feature. Such convertible instruments will be accounted for as a single liability measured at amortized cost, as long as no other features require bifurcation and recognition as derivatives. This ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, using one of two retrospective transition methods. Early adoption is permitted for fiscal periods beginning after December 15, 2020. The Company expects the primary impacts of this new standard will be to potentially increase the carrying value of its convertible debt and reduce its reported interest expense. In addition, should the Company be required to use the if-converted method for calculating diluted earnings per share, the number of shares used in such calculation could potentially increase. The Company will continue to evaluate the effect that the adoption of this ASU will have on its financial statements. F- 13 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 3. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ ​ 2021 2019 2018 Net income ​ $ 12,531 ​ $ 19,265 ​ $ 83,591 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares used in computing basic earnings per share ​ ​ 43,775 ​ 43,346 ​ 43,159 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of dilutive securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based awards and convertible debt ​ ​ 597 ​ 944 ​ 885 Shares used in computing diluted earnings per share ​ ​ 44,372 ​ 44,290 ​ 44,044 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.29 ​ $ 0.44 ​ $ 1.94 Diluted ​ $ 0.28 ​ $ 0.43 ​ $ 1.90 ​ The Company intends to settle the principal amount of its convertible senior notes in cash and any excess value in shares in the event of a conversion. Accordingly, shares issuable upon conversion of the principal amount have been excluded from the calculation of diluted earnings per share. If the market value of the notes under certain prescribed conditions exceeds the conversion amount, the excess is included in the denominator for the computation of diluted earnings per share using the treasury stock method. For fiscal 2020, 2019 and 2018, approximately 0.2 million shares, 0.4 million shares and 0.1 million shares, respectively, were included in the denominator for the calculation of diluted earnings per share. See Note 10, Debt , to the Consolidated Financial Statements for additional information. ​ F- 14 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 ​ ​ 4. Fair Value of Financial Instruments The following summarizes the valuation of the Company’s financial instruments (in thousands). The tables do not include either cash on hand or assets and liabilities that are measured at historical cost or any basis other than fair value. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements ​ ​ ​ ​ ​ at January 2, 2021 Using ​ ​ ​ ​ ​ Quoted Prices in ​ Significant Other ​ Significant ​ ​ ​ ​ ​ Active Markets for ​ Observable ​ Unobservable ​ ​ ​ ​ ​ Identical Assets ​ Inputs ​ Inputs ​ ​ ​ Description (Level 1) (Level 2) (Level 3) Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 75,606 ​ $ — ​ $ — ​ $ 75,606 Corporate debt securities ​ ​ — ​ ​ 14,995 ​ ​ — ​ ​ 14,995 Government debt securities ​ ​ 2,355 ​ ​ 2,564 ​ ​ — ​ ​ 4,919 Total cash equivalents ​ $ 77,961 ​ $ 17,559 ​ $ — ​ $ 95,520 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government debt securities ​ $ 38,461 ​ $ 104,112 ​ $ — ​ $ 142,573 Corporate debt securities ​ ​ — ​ ​ 379,390 ​ ​ — ​ ​ 379,390 Total short-term investments ​ $ 38,461 ​ $ 483,502 ​ $ — ​ $ 521,963 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other assets, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Auction rate securities ​ $ — ​ $ — ​ $ 5,340 ​ $ 5,340 Total ​ $ — ​ $ — ​ $ 5,340 ​ $ 5,340 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 116,422 ​ $ 501,061 ​ $ 5,340 ​ $ 622,823 ​ ​ F- 15 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 4. Fair Value of Financial Instruments (Continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements ​ ​ ​ ​ ​ at December 28, 2019 Using ​ ​ ​ ​ ​ Quoted Prices in ​ Significant Other ​ Significant ​ ​ ​ ​ ​ Active Markets for ​ Observable ​ Unobservable ​ ​ ​ ​ ​ Identical Assets ​ Inputs ​ Inputs ​ ​ ​ Description (Level 1) (Level 2) (Level 3) Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 92,379 ​ $ — ​ $ — ​ $ 92,379 Corporate debt securities ​ ​ — ​ 1,325 ​ — ​ 1,325 Total cash equivalents ​ $ 92,379 ​ $ 1,325 ​ $ — ​ $ 93,704 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government debt securities ​ $ 85,189 ​ $ 86,682 ​ $ — ​ $ 171,871 Corporate debt securities ​ ​ — ​ ​ 326,954 ​ ​ — ​ ​ 326,954 Total short-term investments ​ $ 85,189 ​ $ 413,636 ​ $ — ​ $ 498,825 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other assets, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Auction rate securities ​ $ — ​ $ — ​ $ 5,647 ​ $ 5,647 Total ​ $ — ​ $ — ​ $ 5,647 ​ $ 5,647 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 177,568 ​ $ 414,961 ​ $ 5,647 ​ $ 598,176 ​ Valuation methodology The Company’s cash equivalents and short-term investments that are classified as Level 2 are valued using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments in active markets; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Investments classified as Level 3 are valued using a discounted cash flow model. The assumptions used in preparing the discounted cash flow model include estimates for interest rates, amount of cash flows, expected holding periods of the securities and a discount to reflect the Company’s inability to liquidate the securities. The Company’s derivative instruments are valued using discounted cash flow models. The assumptions used in preparing the valuation models include quoted interest swap rates, foreign exchange rates, forward and spot prices for currencies, and market observable data of similar instruments. Available-for-sale investments The Company's investments are reported at fair value, with unrealized gains and losses, net of tax, recorded as a component of accumulated other comprehensive income in the Consolidated Balance Sheet. The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at January 2, 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair ​ ​ ​ Cost ​ Value Due in one year or less ​ ​ $ 380,069 ​ $ 381,219 Due after one year through ten years ​ ​ 202,363 ​ ​ 203,484 Due after ten years ​ ​ 38,780 ​ 38,120 ​ ​ ​ $ 621,212 ​ $ 622,823 ​ ​ F- 16 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 4. Fair Value of Financial Instruments (Continued) The available-for-sale investments that were in a continuous unrealized loss position, aggregated by length of time that individual securities have been in a continuous loss position, were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than 12 Months ​ 12 Months or Greater ​ Total ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ Fair ​ Unrealized ​ Fair ​ Unrealized ​ Fair ​ Unrealized As of January 2, 2021 Value Losses Value Losses Value Losses Government debt securities ​ $ 10,146 ​ $ ( 5 ) ​ $ — ​ $ — ​ $ 10,146 ​ $ ( 5 ) Corporate debt securities ​ 51,909 ​ ( 74 ) ​ — ​ — ​ 51,909 ​ ( 74 ) Auction rate securities ​ ​ — ​ ​ — ​ ​ 5,340 ​ ​ ( 660 ) ​ ​ 5,340 ​ ​ ( 660 ) ​ ​ $ 62,055 ​ $ ( 79 ) ​ $ 5,340 ​ $ ( 660 ) ​ $ 67,395 ​ $ ( 739 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than 12 Months ​ 12 Months or Greater ​ Total ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ Fair ​ Unrealized ​ Fair ​ Unrealized ​ Fair ​ Unrealized As of December 28, 2019 Value Losses Value Losses Value Losses Government debt securities ​ $ 11,947 ​ $ ( 19 ) ​ $ 7,183 ​ $ ( 7 ) ​ $ 19,130 ​ $ ( 26 ) Corporate debt securities ​ 68,116 ​ ​ ( 81 ) ​ ​ 20 ​ ​ — ​ ​ 68,136 ​ ​ ( 81 ) Auction rate securities ​ ​ — ​ ​ — ​ ​ 5,647 ​ ​ ( 353 ) ​ ​ 5,647 ​ ​ ( 353 ) ​ ​ $ 80,063 ​ $ ( 100 ) ​ $ 12,850 ​ $ ( 360 ) ​ $ 92,913 ​ $ ( 460 ) ​ The gross unrealized losses as of January 2, 2021 and December 28, 2019 were due primarily to changes in market interest rates and the