What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-20 compared with 2023-02-01 · 254 added, 255 removed, 850 unchanged (37% of the section changed)

2 unchanged sentences

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 December 31, 2022 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.

Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of December 30, 2023 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, as a result of the material weakness in our internal control over financial reporting described below.

Notwithstanding the material weakness in internal control over financial reporting described below, management believes and has concluded that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S.

generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

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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 December 31, 2022, our internal control over financial reporting is effective based on those criteria.

Based on our assessment we concluded that, as of December 30, 2023, the material weakness described below existed.

During the year-end financial reporting process of fiscal 2023, management identified a material weakness in internal control over financial reporting.

The material weakness resulted from undue reliance on forecasted inventory demand information used in determining inventory carrying value adjustments without effectively designed controls over the evaluation of demand assumptions.

These forecasts are used to determine inventory carrying value adjustments necessary to record such quantities at the lower of their cost or net realizable value.

A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

This material weakness did not result in any material errors.

With respect to the material weakness above, management, under the oversight of the Audit Committee, is in the process of designing appropriate controls and the remediation plan specific to the inventory valuation process.

The material weakness will not be considered remediated until the enhanced controls operate for a sufficient period of time and management has concluded, through testing, that the related controls are effective.

We will monitor the effectiveness of the remediation plan and refine the remediation plan as appropriate.

Our independent registered public accounting firm, Ernst & Young LLP, issued an attestation report on our internal control over financial reporting.

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Other Information

On January 26, 2023, the Compensation Committee of the Board of Directors of the Company approved a form of Performance Stock Units Grant Notice and Global PSU Award Agreement (the “PSU Award Agreement”) under its 2009 Stock Incentive Plan, as amended and restated, attached hereto as Exhibit 10.20.

The PSU Awards will be earned based upon the level of achievement of the following three performance criteria (each as defined in the PSU Award Agreement):

● 3-Year Revenue CAGR (weighted 50%)

● Year 2 Non-GAAP Operating Income Margin (weighted 25%)

● Year 3 Non-GAAP Operating Income Margin (weighted 25%)

On January 25, 2024, the Compensation Committee of the Board of Directors of the Company approved a form of Performance Stock Units Grant Notice and Global PSU Award Agreement (the “PSU Award Agreement”) under its 2009 Stock Incentive Plan, as amended and restated.

The PSU Awards will be earned based upon the level of achievement of the following performance criteria (each as defined in the PSU Award Agreement):

● Average Revenue Growth Rate Payout Percent (weighted 50%)

● Average Non-GAAP Operating Income Margin Payout Percent (weighted 50%)

The PSU Awards are all subject to the terms and conditions of the 2009 Stock Incentive Plan, as amended and restated, and the form of PSU Award Agreement, a copy of which is attached as Exhibit 10.19 to this Form 10-K and incorporated herein by reference.

Rule 10b5-1 Trading Arrangements

There were no contracts, instructions, or written plans for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), nor were there any non-Rule 10b5-1 trading arrangements, entered into or terminated by our directors and officers (as defined under Rule 16b-1(f) of the Exchange Act) during the quarter ended December 30, 2023.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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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.”

Election of Directors,” “Executive Officers,” “Delinquent 16(a) Reports” and “Code of Ethics.”

Executive Compensation

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Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31 , 2022 and January 1, 2022

Consolidated Statements of Income for the fiscal years ended December 31, 2022, January 1, 2022 and January 2, 2021

Consolidated Statements of Comprehensive Income for the fiscal years ended December 31, 2022, January 1, 2022 and January 2, 2021

Consolidated Statements of Changes in Stockholders’ Equity for the fiscal years ended December 31, 2022, January 1, 2022 and January 2, 2021

Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2022, January 1, 2022 and January 2, 2021

Consolidated Balance Sheets at December 30 , 2023 and December 31, 2022

Consolidated Statements of Operations for the fiscal years ended December 30, 2023, December 31, 2022 and January 1, 2022

Consolidated Statements of Comprehensive Income (loss) for the fiscal years ended December 30, 2023, December 31, 2022 and January 1, 2022

Consolidated Statements of Changes in Stockholders’ Equity for the fiscal years ended December 30, 2023, December 31, 2022 and January 1, 2022

Consolidated Statements of Cash Flows for the fiscal years ended December 30, 2023, December 31, 2022 and January 1, 2022

Notes to Consolidated Financial Statements

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Specimen certificate for shares of common stock (filed as Exhibit 4.1 to the IPO Registration Statement).

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).

Form of 1.375% Convertible Senior Note due 2022 (filed as Exhibit 4.2 to the Form 8-K filed on March 6, 2017).

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).

Form of 0.625% Convertible Senior Note due 2025 (filed as Exhibit 4.2 to the Form 8-K filed on June 1, 2020).

First Supplemental Indenture between Silicon Laboratories Inc.

and Wilmington Trust, National Association, as trustee, dated January 2, 2022 (filed as Exhibit 4.1 to the Form 8-K filed on January 3, 2022).

Description of Registrant’s Securities Registered under Section 12 of the Exchange Act.

Description of Registrant’s Securities Registered under Section 12 of the Exchange Act (filed as Exhibit 4.7 to the Form 10 - K filed on February 1, 2023).

Form of Indemnification Agreement between Silicon Laboratories Inc.

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Silicon Laboratories Inc.

Form of CEO Severance Agreement (filed as Exhibit 10.1 to the Form 8-K filed on May 17, 2021).

Silicon Laboratories Inc.