illiquidity of the Company’s auction-rate securities. The Company’s auction-rate securities have been illiquid since 2008 when auctions for the securities failed because sell orders exceeded buy orders. These securities have a contractual maturity date of 2046. The Company is unable to predict if these funds will become available before their maturity date. ​ The Company records an allowance for credit loss when a decline in investment market value is due to credit-related factors. When evaluating an investment for impairment, the Company reviews factors such as the severity of the impairment, changes in underlying credit ratings, forecasted recovery, the Company’s intent to sell or the likelihood that it would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. As of January 2, 2021, there were no material declines in the market value of available-for-sale investments due to credit-related factors. At January 2, 2021 and December 28, 2019, there were no material unrealized gains associated with the Company's available-for-sale investments. Level 3 fair value measurements The following summarizes quantitative information about Level 3 fair value measurements. Auction rate securities ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value at ​ ​ ​ ​ ​ ​ January 2, 2021 ​ ​ ​ ​ ​ Weighted (000s) Valuation Technique Unobservable Input Average $ 5,340 Discounted cash flow Estimated yield 1.56 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected holding period ​ 10 years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated discount rate 2.09 % ​ ​ F- 17 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 4. Fair Value of Financial Instruments (Continued) Significant changes in any of the unobservable inputs used in the fair value measurement of auction rate securities in isolation could result in a significantly lower or higher fair value measurement. An increase in expected yield would result in a higher fair value measurement, whereas an increase in expected holding period or estimated discount rate would result in a lower fair value measurement. Generally, a change in the assumptions used for expected holding period is accompanied by a directionally similar change in the assumptions used for estimated yield and discount rate. The following summarizes the activity in Level 3 financial instruments for the years ended January 2, 2021 and December 28, 2019 (in thousands): Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, Auction Rate Securities 2021 2019 Beginning balance ​ $ 5,647 ​ $ 5,759 Losses included in other comprehensive income (loss) ​ ( 307 ) ​ ( 112 ) Ending balance ​ $ 5,340 ​ $ 5,647 ​ The Company’s debt is recorded at cost, but is measured at fair value for disclosure purposes. The fair value of the Company’s convertible senior notes is determined using observable market prices. The notes are traded in less active markets and are therefore classified as a Level 2 fair value measurement. As of January 2, 2021 and December 28, 2019, the fair value of the 1.375 % convertible senior notes was $ 194.8 million and $ 524.0 million, respectively. The fair value of the 0.625 % convertible senior notes as of January 2, 2021 was $ 671.4 million. The Company's other financial instruments, including cash, accounts receivable and accounts payable, are recorded at amounts that approximate their fair values due to their short maturities. 5. Derivative Financial Instruments The Company uses derivative financial instruments to manage certain exposures to the variability of foreign currency exchange rates and interest rates. The Company’s objective is to offset increases and decreases in expenses resulting from these exposures with gains and losses on the derivative contracts, thereby reducing volatility of earnings. Cash Flow Hedges Foreign Currency Forward Contracts The Company uses foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on operating expenses denominated in currencies other than the U.S. dollar. Changes in the fair value of the contracts are recorded in accumulated other comprehensive income (loss) in the Consolidated Balance Sheet and subsequently reclassified into earnings in the period during which the hedged transaction is recognized. The reclassified amount is reported in the same financial statement line item as the hedged item. If the foreign currency forward contracts are terminated or can no longer qualify as hedging instruments prior to maturity, the fair value of the contracts recorded in accumulated other comprehensive income (loss) may be recognized in the Consolidated Statement of Income based on an assessment of the contracts at the time of termination. ​ The Company has entered into foreign currency forward contracts for a portion of its forecasted operating expenses denominated in the Euro, Norwegian Krone and Hungarian Forint. As of January 2, 2021, the contracts had maturities of one to twelve months and an aggregate notional value of $ 29.3 million. Gains expected to be reclassified into earnings in the next twelve months were not material. The fair value of the contracts, contract gains or losses recognized in other comprehensive income (loss) and amounts reclassified from accumulated other comprehensive income (loss) into earnings were not material for any of the periods presented. ​ F- 18 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 5. Derivative Financial Instruments (Continued) Interest Rate Swaps The Company entered into an interest rate swap agreement with an original notional value of $ 310 million in connection with borrowing from its credit facility on March 27, 2020. The Company terminated the swap agreement on June 1, 2020 in connection with the repayment in full of its credit facility. The termination of the swap agreement resulted in the reclassification of $ 0.4 million of unrealized losses that were previously recorded in accumulated other comprehensive income (loss) into earnings. ​ ​ Non-designated Hedges Foreign Currency Forward Contracts The Company uses foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on non-U.S. dollar balance sheet exposures. The Company recognizes gains and losses on the foreign currency forward contracts in interest income and other, net in the Consolidated Statement of Income in the same period as the remeasurement loss and gain of the related foreign currency denominated asset or liability. The Company does not apply hedge accounting to these foreign currency forward contracts. As of January 2, 2021, the Company held two foreign currency forward contracts denominated in Singapore Dollars with a notional value of $ 11.9 million. The fair value of foreign contracts and contract losses recognized in income were not material for any of the periods presented. 6. Balance Sheet Details The following tables show the details of selected Consolidated Balance Sheet items (in thousands): ​ Inventories ​ ​ ​ ​ ​ ​ ​ ​ ​ January 2, December 28, ​ ​ 2021 ​ 2019 Work in progress ​ $ 56,165 ​ $ 52,350 Finished goods ​ 10,497 ​ 20,707 ​ ​ $ 66,662 ​ $ 73,057 ​ Prepaid Expenses and Other Current Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 2, ​ December 28, ​ 2021 2019 Distributor advances ​ $ 51,190 ​ $ 38,485 Other ​ 38,117 ​ 30,707 ​ ​ $ 89,307 ​ $ 69,192 ​ ​ F- 19 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 6. Balance Sheet Details (Continued) Property and Equipment ​ ​ ​ ​ ​ ​ ​ ​ ​ January 2, December 28, ​ ​ 2021 ​ 2019 Buildings and improvements ​ $ 118,331 ​ $ 112,673 Equipment ​ 71,225 ​ 65,843 Computers and purchased software ​ 46,727 ​ 45,879 Leasehold interest in ground leases ​ 23,840 ​ 23,840 Leasehold improvements ​ 9,054 ​ 8,782 Furniture and fixtures ​ 8,882 ​ 8,291 ​ ​ 278,059 ​ 265,308 Accumulated depreciation ​ ( 138,620 ) ​ ( 129,369 ) ​ ​ $ 139,439 ​ $ 135,939 ​ Other Current Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ January 2, December 28, ​ ​ 2021 ​ 2019 Accrued compensation and benefits ​ $ 46,633 ​ $ 41,138 Other ​ 35,450 ​ 38,413 ​ ​ $ 82,083 ​ $ 79,551 ​ ​ ​ 7. Risks and Uncertainties Financial Instruments Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash equivalents, investments, accounts receivable, notes receivable and derivatives. The Company places its cash equivalents and investments primarily in municipal bonds, money market funds, corporate bonds, variable-rate demand notes, U.S. Treasury bills, U.S. government securities, agency securities, asset-back securities, commercial paper and auction-rate securities. Concentrations of credit risk with respect to accounts receivable are primarily due to customers with large outstanding balances. The Company’s customers that accounted for greater than 10% of accounts receivable consisted of the following distributors: ​ ​ ​ ​ ​ ​ ​ ​ ​ January 2, ​ December 28, ​ 2021 2019 Arrow Electronics 28 % 14 % Edom Technology ​ 21 % 17 % Other * ​ 11 % * Less than 10% of accounts receivable ​ ​ The Company performs periodic credit evaluations of its customers' financial condition and generally requires no collateral from its customers. The Company provides an allowance for expected credit losses based upon the net amount expected to be collected on such receivables. Losses have not been significant for any of the periods presented. The Company holds three notes receivable from a privately held company. The total carrying value of the notes was $ 1.6 million as of January 2, 2021. The Company holds an equity investment in another privately held company. The investment is accounted for using the equity method and had a carrying value of $ 10.1 million as of January 2, 2021. The notes receivable and the investment were recorded in other assets, net in the Consolidated Balance Sheet. ​ F- 20 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 7. Risks and Uncertainties (Continued) As a result of its use of derivative instruments, the Company is exposed to the risk that its counterparties will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a policy to enter into contracts with only selected major financial institutions. The Company periodically reviews and re-assesses the creditworthiness of such counterparties based on a variety of factors. Distributor Advances On sales to distributors, the Company's payment terms often require the distributor to initially pay amounts owed to the Company for an amount in excess of their ultimate cost. The Company's sales price to its distributors may be higher than the amount that the distributors will ultimately owe the Company because distributors often negotiate price reductions after purchasing the product from the Company and such reductions are often significant. These negotiated price discounts are not granted until the distributor sells the product to the end customer, which may occur after the distributor has paid the original invoice amount to the Company. Payment of invoices prior to receiving an associated discount can have an adverse impact on the working capital of the Company's distributors. Accordingly, the Company has entered into agreements with certain distributors whereby it advances cash to the distributors to reduce the distributor's working capital requirements. The advance amounts are based on the distributor’s inventory balance, and are adjusted quarterly. Such amounts are recorded in prepaid expenses and other current assets in the Consolidated Balance Sheet. The terms of these advances are set forth in binding legal agreements and are unsecured, bear no interest on unsettled balances and are due upon demand. The agreements governing these advances can be cancelled by the Company at any time. Suppliers A significant portion of the Company's products are fabricated by Taiwan Semiconductor Manufacturing Co. (TSMC) or Semiconductor Manufacturing International Corporation (SMIC). The inability of TSMC or SMIC to deliver wafers to the Company on a timely basis could impact the production of the Company's products for a substantial period of time, which could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows. Customers The Company sells directly to end customers, distributors and contract manufacturers. Although the Company actually sells the products to, and is paid by, distributors and contract manufacturers, the Company refers to the end customer as its customer. None of the Company’s end customers accounted for greater than 10% of revenue during fiscal 2020, 2019 or 2018. The Company’s distributors that accounted for greater than 10% of revenue consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 Arrow Electronics 26 % 26 % 21 % Edom Technology 20 % 20 % 17 % Sekorm ​ 11 % * ​ * ​ * Less than 10% of revenue ​ ​ F- 21 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 8. Acquisition Redpine Signals On April 28, 2020, the Company acquired the Wi-Fi and Bluetooth business of Redpine Signals. The Company believes the acquisition will accelerate its roadmap for Wi-Fi and Bluetooth silicon and software solutions. The purchase price was in excess of the fair value of the net assets acquired and, as a result, the Company recorded goodwill. A portion of the goodwill is deductible for tax purposes. The purchase price was allocated as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average ​ ​ ​ ​ ​ Amortization Period ​ Amount (Years) Intangible assets: ​ ​ ​ ​ ​ In-process research and development ​ $ 11,753 Not amortized Developed technology ​ 61,674 8 Customer relationships ​ 2,450 2 Trademarks ​ 661 2 ​ ​ 76,538 ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ 1,395 ​ ​ Inventory ​ ​ 4,375 ​ ​ Other current assets ​ 1,251 ​ ​ Goodwill ​ 233,530 ​ ​ Other non-current assets ​ ​ 673 ​ ​ Current liabilities ​ ( 856 ) ​ ​ Non-current liabilities ​ ( 97 ) ​ ​ Total purchase price ​ $ 316,809 ​ ​ ​ In-process research and development (IPR&D) represents Wi-Fi and Bluetooth technology that had not achieved technological feasibility as of the acquisition date. The fair value of IPR&D was determined using the income approach. The discount rate applied to the projected cash flows was 13.8 %, which reflects the risks related to the projects. ​ Pro forma information related to this acquisition has not been presented because it would not be materially different from amounts reported. The Company recorded approximately $ 1.5 million of acquisition-related costs in selling, general and administrative expenses during fiscal 2020. ​ ​ F- 22 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 9. Goodwill and Other Intangible Assets Goodwill The following summarizes the activity in goodwill for the years ended January 2, 2021 and December 28, 2019 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ 2021 2019 Beginning balance $ 398,402 $ 397,344 Additions due to business combinations ​ 233,530 ​ 1,058 Ending balance ​ $ 631,932 ​ $ 398,402 ​ ​ Other Intangible Assets The gross carrying amount and accumulated amortization of other intangible assets are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization ​ January 2, 2021 ​ December 28, 2019 ​ ​ Period ​ Gross ​ Accumulated ​ Gross ​ Accumulated ​ (Years) Amount Amortization Amount Amortization Subject to amortization: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Developed technology 8 ​ $ 261,939 ​ $ ( 125,435 ) ​ $ 219,695 ​ $ ( 111,634 ) Customer relationships 5 ​ 43,245 ​ ( 31,877 ) ​ 40,795 ​ ( 22,742 ) Trademarks 5 ​ 12,771 ​ ( 6,312 ) ​ 12,310 ​ ( 4,145 ) ​ ​ 8 ​ ​ 317,955 ​ ​ ( 163,624 ) ​ ​ 272,800 ​ ​ ( 138,521 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Not subject to amortization: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In-process research and development ​ Not amortized ​ ​ 11,753 ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total intangible assets ​ ​ ​ $ 329,708 ​ $ ( 163,624 ) ​ $ 272,800 ​ $ ( 138,521 ) ​ Gross intangible assets increased $ 76.5 million in fiscal 2020 due to assets acquired from Redpine Signals. This increase was offset by $ 19.6 million for the removal of fully amortized assets. Amortization expense related to intangible assets for fiscal 2020, 2019 and 2018 was $ 44.7 million, $ 39.5 million and $ 38.0 million, respectively. Research and development expense included intangible asset amortization expense of $ 33.2 million, $ 29.5 million and $ 27.3 million in fiscal 2020, 2019 and 2018, respectively. Selling, general and administrative expense included intangible asset amortization expense of $ 11.5 million, $ 10.0 million and $ 10.7 million in fiscal 2020, 2019 and 2018, respectively. There was no intangible asset amortization expense recorded in cost of revenues in any of the periods presented. The estimated aggregate amortization expense for intangible assets subject to amortization for each of the five succeeding fiscal years is as follows (in thousands): ​ ​ ​ ​ ​ Fiscal Year ​ 2021 ​ $ 44,358 2022 ​ ​ 33,046 2023 ​ ​ 24,324 2024 ​ ​ 21,864 2025 ​ ​ 12,200 ​ ​ ​ ​ F- 23 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 10. Debt 0.625 % Convertible Senior Notes On June 1, 2020, the Company completed a private offering of $ 535 million principal amount convertible senior notes (the “2025 Notes”). The 2025 Notes bear interest semi-annually at a rate of 0.625 % per year and mature on June 15, 2025. The Company used $ 310.0 million of the proceeds to repay in full the outstanding balance under its credit facility and the remainder of the proceeds, along with cash on hand, to repurchase approximately $ 236.8 million aggregate principal amount of its outstanding 1.375 % convertible senior notes. The 2025 Notes are convertible at an initial conversion rate of 8.1498 shares of common stock per $1,000 principal amount of the 2025 Notes, or approximately 4.4 million shares of common stock, which is equivalent to a conversion price of approximately $ 122.70 per share. The conversion rate is subject to adjustment under certain circumstances. Holders may convert the 2025 Notes under the following circumstances: during any calendar quarter after the calendar quarter ended on September 30, 2020 if the closing price of the Company’s common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to $ 159.51 per share, representing 130 % of the conversion price of the 2025 Notes; during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the closing sale price of our common stock and the conversion rate on each such trading day; if specified distributions or corporate events occur; if the Notes are called for redemption; or at any time after March 15, 2025. The Company may redeem all or any portion of the 2025 Notes, at its option, on or after June 20, 2023, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period. Upon conversion, the 2025 Notes may be settled in cash, shares of the Company’s common stock or a combination of cash and shares, at the Company’s election. The Company incurred debt issuance costs of approximately $ 10.4 million, which was allocated to the liability and equity components in proportion to the allocation of the proceeds. The costs allocated to the liability component are being amortized as interest expense over the term of the 2025 Notes using the effective interest method. 1.375 % Convertible Senior Notes On March 6, 2017, the Company completed a private offering of $ 400 million principal amount convertible senior notes (the “2022 Notes”). The Notes bear interest semi-annually at a rate of 1.375 % per year and mature on March 1, 2022. The 2022 Notes are convertible at an initial conversion rate of 10.7744 shares of common stock per $1,000 principal amount of the 2022 Notes, or approximately 4.3 million shares of common stock, which is equivalent to a conversion price of approximately $ 92.81 per share. The conversion rate is subject to adjustment under certain circumstances. Holders may convert the 2022 Notes under the following circumstances: during any calendar quarter after the calendar quarter ended on June 30, 2017 if the closing price of the Company’s common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to $ 120.66 per share, representing 130 % of the conversion price of the 2022 Notes; during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the closing sale price of our common stock and the conversion rate on each such trading day; if specified distributions or corporate events occur; if the 2022 Notes are called for redemption; or at any time after December 1, 2021. The Company may redeem all or any portion of the 2022 Notes, at its option, on or after March 6, 2020, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period. Upon conversion, the 2022 Notes may be settled in cash, shares of the Company’s common stock or a combination of cash and shares, at the Company’s election. ​ F- 24 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 10. Debt (continued) The Company incurred debt issuance costs of approximately $ 10.6 million, which was allocated to the liability and equity components in proportion to the allocation of the proceeds. The costs allocated to the liability component are being amortized as interest expense over the term of the 2022 Notes using the effective interest method. During fiscal 2020, the Company paid $ 305.1 million in cash to repurchase $ 259.4 million aggregate principal amount of the 2022 Notes. The Company recognized a loss on debt extinguishment of $ 4.1 . million during fiscal 2020, which was recorded in interest expense in the Consolidated Statements of Income. On January 6, 2021, the Company issued a notice of redemption for the remaining $ 140.6 million principal amount of the 2022 Notes. The redemption will occur on March 22, 2021, unless earlier converted. The principal balances of the notes were separated into liability and equity components, and recorded initially at fair value. The excess of the principal amounts of the liability components over their carrying amounts represent the debt discount, which are amortized to interest expense over the term of the notes using the effective interest method. The carrying amounts of the liability components was estimated by discounting the contractual cash flows of similar non-convertible debt at an appropriate market rate at the date of issuance. The carrying amount of the notes consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ January 2, December 28, ​ ​ 2021 ​ 2019 Liability component ​ ​ ​ Principal ​ $ 675,567 ​ $ 400,000 Unamortized debt discount ​ ( 103,953 ) ​ ( 27,580 ) Unamortized debt issuance costs ​ ( 8,189 ) ​ ( 4,163 ) Net carrying amount ​ $ 563,425 ​ $ 368,257 ​ ​ ​ ​ ​ ​ ​ Equity component ​ ​ ​ Net carrying amount ​ $ 108,438 ​ $ 57,735 ​ The liability components of the notes are recorded in convertible debt on the Consolidated Balance Sheet. The equity components of the notes are recorded in additional paid-in capital. The effective interest rate for the liability component was 5.336 % for the 2025 Notes and 4.75 % for the 2022 Notes. As of January 2, 2021, the remaining period over which the debt discount and debt issuance costs will be amortized was 4.5 years for the 2025 Notes and 0.2 years for the 2022 Notes. ​ Interest expense related to the notes was comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, December 28, December 29, ​ ​ 2021 ​ 2019 ​ 2018 Contractual interest expense ​ $ 5,530 ​ $ 5,485 ​ $ 5,500 Amortization of debt discount ​ 19,375 ​ 11,717 ​ 11,202 Amortization of debt issuance costs ​ 2,058 ​ 1,768 ​ 1,690 ​ ​ $ 26,963 ​ $ 18,970 ​ $ 18,392 ​ Credit Facility The Company and certain of its domestic subsidiaries (the “Guarantors”) have a $ 400 million revolving credit facility with a maturity date of August 7, 2024. The credit facility includes a $ 25 million letter of credit sublimit and a $ 10 million swingline loan sublimit. The Company also has an option to increase the size of the borrowing capacity by up to the greater of an aggregate of $ 250 million and 100 % of EBITDA, plus an amount that would not cause a secured leverage ratio (funded debt secured by assets/EBITDA) to exceed 3.25 to 1.00, subject to certain conditions. On March 27, 2020, the