Form of Executive Severance Agreement (filed as Exhibit 10.2 to the Form 8-K filed on May 17, 2021).

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2009 Employee Stock Purchase Plan (As Amended and Restated on April 22, 2021) (filed as Exhibit 4.4 to the Form S-8 filed on May 5, 2021).

CEO Transition Agreement between G.

Tyson Tuttle and Silicon Laboratories Inc.

dated July 27, 2021 (filed as Exhibit 10.1 to the Form 8-K filed on July 28, 2021).

Silicon Laboratories Inc.

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Silicon Laboratories Inc.

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 10.20 to the Form 10-K filed on February 1, 2023).

Silicon Laboratories Inc.

Form of Performance Stock Units Grant Notice and Global PSU Award Agreement under Registrant’s 2009 Stock Incentive Plan, as amended and restated.

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Certification as required by Section 906 of the Sarbanes-Oxley Act of 2002.

Policy Relating to Recovery of Erroneously Awarded Compensation

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.

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KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints R.

Matthew Johnson 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.

Matthew Johnson and Mark Mauldin 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:

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(Principal Executive Officer)

Senior Vice President and Chief Financial Officer

February 1, 2023

(Principal Financial Officer)

Chief Accounting Officer

Interim Chief Financial Officer

February 20, 2024

(Principal Accounting Officer)

(Principal Financial Officer and Principal Accounting Officer)

/s/ William G.

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February 20, 2024

/s/ William P.

February 1, 2023

/s/ Christy Wyatt

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Silicon Laboratories Inc.

To the Stockholders and the Board of Directors 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 December 31, 2022 and January 1, 2022, 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 December 31, 2022, 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 December 31, 2022 and January 1, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

(the Company) as of December 30, 2023 and December 31, 2022, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the three years in the period ended December 30, 2023, 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 December 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 30, 2023, 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 December 31, 2022, 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 1, 2023 expressed an unqualified opinion thereon.

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 December 30, 2023, 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 20, 2024 expressed an adverse opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of the critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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 the 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

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As described in Note 2 of the consolidated financial statements, the transaction price for sales reflects the Company’s expectations about the consideration it will be entitled to receive 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 uses significant estimates to determine the expected variable consideration.

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 variable consideration estimates relating to the pricing concessions and returns liability was judgmental because the calculations involve subjective management assumptions about the estimates of expected future price concessions and product returns.

Variable consideration includes consideration due from distributor customers under agreements allowing reductions to the contract price due to pricing concessions.

The Company uses estimates to determine the expected variable consideration to recognize as revenue which consider both actual historical pricing concessions issued and current and expected future market conditions.

Auditing management’s variable consideration estimates relating to pricing concessions was judgmental because the calculations involve subjective management assumptions about the estimates of expected future pricing concessions.

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.

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We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the measurement and valuation of the variable consideration recognized.

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 expected price concessions and product returns.

To test the variable consideration recognized as revenue we performed audit procedures that included, among others, an evaluation of the Company’s methodology and significant assumptions and estimates and tested the completeness and accuracy of the historical data utilized in the estimates.

To test the variable consideration recognized as revenue we performed audit procedures that included, among others, evaluating the Company’s methodology and related significant assumptions and estimates and tested the completeness and accuracy of the historical data utilized in the estimates.

In our assessment of the methodology, we considered changes in the business, changes in pricing assumptions, and evaluated significant assumptions used by management by comparison to current trends and recent transactions.

We also evaluated the accuracy of management’s assumed price concessions and product returns from prior periods by comparing to subsequent actual activity.

We also evaluated the accuracy of management’s assumed price concessions from prior periods by comparing to subsequent actual activity.

Inventory Valuation

Description of the Matter

At December 30, 2023, the Company’s net inventory balance was $194.3 million.

As discussed in Note 2 to the consolidated financial statements, 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.

Auditing management’s inventory carrying value adjustments involved significant judgment because the estimates are based on several factors that are affected by market, industry and competitive conditions outside the Company’s control.

In estimating inventory carrying value adjustments, management developed assumptions such as forecasts of future sales quantities which are sensitive to the competitiveness of product offerings, customer requirements, and product life cycles.

These significant assumptions are forward-looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit

Our audit procedures included, among others, testing the reasonableness of management’s key assumptions and judgments and testing the accuracy and completeness of the underlying data used to determine the valuation of inventory.

For instance, we compared the quantities and carrying value of on-hand inventories to related unit sales, both historical and forecasted, assessed the reasonableness of management’s estimates of forecasted unit sales, and evaluated factors that may impact expected quantities to be sold.

/s/ Ernst & Young LLP

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Silicon Laboratories Inc.

To the Stockholders and the Board of Directors 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 December 30, 2023, 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 December 31, 2022, 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 December 31, 2022 and January 1, 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 1, 2023 expressed an unqualified opinion thereon.

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Silicon Laboratories Inc.

(the Company) has not maintained effective internal control over financial reporting as of December 30, 2023, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management has identified a material weakness in controls related to the company’s inventory demand forecasting process.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 30, 2023 and December 31, 2022, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the three years in the period ended December 30, 2023, and the related notes.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated February 20, 2024 which expressed an unqualified opinion thereon.

Basis for Opinion

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Accounts payable

Current portion of convertible debt, net

Revolving line of credit

Deferred revenue and returns liability

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250,000 shares authorized;

31,994 and 38,481 shares issued and outstanding at December 31, 2022 and January 1, 2022, respectively

31,897 and 31,994 shares issued and outstanding at December 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

Retained earnings

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Silicon Laboratories Inc.