Company borrowed $ 310 million under the credit facility. On June 1, 2020, the Company repaid in full the outstanding balance of the credit facility. F- 25 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 10. Debt (continued) The credit facility, other than swingline loans, will bear interest at the Eurodollar rate plus an applicable margin or, at the option of the Company, a base rate (defined as the highest of the Wells Fargo prime rate, the Federal Funds rate plus 0.50 % and the Eurodollar Base Rate plus 1.00 %) plus an applicable margin. Swingline loans accrue interest at the base rate plus the applicable margin for base rate loans. The applicable margins for the Eurodollar rate loans range from 1.00 % to 1.75 % and for base rate loans range from 0.00 % to 0.75 %, depending in each case, on the leverage ratio as defined in the credit facility. The credit facility contains various conditions, covenants and representations with which the Company must be in compliance in order to borrow funds and to avoid an event of default, including financial covenants that the Company must maintain a net leverage ratio (funded indebtedness/EBITDA) of no more than 4.25 to 1, a secured leverage ratio of no more than 3.50 to 1, and a minimum interest coverage ratio (EBITDA/interest payments) of no less than 2.50 to 1. As of January 2, 2021, the Company was in compliance with all covenants of the credit facility. The Company’s obligations under the credit facility are guaranteed by the Guarantors and are secured by a security interest in substantially all assets of the Company and the Guarantors. ​ 11. Leases The Company leases certain facilities under operating lease agreements that expire at various dates through 2030. Some of these arrangements contain renewal options and require the Company to pay taxes, insurance and maintenance costs. The Company adopted ASC Topic 842, Leases , on December 30, 2018, the first day of its fiscal 2019. Lease costs for operating leases were $ 5.6 million and $ 5.8 million during fiscal 2020 and 2019, respectively. The Company elected the practical expedient to not provide comparable presentation for periods prior to adoption. Rent expense for operating leases was $ 6.0 million for fiscal 2018. ​ Supplemental Lease Information ​ ​ ​ ​ ​ ​ ​ ​ ​ January 2, December 28, Balance Sheet Information (in thousands) ​ 2021 ​ 2019 Operating lease right-of-use assets ​ $ 28,213 ​ $ 16,086 Operating lease liabilities ​ $ 29,900 ​ $ 17,894 ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, Cash Flow Information (in thousands) ​ 2021 ​ 2019 Cash paid for operating lease liabilities $ 5,942 ​ $ 6,023 Right-of-use assets obtained in exchange for operating lease obligations $ 16,711 ​ $ 2,631 ​ ​ ​ ​ ​ ​ ​ ​ January 2, December 28, Operating Lease Information ​ 2021 ​ 2019 Weighted-average remaining lease term 6.5 years ​ 4.5 years ​ Weighted-average discount rate 4.37 % 5.26 % ​ ​ F- 26 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 11. Leases (Continued) The maturities of operating lease liabilities as of January 2, 2021 were as follows (in thousands): ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2021 ​ $ 6,787 2022 ​ ​ 6,174 2023 ​ ​ 5,367 2024 ​ ​ 4,874 2025 ​ ​ 3,278 Thereafter ​ ​ 8,421 Total lease payments ​ ​ 34,901 Less imputed interest ​ ​ ( 5,001 ) Total lease liabilities ​ $ 29,900 ​ ​ 12. Commitments and Contingencies Investment Commitment The Company has committed to invest up to $ 10.0 million in a limited partnership, of which approximately $ 7.8 million was funded through January 2, 2021. Legal Proceedings The Company is involved in various legal proceedings that have arisen in the normal course of business. While the ultimate results cannot be predicted with certainty, the Company does not expect them to have a material adverse effect on its Consolidated Financial Statements. ​ 13. Stockholders’ Equity Common Stock The Company issued 0.6 million shares of common stock during fiscal 2020. ​ Share Repurchase Programs In April 2020, the Board of Directors terminated the Company’s existing share repurchase program, effective immediately, which had an authorization amount of $ 200 million and a termination date of December 2020. The Company repurchased 0.2 million shares, 0.3 million shares and 0.4 million shares of its common stock for $ 16.3 million, $ 26.7 million and $ 39.3 million during fiscal 2020, 2019 and 2018, respectively. These shares were retired upon repurchase. ​ 14. Revenues The Company groups its revenues into two categories, based on the markets and applications in which its products may be used. The following disaggregates the Company's revenue by product category (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, December 28, December 29, ​ ​ 2021 ​ 2019 ​ 2018 Internet of Things ​ $ 513,670 ​ $ 488,156 ​ $ 463,838 Infrastructure and automotive ​ 373,007 ​ 349,398 ​ 404,429 ​ ​ $ 886,677 ​ $ 837,554 ​ $ 868,267 ​ F- 27 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 14. Revenues (Continued) The Company has combined its previous product groups, Infrastructure, Broadcast and Access, into the Infrastructure and automotive product group. Prior periods were retrospectively adjusted. A portion of the Company's sales are made to distributors under agreements allowing certain rights of return and/or price protection related to the final selling price to the end customers. These factors impact the timing and uncertainty of revenues and cash flows. The Company recognized revenue of $ 17.7 million, $ 17.6 million and $ 24.3 million during fiscal 2020, 2019 and 2018, respectively, from performance obligations that were satisfied in previous reporting periods. ​ The following disaggregates the Company's revenue by sales channel (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, December 28, December 29, ​ 2021 2019 2018 Distributors ​ $ 696,019 ​ $ 610,410 ​ $ 618,989 Direct customers ​ 190,658 ​ 227,144 ​ 249,278 ​ ​ $ 886,677 ​ $ 837,554 ​ $ 868,267 ​ The Company periodically reviews the assumptions used to estimate consideration it will be entitled to receive from customers. In fiscal 2020, the Company adjusted certain assumptions used to estimate the constraint on variable consideration based on an analysis of prior period estimates versus actual experience. These updated assumptions and resulting revision in estimates of variable consideration increased revenue by $ 11.9 million in the fourth quarter of fiscal 2020. ​ 15. Stock-Based Compensation In fiscal 2009, the stockholders of the Company approved the 2009 Stock Incentive Plan (the “2009 Plan”) and the 2009 Employee Stock Purchase Plan (the “2009 Purchase Plan”). In fiscal 2017, the stockholders of the Company approved amendments to both the 2009 Plan and the 2009 Purchase Plan. The purpose of the amendments was to authorize additional shares of common stock for issuance, to comply with changes in applicable law, to improve the Company’s corporate governance and to implement other best practices. 2009 Stock Incentive Plan Under the 2009 Plan, the following may be granted: stock options, stock appreciation rights, performance shares, performance stock units, restricted stock units (RSUs), restricted stock awards (RSAs), performance-based awards and other awards (collectively, all such grants are referred to as “awards”). The fiscal 2017 amendments to the 2009 Plan created a single share pool. All awards now deduct one share from the 2009 Plan shares available for issuance for each share granted. Awards granted under the 2009 Plan generally contain vesting provisions ranging from three to four years . The exercise price of stock options offered under the 2009 Plan may not be less than 100 % of the fair market value of a share of our common stock on the date of grant. To the extent awards granted under the 2009 Plan terminate, expire or lapse for any reason, or are settled in cash, shares subject to such awards will again be available for grant. Stock Grants The Company granted to its employees 0.7 million, 0.7 million and 0.6 million shares of full value awards and no stock options from the 2009 Plan during fiscal 2020, 2019 and 2018, respectively. ​ F- 28 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 15. Stock-Based Compensation (Continued) Included in the full value awards granted under the 2009 Plan in fiscal 2020, 2019 and 2018 were a total of 82,000 , 93,000 and 41,000 market-based stock awards, respectively. The awards, also known as market stock units (MSUs), provide the rights to acquire a number of shares of common stock for no cash consideration based upon achievement of specified levels of market conditions. The requisite service period for these MSUs is also the vesting period, which is generally three years . The performance criteria of the MSUs granted in 2018 measures the difference between the total stockholders’ return of the Company against that of the PHLX Semiconductor Sector Total Return Index. MSUs granted in 2019 and 2020 measure the relative performance of the total stockholders' return of the Company against that of a selected benchmarked group of companies. Also included in the full value awards granted under the 2009 Plan during fiscal 2018 were 41,000 performance-based stock awards (PSUs). There were no PSUs granted during fiscal 2020 or 2019. PSUs provide for the rights to acquire a number of shares of common stock for no cash consideration based upon the achievement of specified revenue objectives during the year. The requisite service period for these PSUs is approximately three years from the date of grant. ​ 2009 Employee Stock Purchase Plan The rights to purchase common stock granted under the 2009 Purchase Plan are intended to be treated as either (i) purchase rights granted under an “employee stock purchase plan,” as that term is defined in Section 423(b) of the Internal Revenue Code (the “423(b) Plan”), or (ii) purchase rights granted under an employee stock purchase plan that is not subject to the terms and conditions of Section 423(b) of the Internal Revenue Code (the “Non-423(b) Plan”). The Company will retain the discretion to grant purchase rights under either the 423(b) Plan or the Non-423(b) Plan. Eligible employees may purchase a limited number of shares of the Company’s common stock at no less than 85 % of the fair market value of a share of common stock at prescribed purchase intervals during an offering period. Each offering period will be comprised of a series of one or more successive and/or overlapping purchase intervals and has a maximum term of 24 months . During fiscal 2020, 2019 and 2018, the Company issued 177,000 , 208,000 and 223,000 shares, respectively, under the 2009 Purchase Plan to its employees. The weighted-average fair value for purchase rights granted in fiscal 2020 under the 2009 Purchase Plan was $ 36.12 per share. Accounting for Stock-Based Compensation Stock-based compensation costs are based on the fair values on the date of grant for stock awards and stock options and on the date of enrollment for the employee stock purchase plans. The fair values of stock awards (such as RSUs, PSUs and RSAs) are estimated based on their intrinsic values. The fair values of MSUs are estimated using a Monte Carlo simulation. The fair values of stock options and employee stock purchase plans are estimated using the Black-Scholes option-pricing model. The Black-Scholes valuation calculation requires the Company to estimate key assumptions such as future stock price volatility, expected terms, risk-free rates and dividend yield. Expected stock price volatility is based upon a combination of both historical volatility and implied volatility derived from traded options on the Company’s stock in the marketplace. Expected term is derived from an analysis of historical exercises and remaining contractual life of options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company has never paid cash dividends and does not currently intend to pay cash dividends, thus it has assumed a 0 % dividend yield. The Monte Carlo simulation used to calculate the fair value of the MSUs simulates the present value of the potential outcomes of future stock prices of the Company and the Philadelphia Semiconductor Sector Total Return Index over the requisite service period. The projection of stock prices are based on the risk-free rate of return, the volatilities of the stock price of the Company and the Index, and the correlation of the stock price of the Company with the Index. The Company estimates potential forfeitures of stock grants and adjusts compensation cost recorded accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of stock-based compensation expense to be recognized in future periods. F- 29 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 15. Stock-Based Compensation (Continued) The fair values of stock options and RSUs are amortized as compensation expense on a straight-line basis over the vesting period of the grants. The fair values of RSAs are fully expensed in the period of grant, when shares are immediately issued with no vesting restrictions. The fair values of MSUs are amortized as compensation expense on a straight-line basis over the performance and service periods of the grants. The fair values of PSUs are amortized as compensation expense on a straight-line basis over the performance period when the performance is probable of achievement, and over the remaining service periods thereafter. Compensation expense recognized is shown in the operating activities section of the Consolidated Statements of Cash Flows. ​ The fair values estimated from the Black-Scholes option-pricing model for ESPP shares granted were calculated using the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ Employee Stock Purchase Plan 2021 2019 2018 ​ Expected volatility ​ 67 % 37 % 30 % Risk-free interest rate % ​ 0.15 % 1.6 % 2.4 % Expected term (in months) ​ 9 ​ 9 ​ 9 ​ Dividend yield ​ — ​ — ​ — ​ ​ The fair values estimated from the Monte Carlo simulation for MSUs were calculated using the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ MSUs 2021 2019 2018 Expected volatility 36 % 31 % 29 % Risk-free interest rate % 1.3 % 2.4 % 2.4 % Expected term (in years) 2.9 ​ 2.9 ​ 2.9 ​ Dividend yield — ​ — ​ — ​ ​ A summary of stock-based compensation activity with respect to fiscal 2020 follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ Weighted-Average ​ Aggregate ​ ​ ​ ​ Average ​ Remaining ​ Intrinsic ​ ​ Shares ​ Exercise ​ Contractual Term ​ Value Stock Options (000s) Price (In Years) (000s) Outstanding at December 28, 2019 137 ​ $ 39.47 ​ ​ ​ ​ ​ Outstanding at January 2, 2021 127 ​ $ 39.16 5.11 ​ $ 11,232 Vested at January 2, 2021 and expected to vest 127 ​ $ 39.16 5.11 ​ $ 11,232 Exercisable at January 2, 2021 127 ​ $ 39.16 5.11 ​ $ 11,232 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ Weighted-Average ​ Aggregate ​ ​ ​ ​ Average ​ Remaining ​ Intrinsic ​ ​ Shares ​ Purchase ​ Vesting Term ​ Value RSAs and RSUs (000s) Price (In Years) (000s) Outstanding at December 28, 2019 1,084 ​ $ — ​ ​ ​ ​ ​ Granted 610 ​ $ — ​ ​ ​ ​ ​ Vested or issued ( 546 ) ​ $ — ​ ​ ​ ​ ​ Cancelled or forfeited ( 42 ) ​ $ — ​ ​ ​ ​ ​ Outstanding at January 2, 2021 1,106 ​ $ — 1.06 ​ $ 140,801 Outstanding at January 2, 2021 and expected to vest 1,026 ​ $ — 1.06 ​ $ 130,635 ​ ​ F- 30 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 15. Stock-Based Compensation (Continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- Weighted-Average ​ Aggregate ​ ​ ​ ​ Average ​ Remaining ​ Intrinsic ​ ​ Shares ​ Purchase ​ Vesting Term ​ Value PSUs and MSUs (000s) Price (In Years) (000s) Outstanding at December 28, 2019 262 $ — ​ ​ ​ ​ ​ Granted 82 ​ $ — ​ ​ ​ ​ ​ Earned or issued ( 83 ) ​ $ — ​ ​ ​ ​ ​ Cancelled or forfeited ( 28 ) ​ $ — ​ ​ ​ ​ ​ Outstanding at January 2, 2021 233 ​ $ — 1.14 $ 29,703 Outstanding at January 2, 2021 and expected to vest 215 $ — 1.14 $ 27,390 ​ The following summarizes the Company’s weighted average fair value at the