Consolidated Statements of Income

Consolidated Statements of Operations

(In thousands, except per share data)

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Income (loss) from continuing operations before income taxes

Provision (benefit) for income taxes

Equity-method earnings

Provision for income taxes

Equity-method earnings (loss)

Income (loss) from continuing operations

Income from discontinued operations, net of income taxes

Net income (loss)

Basic earnings (loss) per share:

Continuing operations

Net income (loss)

Diluted earnings (loss) per share:

Continuing operations

Net income (loss)

Weighted-average common shares outstanding:

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Silicon Laboratories Inc.

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

Net income (loss)

Other comprehensive income (loss), before tax:

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Unrealized gains (losses) arising during the period

Reclassification for (gains) losses included in net income

Reclassification for (gains) losses included in net income (loss)

Net changes to cash flow hedges:

Unrealized gains (losses) arising during the period

Reclassification for (gains) losses included in net income

Reclassification for (gains) losses included in net income (loss)

Other comprehensive income (loss), before tax

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Other comprehensive income (loss)

Comprehensive income

Comprehensive income (loss)

The accompanying notes are an integral part of these Consolidated Financial Statements.

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Income (Loss)

Balance as of December 28, 2019

Cumulative effect of adoption of accounting standard

Other comprehensive income

Stock issuances, net of shares withheld for taxes

Repurchases of common stock

Stock-based compensation

Convertible debt activity

Balance as of January 2, 2021

Net income (loss)

Other comprehensive loss

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Cumulative effect of adoption of accounting standard

Net income (loss)

Other comprehensive loss

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Balance as of December 31, 2022

Net income (loss)

Other comprehensive income

Stock issuances, net of shares withheld for taxes

Repurchases of common stock

Stock-based compensation

Convertible debt activity

Balance as of December 30, 2023

The accompanying notes are an integral part of these Consolidated Financial Statements.

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Operating Activities

Adjustments to reconcile net income to net cash provided by (used in) operating activities of continuing operations:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities of continuing operations:

Income from discontinued operations, net of income taxes

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Stock-based compensation expense

Equity-method earnings

Equity-method (earnings) loss

Deferred income taxes

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Purchases of other assets

Acquisitions of businesses, net of cash acquired

Net cash provided by (used in) investing activities of continuing operations

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Proceeds from the issuance of common stock

Net cash provided by (used in) financing activities of continuing operations

Net cash used in financing activities of continuing operations

( 1,298,672 )

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Income taxes paid

Noncash financing activities:

Issuance of common stock in connection with settlement of convertible debt

The accompanying notes are an integral part of these Consolidated Financial Statements.

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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.

On July 26, 2021, the Company sold its infrastructure and automotive business to Skyworks Solutions, Inc for $ 2.75 billion in cash.

The financial results of the infrastructure and automotive business have been presented as discontinued operations in the Consolidated Financial Statements.

On July 26, 2021, the Company sold its infrastructure and automotive business to Skyworks Solutions, Inc.

for $ 2.75 billion in cash.

The financial results of the infrastructure and automotive business for the fiscal year ended January 1, 2022 have been presented as discontinued operations in the Consolidated Financial Statements.

See Note 3, Discontinued Operations , for additional information.

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Fiscal 2023, 2022, and 2021 had 52 weeks.

Fiscal 2020 had 53 weeks with the extra week occurring in the first quarter of the year.

Fiscal 2022, 2021 and 2020 ended on December 31, 2022, January 1, 2022 and January 2, 2021, respectively.

Fiscal 2023, 2022 and 2021 ended on December 30, 2023, December 31, 2022, and January 1, 2022, respectively.

The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries.

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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.

dollars are included in interest income and other, net in the Consolidated Statements of Operations.

Use of Estimates

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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 equity-method earnings in the Consolidated Statements of Income.

The Company’s proportionate share of income or loss is recorded in equity-method earnings in the Consolidated Statements of Operations.

The Company has elected to use the measurement alternative under Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, to value non-marketable equity investments that do not have readily determinable fair values.

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The Company periodically reviews its equity investments for declines in fair value based on the specific identification method and writes down investments to their estimated fair values when it determines that a decline has occurred.

In fiscal 2023, the Company sold its ownership in Walden Technology Ventures III, a limited partnership, and recognized the loss in the Consolidated Statement of Operations.

Derivative Financial Instruments

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Shipping and Handling

Shipping and handling costs are classified as a component of cost of revenues in the Consolidated Statements of Income.

Shipping and handling costs are classified as a component of cost of revenues in the Consolidated Statements of Operations.

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.

The Company accounts for those plans using a fair-value method and recognizes the expense in its Consolidated Statement of Operations.

Silicon Laboratories Inc.

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See Note 17, Income Taxes , for additional information.

Adoption of New Accounting Standard

Convertible Instruments

The Company adopted FASB 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) , on January 2, 2022, the first day of its fiscal year ended December 31, 2022.

The Company elected the modified retrospective transition method of adoption at the beginning of the period of adoption through a cumulative-effect adjustment.

Prior periods have not been adjusted.

The following reflects the material changes recorded in connection with the cumulative-effect adjustment (in thousands):

Financial Statement Line Item

Current portion of convertible debt, net

Other non-current liabilities

Retained earnings

The primary impact of the Company’s adoption of ASU 2020-06 was to increase the carrying value of its convertible debt, representing the unamortized debt discount, and reduce deferred tax liabilities related to convertible debt.

The adoption reduced reported interest expense recorded in connection with convertible debt, which increased basic earnings per share and diluted earnings per share by $ 0.47 and $ 0.46 , respectively, for the year ended December 31, 2022.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures .

This ASU requires interim and annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker (“CODM”) and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and contains other disclosure requirements.

This authoritative guidance is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the effect of this new guidance on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures .

This ASU requires that reporting entities disclose specific categories in the effective tax rate reconciliation as well as information about income taxes paid.

The authoritative guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the effect of this new guidance on our consolidated financial statements.

Silicon Laboratories Inc.

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The financial results of the infrastructure and automotive business, which are readily distinguishable from other components of the Company, have been presented as discontinued operations in the Consolidated Financial Statements because the sale represented a strategic shift for the Company.

The following table presents the financial results of the infrastructure and automotive business (the “discontinued operations”) in the Company’s Consolidated Statements of Income (in thousands, except per share data):

Costs of revenues

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Income from discontinued operations per share:

Continuing Involvement

In connection with the closing of the sale, the Company entered into certain ancillary agreements with Skyworks, including a Transition Services Agreement (“TSA”).

Through the TSA, the Company has subleased certain premises to Skyworks and will provide or provides various temporary support services for three to eighteen months after the close of the transaction, depending on the service provided.

Although the services provided under the TSA will generate continuing cash flows between the Company and Skyworks for the duration of the TSA, the amounts have not been nor are expected to be material to the ongoing operations of either entity.

Fees received by the Company under the TSA were $ 5.2 million for fiscal 2022.

Silicon Laboratories Inc.

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Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share data):

Income (loss) from continuing operations

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Earnings (loss) per share:

Diluted shares for fiscal 2021 and 2020 excluded 1.5 million and 0.6 million shares, respectively, due to the Company’s loss from continuing operations for the periods.

The Company has irrevocably elected to settle the principal amount of its convertible senior notes in cash and intends to settle any excess value in shares in the event of a conversion.

For fiscal 2022, 2021 and 2020 approximately 0.6 million shares, 1.0 million shares and 0.2 million shares, respectively, were included in the denominator for the calculation of diluted earnings per share.

See Note 11, Debt , to the Consolidated Financial Statements for additional information.

In periods where the Company reports income from continuing operations, diluted earnings per share was computed using the treasury stock method for stock-based awards and the if-converted method for convertible debt.

Diluted shares for fiscal 2023 excluded 0.9 million shares and fiscal 2021 excluded 1.5 million shares due to the Company’s loss from continuing operations for the periods.

The Company irrevocably elected to settle the principal amount of its 0.625 % convertible senior notes due 2025 (the “2025 Notes”) in cash and intended to settle any excess value in shares in the event of a conversion.

In June 2023, the Company paid $ 535.0 million in cash and issued 0.9 million shares of common stock in connection with the conversions and redemptions of the 2025 Notes.

For fiscal 2022, approximately 0.6 million shares were included in the denominator for the calculation of diluted earnings per share (related to the not yet converted or redeemed 2025 Notes.) See Note 10, Debt , to the Consolidated Financial Statements for additional information.

Securities that were anti-dilutive were insignificant and were excluded from the computation of diluted earnings per share in all periods presented.

Fair Value of Financial Instruments

9 unchanged sentences

Money market funds

Corporate debt securities

Total cash equivalents

8 unchanged sentences

Fair Value Measurements

at January 1, 2022 Using

at December 31, 2022 Using

Quoted Prices in

5 unchanged sentences

Corporate debt securities

Government debt securities

Total cash equivalents

3 unchanged sentences

Total short-term investments

Other assets, net:

Auction rate securities

Valuation methodology

11 unchanged sentences

Due in one year or less

Due after one year through ten years

Due after ten years

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022

Fair Value of Financial Instruments (Continued)

Due after one year through five years

Unrealized Gains and Losses

5 unchanged sentences

Government debt securities

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 30, 2023

Fair Value of Financial Instruments (Continued)

Less Than 12 Months

12 Months or Greater

As of January 1, 2022

As of December 31, 2022

Corporate debt securities

Government debt securities

Auction rate securities

The gross unrealized losses as of December 31, 2022 were due primarily to changes in market interest rates.

The gross unrealized losses as of January 1, 2022 were due primarily to changes in market interest rates and the illiquidity of the Company’s auction-rate securities.

The gross unrealized losses as of December 30, 2023 and December 31, 2022 were due primarily to changes in market interest rates.

The Company records an allowance for credit loss when a decline in investment market value is due to credit-related factors.

1 unchanged sentence

As of December 30, 2023, there were no material declines in the market value of available-for-sale investments due to credit-related factors.

At December 31, 2022 and January 1, 2022, there were no material unrealized gains associated with the Company’s available-for-sale investments.

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022

Fair Value of Financial Instruments (Continued)

At December 30, 2023 and December 31, 2022, there were no material unrealized gains associated with the Company’s available-for-sale investments.

Level 3 fair value measurements

The following summarizes the activity in Level 3 financial instruments for the years ended December 31, 2022 and January 1, 2022 (in thousands):

The following summarizes the activity in Level 3 financial instruments for the year ended December 31, 2022 (in thousands):

Auction Rate Securities

5 unchanged sentences

Fair values of other financial instruments

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 December 31, 2022 and January 1, 2022, the fair value of the notes was $ 671.9 million and $ 944.3 million, respectively.