date of grant: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 Per grant of RSAs and RSUs ​ $ 100.27 $ 89.35 $ 93.75 Per grant of PSUs and MSUs ​ $ 98.58 $ 85.79 $ 97.53 ​ The following summarizes the Company’s stock-based payment and stock option values (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 Intrinsic value of stock options exercised ​ $ 558 ​ $ — ​ $ 1,952 Intrinsic value of RSUs that vested ​ $ 48,534 ​ $ 57,693 ​ $ 68,012 Grant date fair value of RSUs that vested ​ $ 37,477 ​ $ 40,434 ​ $ 37,720 Intrinsic value of PSUs and MSUs that vested ​ $ 8,545 ​ $ 3,649 ​ $ 3,562 Grant date fair value of PSUs and MSUs that vested ​ $ 6,302 ​ $ 1,461 ​ $ 1,788 ​ The Company received $ 15.0 million cash for the issuance of common stock, and paid $ 18.1 million for shares withheld for taxes, during fiscal 2020. The Company issues shares from the shares reserved under its stock plans upon the exercise of stock options, vesting of RSUs, PSUs and MSUs, and purchases through employee stock purchase plans. The Company does not currently expect to repurchase shares from any source to satisfy such obligation. The following table presents details of stock-based compensation costs recognized in the Consolidated Statements of Income (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 Cost of revenues ​ $ 1,477 ​ $ 1,316 ​ $ 1,238 Research and development ​ 29,212 ​ 26,187 ​ 23,867 Selling, general and administrative ​ 29,402 ​ 27,296 ​ 24,972 ​ ​ 60,091 ​ 54,799 ​ 50,077 Income tax benefit ​ 3,616 ​ 2,476 ​ 8,890 ​ ​ $ 56,475 ​ $ 52,323 ​ $ 41,187 ​ The decrease in income tax benefit in fiscal 2019 was primarily due to a change in the Company’s position related to the treatment of stock-based compensation within its intercompany cost-sharing arrangement. The Company had approximately $ 78.6 million of total unrecognized compensation costs related to equity grants from the 2009 Plan as of January 2, 2021 that are expected to be recognized over a weighted-average period of approximately 2.2 years. There were no significant stock-based compensation costs capitalized into assets in any of the periods presented. F- 31 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 15. Stock-Based Compensation (Continued) ​ As of January 2, 2021, the Company had reserved shares of common stock for future issuance as follows (in thousands): ​ ​ ​ 2009 Stock Incentive Plan 1,223 2009 Employee Stock Purchase Plan 600 Total shares reserved 1,823 ​ ​ ​ 16. Employee Benefit Plan The Company maintains a defined contribution or 401(k) Plan for its qualified U.S. employees. Participants may contribute a percentage of their compensation on a pre-tax basis, subject to a maximum annual contribution imposed by the Internal Revenue Code. The Company may make discretionary matching contributions as well as discretionary profit-sharing contributions to the 401(k) Plan. The Company contributed $ 4.2 million, $ 3.9 million and $ 3.7 million to the 401(k) Plan during fiscal 2020, 2019 and 2018, respectively. ​ 17. Income Taxes Income before income taxes includes the following components (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 ​ 2018 Domestic $ ( 19,491 ) $ 2,025 $ 19,777 Foreign ​ ​ 34,792 ​ 47,624 ​ 52,384 ​ ​ $ 15,301 ​ $ 49,649 ​ $ 72,161 ​ The provision (benefit) for income taxes consists of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 Current: Domestic ​ $ 1,485 ​ $ ( 779 ) ​ $ ( 8,843 ) Foreign ​ ​ 7,803 ​ 8,157 ​ 5,888 Total Current ​ ​ 9,288 ​ 7,378 ​ ( 2,955 ) Deferred: ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ ​ ( 4,031 ) ​ 33,624 ​ ( 8,978 ) Foreign ​ ​ ( 2,487 ) ​ ( 10,618 ) ​ 503 Total Deferred ​ ​ ( 6,518 ) ​ 23,006 ​ ( 8,475 ) Provision (benefit) for income taxes ​ $ 2,770 ​ $ 30,384 ​ $ ( 11,430 ) ​ ​ F- 32 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 17. Income Taxes (Continued) The reconciliation of the federal statutory tax rate to the Company’s effective tax rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 Federal statutory rate 21.0 % 21.0 % 21.0 % Foreign tax rate benefit ( 19.2 ) ​ ( 14.9 ) ​ ( 14.8 ) ​ Research and development tax credits ( 50.9 ) ​ ( 15.2 ) ​ ( 9.8 ) ​ GILTI and Subpart F income ​ 35.7 ​ 4.9 ​ 4.1 ​ Nondeductible (nontaxable) foreign items ​ ( 1.5 ) ​ 5.4 ​ 4.4 ​ State tax expense ​ 2.6 ​ 1.0 ​ 1.5 ​ Release of prior year unrecognized tax benefits — ​ ( 0.4 ) ​ ( 2.7 ) ​ Nondeductible officer compensation 15.7 ​ 4.3 ​ 2.4 ​ Change in cost-sharing treatment of stock-based compensation ​ — ​ 54.8 ​ ( 2.2 ) ​ Excess tax benefit of stock-based compensation ​ ( 4.0 ) ​ ( 2.2 ) ​ ( 5.9 ) ​ Change in prior period valuation allowance ​ 2.5 ​ 1.3 ​ ( 2.5 ) ​ One-time impacts of tax reform — ​ ( 0.5 ) ​ ( 11.5 ) ​ Nondeductible (nontaxable) domestic items ​ 14.8 ​ 2.8 ​ 1.5 ​ Other 1.4 ​ ( 1.1 ) ​ ( 1.3 ) ​ Effective Tax Rate 18.1 % 61.2 % ( 15.8 ) % ​ The effective tax rate for fiscal 2020 decreased from fiscal 2019 primarily due to a fiscal 2019 change in the Company’s position related to the treatment of stock-based compensation within its intercompany cost-sharing arrangement offset by the increased impact of fiscal 2020 permanent tax differences. The effective tax rate for fiscal 2019 increased from fiscal 2018 primarily due to a change in the Company’s financial statement position related to the treatment of stock-based compensation within its intercompany cost-sharing arrangement. The Company’s operations in Singapore are subject to reduced tax rates through June 30, 2024, as long as certain conditions are met. The impact of the tax holiday decreased foreign taxes by $ 1.8 million in fiscal 2020 (representing $ 0.04 per diluted share), by $ 4.0 million in fiscal 2019 (representing $ 0.09 per diluted share), and by $ 8.1 million in fiscal 2018 (representing $ 0.18 per diluted share). The Tax Cuts and Jobs Act was enacted in the U.S. on December 22, 2017 and required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred from U.S income tax under U.S. tax law. The Company elected to pay the transition tax over the eight-year period provided in the Act. As of January 2, 2021, the unpaid balance of its transition tax obligation is $ 21.4 million, which is payable between April 2022 and April 2025. This is recorded as a component of other non-current liabilities in the Consolidated Balance Sheet. ​ F- 33 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 17. Income Taxes (Continued) Deferred Income Taxes Deferred tax assets and liabilities are recorded for the estimated tax impact of temporary differences between the tax basis and book basis of assets and liabilities. Significant components of the Company’s deferred taxes as of January 2, 2021 and December 28, 2019 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ January 2, December 28, ​ 2021 2019 Deferred tax assets: ​ ​ ​ ​ ​ Net operating loss carryforwards $ 6,839 ​ $ 7,912 Tax credit carryforwards ​ ​ 22,421 ​ ​ 14,755 Stock-based compensation 2,683 ​ 2,619 Intangible assets ​ ​ 9,802 ​ ​ 7,135 Fixed assets ​ ​ 261 ​ ​ 289 Capitalized research and development 1,237 ​ 1,735 Deferred income on shipments to distributors 3,099 ​ 4,018 Leases ​ ​ 6,335 ​ ​ 3,446 Accrued liabilities and other 7,652 ​ 7,374 ​ 60,329 ​ 49,283 Less: Valuation allowance ( 5,311 ) ​ ( 4,486 ) ​ 55,018 ​ 44,797 Deferred tax liabilities: ​ ​ ​ ​ ​ Intangible assets ​ ​ 16,758 ​ ​ 16,621 Fixed assets ​ ​ 8,473 ​ ​ 4,969 Leases ​ ​ 5,999 ​ ​ 3,166 Debt ​ ​ 21,674 ​ ​ 5,741 Prepaid expenses and other 4,919 ​ 2,424 ​ 57,823 ​ 32,921 Net deferred tax assets (liabilities) $ ( 2,805 ) ​ $ 11,876 ​ As of January 2, 2021, the Company had federal net operating loss and research and development tax credit carryforwards of approximately $ 23.2 million and $ 1.9 million, respectively, as a result of the Silicon Clocks, Spectra Linear and Ember acquisitions. These carryforwards expire in fiscal years 2021 through 2031. Recognition of these loss and credit carryforwards is subject to an annual limit, which may cause them to expire