Prior to its conversion or redemption in June 2023, the Company’s debt was recorded at cost, but measured at fair value for disclosure purposes.

The fair value of the Company’s 2025 Notes was determined using observable market prices.

The notes were traded in less active markets and were therefore classified as a Level 2 fair value measurement.

As of December 31, 2022, the fair value of the notes was $ 671.9 million.

No notes were outstanding as of December 30, 2023.

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.

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 30, 2023

Derivative Financial Instruments

6 unchanged sentences

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 loss may be recognized in the Consolidated Statement of Income based on an assessment of the contracts at the time of termination.

As of December 31, 2022, the Company held no such foreign currency forward contracts.

The fair value of the contracts, contract gains or losses recognized in other comprehensive loss and amounts reclassified from accumulated other comprehensive loss into earnings were not material for any of the periods presented.

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022

Derivative Financial Instruments (Continued)

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 loss may be recognized in the Consolidated Statement of Operations based on an assessment of the contracts at the time of termination.

As of December 30, 2023, the contracts had maturities of one to three months and an aggregate notional value of $ 6.8 million.

Gains and losses 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 loss into earnings were not material for any of the periods presented.

Non-designated Hedges

2 unchanged sentences

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 recognizes gains and losses on the foreign currency forward contracts in interest income and other, net in the Consolidated Statement of Operations 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.

5 unchanged sentences

Finished goods

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 30, 2023

Supplemental Information (Continued)

Property and Equipment

7 unchanged sentences

Equity-method investment (1)

* The Company holds an 8 % equity interest in China Walden Venture Investments III, a limited partnership.

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022

Supplemental Information (Continued)

(1) At December 31, 2022, the Company held an 8 % equity interest in Walden Technology Ventures III, a limited partnership.

In fiscal 2023, the Company sold its ownership in this investment and recognized the net loss of $ 15.2 million in the Consolidated Statement of Operations.

Other Current Liabilities

1 unchanged sentence

Income taxes payable

Other Non-Current Liabilities

Lease liability – non-current

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 30, 2023

Risks and Uncertainties

2 unchanged sentences

The Company places its cash equivalents and investments primarily in municipal bonds, money market funds, corporate bonds, U.S.

government securities, agency bonds, asset-back securities, variable rate demand notes, Yankee bonds and commercial paper.

government securities, agency bonds, asset-back securities, and Yankee bonds.

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:

The Company’s customers that accounted for greater than 10% of accounts receivable consisted of the following:

Arrow Electronics

Edom Technology

* Less than 10% of accounts receivable

15 unchanged sentences

The agreements governing these advances can be cancelled by the Company at any time.

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.

Silicon Laboratories Inc.

2 unchanged sentences

Risks and Uncertainties (Continued)

A significant portion of the Company’s products are fabricated by Taiwan Semiconductor Manufacturing Co.

(TSMC) or Semiconductor Manufacturing International Corporation (SMIC).

The Company sells directly to end customers, distributors and contract manufacturers.

5 unchanged sentences

* Less than 10% of revenue

Redpine Signals

On April 28, 2020, the Company acquired the Wi-Fi and Bluetooth business of Redpine Signals for $ 316.8 million.

The Company believes the acquisition accelerated its roadmap for Wi-Fi and Bluetooth silicon and software solutions.

Silicon Laboratories Inc.

5 unchanged sentences

December 30, 2023

January 1, 2022

December 31, 2022

Developed technology

Customer relationships

Total intangible assets

Gross intangible assets decreased $ 64.9 million in fiscal 2022 due to the removal of fully amortized assets.

The following table presents details of intangible asset amortization expense recognized in the Consolidated Statements of Income (in thousands):

The following table presents details of intangible asset amortization expense recognized in the Consolidated Statements of Operations (in thousands):

Research and development

1 unchanged sentence

The estimated aggregate amortization expense for intangible assets subject to amortization for each of the five succeeding fiscal years is as follows (in thousands):

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022

0.625 % Convertible Senior Notes

On June 1, 2020, the Company completed a private placement 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 2025 Notes are convertible at a conversion rate of 8.1980 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 $ 121.98 per share.

The conversion rate is subject to adjustment under certain circumstances.

Holders may convert the 2025 Notes under the following circumstances:

The 2025 Notes bore interest semi-annually at a rate of 0.625 % per year and were scheduled to mature on June 15, 2025.

The 2025 Notes were convertible at a conversion rate of 8.1980 shares of common stock per $1,000 principal amount of the 2025 Notes, or approximately 4.4 million shares of common stock, which was equivalent to a conversion price of $ 121.98 per share.

The conversion rate was subject to adjustment under certain circumstances.

Holders may have converted 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 (“the Sales Price Trigger”);

3 unchanged sentences

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.

As of January 1, 2022, upon conversion, the 2025 Notes could be settled in cash, shares of the Company’s common stock or a combination of cash and shares, at the Company’s election.

On January 2, 2022, the Company irrevocably elected cash settlement for the principal amount of the 2025 Notes.

The Company intends to settle any excess value in shares in the event of a conversion.

The 2025 Notes were classified as current liabilities at January 1, 2022 due to the Sales Price Trigger condition being met on January 1, 2022.

The Sales Price Trigger condition was not met during fiscal 2022, therefore the net carrying amount of the 2025 Notes is now classified as a non-current liability.

The Company may have redeemed 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.

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 30, 2023

Debt (Continued)

The principal balance of the 2025 Notes was initially separated into liability and equity components, and recorded at fair value.

The excess of the principal amount of the liability component over its carrying amount represented the debt discount, which was amortized to interest expense over the term of the 2025 Notes using the effective interest method.

With the Company’s adoption of ASU 2020-06 in fiscal 2022, the principal balance of the 2025 Notes is no longer separated between liability and equity components.

With the Company’s adoption of ASU 2020-06 in fiscal 2022, the principal balance of the 2025 Notes was no longer separated between liability and equity components.

This resulted in an increase to the carrying value of its convertible debt, representing the unamortized debt discount as of January 2, 2022, with an offsetting reduction in stockholders’ equity.

1 unchanged sentence

Upon the adoption of ASU 2020-06, the equity component was reclassified to liabilities and remeasured to reflect cumulative amortization since the issuance of the 2025 Notes.

The carrying amount of the 2025 Notes consisted of the following (in thousands):

Liability component

Unamortized debt discount

Unamortized debt issuance costs

Net carrying amount

Equity component

Net carrying amount

On March 22, 2023, the Company issued a notice of redemption for the 2025 Notes.

Prior to the redemption, the Company received conversion notices representing $ 533.6 million principal amount of the notes.

The Company paid $ 533.6 million in cash and issued 0.9 million shares of common stock, as well as $ 47 thousand in cash in lieu of fractional shares, for the conversions.

Notes representing $ 1.4 million principal amount were redeemed at par, plus accrued interest.

All note conversions and redemptions were completed in June 2023.

The liability component of the 2025 Notes is recorded in convertible debt on the Consolidated Balance Sheet.

1 unchanged sentence

The effective interest rate for the liability component was 5.336 %.

As of December 31, 2022, the remaining period over which the debt issuance costs will be amortized was 2.5 years.

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022

Debt (Continued)

As of December 30, 2023, there were no remaining debt issuance costs.

Interest expense related to the Company’s convertible debt was comprised of the following (in thousands):

3 unchanged sentences

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 Company and certain of its domestic subsidiaries (the “Guarantors”) have a $ 400 million revolving credit facility, as amended on June 30, 2023, with a maturity date of June 30, 2028.

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 of the last four fiscal quarters, 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.

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 December 31, 2022, 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.

As of December 31, 2022, no amounts were outstanding on the credit facility.

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 of the last four fiscal quarters, plus an amount that would not cause a secured net leverage ratio (funded debt secured by assets/EBITDA) to exceed 3.50 to 1.00, subject to certain conditions.

Silicon Laboratories Inc.

1 unchanged sentence

December 30, 2023

Debt (Continued)

Credit Facility (Continued)

The credit facility, other than swingline loans, will bear interest at the Adjusted Term Secured Overnight Financing Rate (“SOFR”) 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 Adjusted Term SOFR 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 Adjusted Term SOFR 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 consolidated net leverage ratio (funded indebtedness less cash and cash equivalents up to $ 750 million and divided by EBITDA) of no more than 4.25 to 1, and a minimum interest coverage ratio (EBITDA/interest payments) of no less than 2.50 to 1.

As of December 30, 2023, 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.

As of December 30, 2023, $ 45.0 million was outstanding on the credit facility, with a weighted average interest rate of 6.46 %.

The Company leases certain facilities under operating lease agreements that expire at various dates through 2030.

17 unchanged sentences

Weighted-average discount rate

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 30, 2023

Leases (Continued)

The maturities of operating lease liabilities as of December 30, 2023 were as follows (in thousands):

4 unchanged sentences

Lease income from operating leases was $ 3.1 million, $ 6.2 million and $ 4.9 million during fiscal 2023, 2022 and 2021, respectively.

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022

Maturities of lease income as of December 30, 2023 were as follows (in thousands):

Commitments and Contingencies

1 unchanged sentence

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.

The patent infringement actions initiated by Bell Semiconductor, LLC were resolved in December 2022.

Share Repurchases

The Company repurchased 6.9 million shares, 6.5 million shares and 0.2 million shares of its common stock for $ 887.6 million, $ 1.15 billion and $ 16.3 million during fiscal 2022, 2021 and 2020, respectively.

The Company repurchased 1.5 million shares, 6.9 million shares and 6.5 million shares of its common stock for $ 213.0 million, $ 887.6 million, and $ 1.15 billion during fiscal 2023, 2022 and 2021, respectively.

Shares repurchased in fiscal 2021 included purchases of 4.0 million shares through a tender offer, 1.7 million shares through an accelerated share repurchase agreement and 0.8 million shares through the Company’s existing share repurchase program.

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 30, 2023

The Company groups its products as Industrial & Commercial or Home & Life based on the target markets they address.

3 unchanged sentences

These factors impact the timing and uncertainty of revenues and cash flows.

The Company recognized revenue of $ 30.1 million, $ 12.4 million and $ 11.5 million during fiscal 2022, 2021 and 2020, respectively, from performance obligations that were satisfied in previous reporting periods.

The Company did not recognize any revenue during fiscal 2023 from performance obligations that were satisfied in previous reporting periods, and recognized revenue of $ 30.1 million and $ 12.4 million during fiscal 2022 and 2021, respectively, from performance obligations that were satisfied in previous reporting periods.

The following disaggregates the Company’s revenue by sales channel (in thousands):

Direct customers

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022

Stock-Based Compensation

7 unchanged sentences

The Company granted to its employees 0.5 million, 0.5 million and 0.6 million shares of full value awards from the 2009 Plan during fiscal 2023, 2022 and 2021, respectively.