before they are used. Additionally, as of January 2, 2021, the Company had generated $ 10.5 million of federal research and development credit carryforwards and $ 0.6 million of foreign tax credit carryforwards. The federal research and development credits expire in fiscal years 2039 through 2040, and the foreign tax credits expire in 2030. These credits are not currently subject to an annual limitation. The Company also had state loss, state tentative minimum tax credit, and state research and development tax credit carryforwards of approximately $ 31.6 million, $ 0.1 million, and $ 13.0 million, respectively. A portion of these loss and credit carryforwards was generated by the Company and a portion was acquired through the Integration Associates, Silicon Clocks, Spectra Linear and Zentri acquisitions. Certain of these carryforwards expire in fiscal years 2024 through 2036, and others do not expire. Recognition of some of these loss and credit carryforwards is subject to an annual limit, which may cause them to expire before they are used. F- 34 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 17. Income Taxes (Continued) A valuation allowance is established against a deferred tax asset when it is more likely than not that the deferred tax asset will not be realized. The Company maintains a valuation allowance with respect to certain deferred tax assets relating to state research and development tax credit and state net operating loss carryforwards. The following table summarizes the activity related to the valuation allowance for deferred tax assets (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ Additions ​ ​ ​ ​ ​ ​ Beginning of ​ Charged to ​ ​ ​ ​ Balance at ​ Period Expenses Deductions End of Period Year ended January 2, 2021 ​ $ 4,486 $ 847 $ ( 22 ) $ 5,311 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 28, 2019 ​ $ 4,975 $ 1,044 $ ( 1,533 ) $ 4,486 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 29, 2018 ​ $ 6,518 ​ $ 435 ​ $ ( 1,978 ) ​ $ 4,975 ​ At the end of fiscal 2020, undistributed earnings of certain of the Company's foreign subsidiaries of approximately $ 94.8 million are intended to be permanently reinvested outside the U.S. Accordingly, no provision for foreign withholding tax and state income taxes associated with a distribution of these earnings has been made. Determination of the amount of the unrecognized deferred tax liability on these unremitted earnings is not practicable. Uncertain Tax Positions The following table summarizes the activity related to gross unrecognized tax benefits (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 Beginning balance ​ $ 2,276 ​ $ 2,036 ​ $ 3,187 Additions based on tax positions related to current year ​ 577 ​ 436 ​ 630 Additions based on tax positions related to prior years ​ — ​ — ​ 115 Reductions based on tax positions related to prior years ​ ​ — ​ ​ ( 196 ) ​ ​ — Reductions for tax positions as a result of a lapse of the applicable statute of limitations ​ ​ — ​ ​ — ​ ​ ( 1,896 ) Ending balance ​ $ 2,853 ​ $ 2,276 ​ $ 2,036 ​ As of January 2, 2021, December 28, 2019 and December 29, 2018, the Company had gross unrecognized tax benefits, inclusive of interest, of $ 3.0 million, $ 2.4 million and $ 2.1 million, respectively, of which $ 2.1 million, $ 1.9 million and $ 2.1 million, respectively, would affect the effective tax rate if recognized. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision (benefit) for income taxes. These amounts were not material for any of the periods presented. Following the completion of the Norwegian Tax Administration (“NTA”) examination of the Company’s Norwegian subsidiary for income tax matters relating to fiscal years 2013 – 2016, the Company received an assessment from the NTA in December 2017 concerning an adjustment to its 2013 taxable income related to the pricing of an intercompany transaction. The Company is currently appealing the assessment. The adjustment to the pricing of the intercompany transaction results in approximately 141.3 million Norwegian kroner, or $ 16.5 million additional Norwegian income tax. The Company disagrees with the NTA’s assessment and believes the Company’s position on this matter is more likely than not to be sustained. The Company plans to exhaust all available administrative remedies, and if unable to resolve this matter through administrative remedies with the NTA, the Company plans to pursue judicial remedies. F- 35 Table of Contents Silicon Laboratories Inc. Notes to Consolidated Financial Statements (Continued) January 2, 2021 17. Income Taxes (Continued) The Company believes that it has accrued adequate reserves related to all matters contained in tax periods open to examination. Should the Company experience an unfavorable outcome in the NTA matter, however, such an outcome could have a material impact on its financial statements. Tax years 2015 through 2020 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company is not currently under audit in any major taxing jurisdiction. The Company does not expect material changes to its gross unrecognized tax benefits in the next 12 months. 18. Segment Information The Company has one operating segment, mixed-signal analog intensive products, consisting of numerous product areas. The Company’s chief operating decision maker is considered to be its Chief Executive Officer. The chief operating decision maker allocates resources and assesses performance of the business and other activities at the operating segment level. The Company groups its products into two categories, based on the markets and applications in which the products may be used. See Note 14, Revenues , for a summary of the Company’s revenue by product category. Revenue is attributed to a geographic area based on the shipped-to location. The following summarizes the Company’s revenue by geographic area (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ January 2, ​ December 28, ​ December 29, ​ 2021 2019 2018 United States ​ $ 92,136 ​ $ 110,451 ​ $ 149,385 China ​ 397,751 ​ 354,855 ​ 344,255 Rest of world ​ 396,790 ​ 372,248 ​ 374,627 Total ​ $ 886,677 ​ $ 837,554 ​ $ 868,267 ​ The following summarizes the Company’s property and equipment, net by geographic area (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ January 2, ​ December 28, ​ 2021 2019 United States ​ $ 128,204 ​ $ 126,572 Rest of world ​ 11,235 ​ 9,367 Total ​ $ 139,439 ​ $ 135,939 ​ ​ ​ ​ ​ F- 36 Table of Contents Supplementary Financial Information (Unaudited) Quarterly financial information for fiscal 2020 and 2019 is as follows. The first quarter of fiscal 2020 had 14 weeks. All other quarterly periods reported here had 13 weeks (in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2020 ​ ​ Fourth ​ Third ​ Second ​ First ​ Quarter Quarter Quarter Quarter Revenues ​ $ 242,917 (1) $ 221,350 ​ $ 207,533 ​ $ 214,877 Gross profit ​ 141,975 ​ 130,074 ​ 126,311 ​ 129,166 Operating income ​ 17,662 ​ 9,622 ​ 7,069 ​ 3,947 Net income (loss) ​ $ 8,948 ​ $ 3,162 ​ $ (1,823) ​ $ 2,244 Earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.20 ​ $ 0.07 ​ $ (0.04) ​ $ 0.05 Diluted ​ $ 0.20 ​ $ 0.07 ​ $ (0.04) ​ $ 0.05 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2019 ​ ​ Fourth ​ Third ​ Second ​ First ​ Quarter Quarter Quarter Quarter Revenues ​ $ 219,438 ​ $ 223,294 ​ $ 206,709 ​ $ 188,113 Gross profit ​ 133,271 ​ 134,090 ​ 127,049 ​ 115,874 Operating income ​ 13,229 ​ 23,820 ​ 14,556 ​ 5,092 Net income (loss) ​ $ 9,715 ​ $ 20,181 ​ $ (16,029) (2) $ 5,398 Earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.22 ​ $ 0.47 ​ $ (0.37) (2) $ 0.12 Diluted ​ $ 0.22 ​ $ 0.45 ​ $ (0.37) (2) $ 0.12 (1) Includes an adjustment of $11.9 million to increase revenue resulting from a change in the assumptions used to estimate variable consideration. (2) Includes a discrete charge to the income tax provision of $28.1 million ($0.64 per share) related to a net deferred tax asset previously recognized in connection with intercompany cost sharing arrangements. ​ ​ ​