Full value awards include RSUs, MSUs awards and PSUs.

Full value awards include RSUs, MSUs, and PSUs.

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.

1 unchanged sentence

MSUs granted in 2020 measured the relative performance of the total stockholders’ return of the Company against that of a selected benchmarked group of companies.

The Company granted no MSUs in fiscal 2022 and 2021 and 82,000 MSUs in fiscal 2020.

The Company granted no MSUs in fiscal 2023, 2022 and 2021.

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 30, 2023

Stock-Based Compensation (Continued)

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 or profitability objectives during the year.

The requisite performance period of these PSUs is approximately three years from the date of grant.

The Company granted 52,078 and 116,809 PSUs in fiscal 2022 and 2021, respectively, and no PSUs in fiscal 2020.

The Company granted 85,554 , 52,078 , and 116,809 PSUs in fiscal 2023, 2022, and 2021, respectively.

The rights to purchase common stock granted under the 2009 ESPP 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”).

2 unchanged sentences

The weighted-average fair value for purchase rights granted in fiscal 2023 under the 2009 ESPP was $ 27.81 per share.

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022

Stock-Based Compensation (Continued)

Accounting for Stock-Based Compensation

7 unchanged sentences

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.

The following table presents details of stock-based compensation costs recognized in the Consolidated Statements of Income (in thousands):

The following table presents details of stock-based compensation costs recognized in the Consolidated Statements of Operations (in thousands):

Cost of revenues

4 unchanged sentences

Share-based compensation – discontinued operations, net

The Company recorded $ 7.8 million in selling, general and administrative expense during fiscal 2021 in connection with the modification of certain equity awards.

The Company recorded $ 0.6 million and $ 7.8 million of stock-based compensation charges included in selling, general and administrative expense during fiscal 2023 and fiscal 2021, respectively, in connection with the modification of certain equity awards.

The modifications were pursuant to employee terminations.

13 unchanged sentences

Dividend yield

The fair values estimated from the Monte Carlo simulation for MSUs were calculated using the following assumptions:

Expected volatility

Risk-free interest rate %

Expected term (in years)

Dividend yield

A summary of stock-based compensation activity with respect to fiscal 2023 follows:

2 unchanged sentences

Stock Options

Outstanding at January 1, 2022

Outstanding at December 31, 2022

Outstanding at December 30, 2023

Vested at December 30, 2023 and expected to vest

2 unchanged sentences

RSAs and RSUs

Outstanding at January 1, 2022

Outstanding at December 31, 2022

Vested or issued

2 unchanged sentences

Outstanding at December 30, 2023 and expected to vest

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022

Stock-Based Compensation (Continued)

Weighted-Average

PSUs and MSUs

Outstanding at January 1, 2022

Outstanding at December 31, 2022

Vested or issued

2 unchanged sentences

Outstanding at December 30, 2023 and expected to vest

Silicon Laboratories Inc.

Notes to Consolidated Financial Statements (Continued)

December 30, 2023

Stock-Based Compensation (Continued)

The following summarizes the Company’s weighted average fair value at the date of grant:

14 unchanged sentences

The Company contributed $ 3.3 million, $ 3.2 million and $ 3.5 million to the 401(k) Plan during fiscal 2023, 2022 and 2021, respectively.

Income (loss) from continuing operations, inclusive of equity-method earnings (loss) and before income taxes, includes the following components (in thousands):

Silicon Laboratories Inc.

1 unchanged sentence

December 30, 2023

Income (loss) from continuing operations, inclusive of equity-method earnings and before income taxes, includes the following components (in thousands):

Income Taxes (Continued)

The provision (benefit) for income taxes consists of the following (in thousands):

1 unchanged sentence

Total Deferred

Provision (benefit) for income taxes

Provision for income taxes

The reconciliation of the federal statutory tax rate to the Company’s effective tax rate is as follows:

1 unchanged sentence

Foreign tax rate benefit

Research and development tax credits

Return to provision adjustments

Excess tax benefit of stock-based compensation

Change in prior period valuation allowance

Net operating loss not benefited

(Nondeductible) nontaxable foreign items

GILTI and Subpart F income, net of foreign tax credits

Base erosion and anti-abuse tax

(Nondeductible) nontaxable domestic items

Foreign withholding taxes

State tax expense

Change in prior period valuation allowance

Net operating loss not benefited

Other tax effects of equity compensation

Nondeductible officer compensation

Nondeductible (nontaxable) foreign items

GILTI and Subpart F income

Excess tax benefit of stock-based compensation

Return to provision adjustments

Research and development tax credits

Effective tax rate

3 unchanged sentences

Income Taxes (Continued)

The increase in the effective tax rate for fiscal 2022 was primarily due to the recognition of certain tax benefits for fiscal 2021 in discontinued operations under FASB ASU 2019-12, Simplifying the Accounting for Income Taxes, and the required adoption of new U.S.

The decrease in the provision for income taxes for fiscal 2023 was primarily due to decreases in pre-tax book income and global intangible low-taxed income inclusions as compared to fiscal 2022.

The provision for income taxes for fiscal 2022 increased from fiscal 2021 primarily due to the recognition of certain tax benefits for fiscal 2021 in discontinued operations under FASB ASU 2019-12, Simplifying the Accounting for Income Taxes, and the required adoption of new U.S.

tax rules regarding the capitalization of research and experimental costs in fiscal 2022.

The effective tax rate for fiscal 2021 decreased from fiscal 2020 primarily due to the adoption of ASU 2019-12 in 2021 and an increase in the beginning of year valuation allowance on deferred tax assets for state attribute carryforwards.

Under ASU 2019-12, the income tax benefit of a loss from continuing operations should be recognized in discontinued operations if the Company would be unable to benefit from the loss without considering the income from discontinued operations.

As such, tax benefits associated with losses incurred for fiscal 2021 were recognized in discontinued operations.

Additionally, for fiscal 2021 there was an increase in the beginning of year valuation allowance on deferred tax assets for state attribute carryforwards as a result of changes in state tax estimates, primarily due to the divestiture of the infrastructure and automotive business.

In fiscal 2021, tax on the gain from the divestiture of the infrastructure and automotive business of $ 346.9 million was recorded in discontinued operations, as well as additional tax benefits associated with discontinued operations of $ 7.2 million.

In fiscal 2022, the Company revised its estimate of tax on the gain from the divestiture and recorded an associated net tax benefit of $ 2.2 million, which comprises the majority of the return to provision adjustment in the effective tax rate.

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017.

12 unchanged sentences

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 December 31, 2022 and January 1, 2022 were as follows (in thousands):

Significant components of the Company’s deferred taxes as of December 30, 2023 and December 31, 2022 were as follows (in thousands):

Deferred tax assets:

2 unchanged sentences

Intangible assets

Accrued liabilities

Deferred income on shipments to distributors

Net operating loss carryforwards

Deferred income on shipments to distributors

Accrued liabilities

Valuation allowance

4 unchanged sentences

Net deferred tax assets (liabilities)

As of December 31, 2022, the Company had federal net operating loss and research and development tax credit carryforwards of approximately $ 14.6 million and $ 1.6 million, respectively.

As of December 30, 2023, the Company had foreign net operating loss and research and development tax credit carryforwards of approximately $ 47.2 million and $ 0.2 million, respectively.

The foreign net operating loss carryforward does not expire.

The foreign research and development tax credits expire in fiscal years 2042 through 2043.

The Company also had U.S.

federal net operating loss and research and development tax credit carryforwards of approximately $ 12.4 million and $ 1.1 million, respectively.

These carryforwards expire in fiscal years 2026 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.

The Company also had state loss, state tentative minimum tax credit, and state research and development tax credit carryforwards of approximately $ 29.3 million, $ 0.1 million, and $ 12.2 million, respectively.

Additionally, the Company had state loss, state research and development, and state alternative minimum tax credit carryforwards of approximately $ 28.2 million, $ 12.9 million, and $ 0.1 million, respectively.

Certain of these carryforwards expire in fiscal years 2025 through 2036, and others do not expire.

7 unchanged sentences

The following table summarizes the activity related to the valuation allowance for deferred tax assets (in thousands):

End of Period

Year ended December 30, 2023

Year ended January 1, 2022

Year ended December 31, 2022

Year ended January 1, 2022

At the end of fiscal 2022, undistributed earnings of certain of the Company’s foreign subsidiaries of approximately $ 136.8 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.

Prior to fiscal 2023, the Company asserted permanent reinvestment of the earnings of all foreign subsidiaries, except for Singapore and China.

During fiscal 2023, the Company modified its previous indefinite reinvestment assertion for the remaining foreign subsidiaries and recorded a deferred tax liability for applicable withholding taxes on the undistributed earnings in those jurisdictions.

Uncertain Tax Positions

2 unchanged sentences

Additions based on tax positions related to current year

Additions based on tax positions related to prior years

Reductions based on tax positions related to prior years

1 unchanged sentence

Ending balance

As of December 31, 2022, January 1, 2022 and January 2, 2021, the Company had gross unrecognized tax benefits, inclusive of interest, of $ 4.4 million, $ 3.9 million and $ 3.0 million, respectively, of which $ 4.4 million, $ 3.9 million and $ 2.1 million, respectively, would affect the effective tax rate if recognized.

As of December 30, 2023, December 31, 2022 and January 1, 2022, the Company had gross unrecognized tax benefits, inclusive of interest, of $ 5.4 million, $ 4.4 million and $ 3.9 million, respectively, of which $ 5.1 million, $ 4.4 million and $ 3.9 million, respectively, would affect the effective tax rate if recognized.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes.

5 unchanged sentences

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.

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.

Silicon Laboratories Inc.

2 unchanged sentences

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 2023 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.

The Company’s 2021 tax year is currently under examination in India.

Although the outcome of tax audits is always uncertain, the Company believes that the results of the examination will not materially impact its financial position or results of operations.

The Company is not currently under audit in any other major taxing jurisdiction.

The Company believes it is reasonably possible that its gross unrecognized benefits will decrease by approximately $ 1.7 million, inclusive of interest, in the next 12 months due to the lapse of the statute of limitations.

Segment Information

11 unchanged sentences

Rest of world

Restructuring Activities

During the fourth quarter of 2023, the Company implemented a workforce reduction of approximately 10 % of its employees to reduce costs and align its business in response to market conditions.

In fiscal 2023, the Company incurred employee separation costs of $ 9.1 million and non-cash charges for the accelerated vesting of certain equity awards of approximately $ 0.6 million.

Employee separation costs of $ 6.0 million were recorded to research and development expenses and $ 3.0 million were recorded to selling, general and administrative expenses within the Consolidated Statement of Operations .

No further material amounts are expected to be incurred.

In fiscal 2023, the Company paid approximately $ 5 million of employee separation payments and accrued approximately $ 4 million in other current liabilities at December 30, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures