What changed in this filing

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Item 1. Financial Statements

2024-04-24 compared with 2023-11-01 · 148 added, 190 removed, 251 unchanged (57% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

September 30,

2024 December 30,

Current assets:

2 unchanged sentences

Accounts receivable, net 32,616 29,295

Inventories 198,206 194,295

Prepaid expenses and other current assets 82,608 75,117

1 unchanged sentence

Property and equipment, net 142,155 145,890

Goodwill 376,389 376,389

Other intangible assets, net 53,453 59,533

Other assets, net 126,036 123,313

Total assets $ 1,344,153 $ 1,443,056

Liabilities and Stockholders’ Equity

5 unchanged sentences

Total current liabilities 111,359 163,570

Convertible debt, net

Other non-current liabilities 67,233 70,804

7 unchanged sentences

250,000 shares authorized;

31,779 and 31,994 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

31,924 and 31,897 shares issued and outstanding at March 30, 2024 and December 30, 2023, respectively

Additional paid-in capital 29,830 16,973

Retained earnings 1,136,205 1,192,731

4 unchanged sentences

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

2024 April 1,

Revenues $ 106,375 $ 246,787

Cost of revenues 51,306 92,927

Gross profit 55,069 153,860

Operating expenses:

2 unchanged sentences

Operating expenses 114,203 134,287

Operating income

Operating income (loss) ( 59,134 ) 19,573

Other income (expense):

1 unchanged sentence

Interest expense ( 509 ) ( 1,656 )

Income before income taxes

Provision for income taxes

Equity-method earnings (loss)

Earnings per share:

Income (loss) before income taxes ( 56,911 ) 22,753

Provision (benefit) for income taxes ( 385 ) 7,753

Equity-method loss — ( 1,033 )

Net income (loss) $ ( 56,526 ) $ 13,967

Earnings (loss) per share:

Basic $ ( 1.77 ) $ 0.44

Diluted $ ( 1.77 ) $ 0.41

Weighted-average common shares outstanding:

Basic 31,910 31,959

Diluted 31,910 33,753

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

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Other comprehensive income (loss), before tax

2024 April 1,

Net income (loss) $ ( 56,526 ) $ 13,967

Other comprehensive income, before tax:

Net changes to available-for-sale securities:

Unrealized gains (losses) arising during the period

Reclassification for losses included in net income

Unrealized gains arising during the period 624 2,997

Reclassification for losses included in net income (loss) 15 2,614

Net changes to cash flow hedges:

Unrealized gains (losses) arising during the period

Reclassification for (gains) losses included in net income

Other comprehensive income (loss), before tax

Provision (benefit) for income taxes

Other comprehensive income (loss)

Comprehensive income

Unrealized gains arising during the period 275 38

Reclassification for gains included in net income (loss) ( 234 ) ( 30 )

Other comprehensive income, before tax 679 5,619

Provision for income taxes 131 1,394

Other comprehensive income 548 4,225

Comprehensive income (loss) $ ( 55,978 ) $ 18,192

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

2 unchanged sentences

(In thousands)

Accumulated Other

Three Months Ended March 30, 2024 Shares Common

Stock Additional

Capital Retained

Earnings Accumulated Other

Comprehensive

Income (Loss) Total

Stockholders’

Three Months Ended September 30, 2023

Income (Loss)

Balance as of July 1, 2023

Balance as of December 30, 2023 31,897 $ 3 $ 16,973 $ 1,192,731 $ ( 1,025 ) $ 1,208,682

Net loss — — — ( 56,526 ) — ( 56,526 )

Other comprehensive income — — — — 548 548

2 unchanged sentences

Stock-based compensation — — 13,564 — — 13,564

Balance as of September 30, 2023

Accumulated Other

Comprehensive

Stockholders’

Three Months Ended October 1, 2022

Income (Loss)

Balance as of July 2, 2022

Other comprehensive loss

Stock issuances, net of shares withheld for taxes

Repurchases of common stock

Stock-based compensation

Balance as of October 1, 2022

Accumulated Other

Balance as of March 30, 2024 31,924 $ 3 $ 29,830 $ 1,136,205 $ ( 477 ) $ 1,165,561

Three Months Ended April 1, 2023 Shares Common

Stock Additional

Capital Retained

Earnings Accumulated Other

Comprehensive

Income (Loss) Total

Stockholders’

Nine Months Ended September 30, 2023

Income (Loss)

Balance as of December 31, 2022 31,994 $ 3 $ — $ 1,415,693 $ ( 10,688 ) $ 1,405,008

Net income — — — 13,967 — 13,967

Other comprehensive income — — — — 4,225 4,225

2 unchanged sentences

Stock-based compensation — — 16,663 — — 16,663

Convertible debt activity

Balance as of September 30, 2023

Accumulated Other

Comprehensive

Stockholders’

Nine Months Ended October 1, 2022

Income (Loss)

Balance as of January 1, 2022

Cumulative effect of adoption of accounting standard

Other comprehensive loss

Stock issuances, net of shares withheld for taxes

Repurchases of common stock

Stock-based compensation

Balance as of October 1, 2022

Balance as of April 1, 2023 31,997 $ 3 $ — $ 1,425,914 $ ( 6,463 ) $ 1,419,454

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

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

2024 April 1,

Operating Activities

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

Net income (loss) $ ( 56,526 ) $ 13,967

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation of property and equipment 6,634 6,235

1 unchanged sentence

Amortization of debt issuance costs — 523

Loss on extinguishment of convertible debt

Stock-based compensation expense 13,612 16,638

Equity-method (earnings) loss

Equity-method loss — 1,033

Deferred income taxes ( 5,270 ) ( 2,670 )

1 unchanged sentence

Accounts receivable ( 3,321 ) ( 16,257 )

Inventories ( 3,958 ) ( 32,794 )

Prepaid expenses and other assets ( 15,466 ) 11,530

3 unchanged sentences

Other non-current liabilities ( 3,113 ) ( 978 )

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

Net cash used in operating activities ( 71,800 ) ( 13,280 )

Investing Activities

3 unchanged sentences

Purchases of property and equipment ( 2,047 ) ( 7,657 )

Purchases of other assets

Net cash provided by investing activities of continuing operations

Proceeds from sale of equity investment 12,382 —

Net cash provided by investing activities 81,492 254,281

Financing Activities

Proceeds from revolving line of credit

Payments on debt ( 45,000 ) —

2 unchanged sentences

Proceeds from the issuance of common stock 341 —

Net cash used in financing activities of continuing operations

Discontinued Operations

Operating activities

Net cash used in discontinued operations

Decrease in cash and cash equivalents

Net cash used in financing activities ( 45,707 ) ( 24,539 )

Increase (decrease) in cash and cash equivalents ( 36,015 ) 216,462

Cash and cash equivalents at beginning of period 227,504 499,915

11 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

The condensed consolidated results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year.

These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2022, included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 1, 2023.

The condensed consolidated results of operations for the three months ended March 30, 2024 are not necessarily indicative of the results to be expected for the full year.

These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 30, 2023, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 20, 2024.

The Company prepares financial statements on a 52- or 53-week fiscal year that ends on the Saturday closest to December 30.

7 unchanged sentences

The Company periodically reviews the assumptions used in its financial statement estimates.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to the customer, 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.

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.

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

2024 April 1,

Net income (loss) $ ( 56,526 ) $ 13,967

Shares used in computing basic earnings per share 31,910 31,959

2 unchanged sentences

Shares used in computing diluted earnings per share 31,910 33,753

Earnings per share:

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 the three and nine months ended September 30, 2023 and October 1, 2022, approximately 0.0 million, 0.7 million, 0.4 million, and 0.7 million shares, respectively, 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 6, Debt , to the Condensed 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.

Earnings (loss) per share:

Basic $ ( 1.77 ) $ 0.44

Diluted $ ( 1.77 ) $ 0.41

Diluted shares for the three months ended March 30, 2024 excluded 0.4 million shares due to the Company's net loss for the period.

For the three months ended April 1, 2023, approximately 1.2 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.) Securities that were anti-dilutive were insignificant and were excluded from the computation of diluted earnings per share for the three months ended April 1, 2023.

Fair Value of Financial Instruments

10 unchanged sentences

Fair Value Measurements

at September 30, 2023 Using

Quoted Prices in

Significant Other

at March 30, 2024 Using

Description Quoted Prices in

Active Markets for

Identical Assets

(Level 1) Significant Other

(Level 2) Total

Cash equivalents:

5 unchanged sentences

Total short-term investments $ — $ 141,201 $ 141,201

Total $ 107,746 $ 141,201 $ 248,947

Fair Value Measurements

at December 30, 2023 Using

Quoted Prices in

Significant Other

Description Quoted Prices in

Active Markets for

Identical Assets

(Level 1) Significant Other

(Level 2) Total

Cash equivalents:

Money market funds $ 137,195 $ — $ 137,195

Corporate debt securities

Total cash equivalents $ 137,195 $ — $ 137,195

3 unchanged sentences

Total short-term investments $ — $ 211,720 $ 211,720

Total $ 137,195 $ 211,720 $ 348,915

Valuation methodology

8 unchanged sentences

Fair Value of Financial Instruments (Continued)

The following summarizes the components of available-for-sale investments:

As of March 30, 2024 Amortized Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash Equivalent Marketable Securities

Corporate debt securities $ 59,107 $ 46 $ ( 410 ) $ 58,743 $ — $ 58,743

Government debt securities 82,685 19 ( 246 ) 82,458 — 82,458

Money market funds 107,746 — — 107,746 107,746 —

Total $ 249,538 $ 65 $ ( 656 ) $ 248,947 $ 107,746 $ 141,201

As of December 30, 2023 Amortized Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash Equivalent Marketable Securities

Corporate debt securities $ 130,858 $ 69 $ ( 880 ) $ 130,047 $ — $ 130,047

Government debt securities 82,091 137 ( 555 ) 81,673 — 81,673

Money market funds 137,195 — — 137,195 137,195 —

Total $ 350,144 $ 206 $ ( 1,435 ) $ 348,915 $ 137,195 $ 211,720

Contractual maturities of investments

The Company’s available-for-sale investments are reported at fair value, with unrealized gains and losses, net of tax, recorded as a component of accumulated other comprehensive loss in the Condensed Consolidated Balance Sheet.

The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at September 30, 2023 (in thousands):

The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at March 30, 2024 (in thousands):

Cost Fair Value

Due in one year or less $ 112,498 $ 112,010

Due after one year through five years 29,294 29,191

$ 141,792 $ 141,201

Unrealized Gains and Losses

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

As of September 30, 2023

Less Than 12 Months 12 Months or Greater Total

As of March 30, 2024 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses

Corporate debt securities $ 2,501 $ ( 1 ) $ 30,323 $ ( 410 ) $ 32,824 $ ( 411 )

Government debt securities 36,642 ( 166 ) 30,174 ( 79 ) 66,816 ( 245 )

Less Than 12 Months

12 Months or Greater

As of December 31, 2022

$ 39,143 $ ( 167 ) $ 60,497 $ ( 489 ) $ 99,640 $ ( 656 )

Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Fair Value of Financial Instruments (Continued)

Less Than 12 Months 12 Months or Greater Total

As of December 30, 2023 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses

Corporate debt securities $ 12,449 $ ( 13 ) $ 95,760 $ ( 867 ) $ 108,209 $ ( 880 )

Government debt securities 28,255 ( 115 ) 31,122 ( 440 ) 59,377 ( 555 )

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

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

$ 40,704 $ ( 128 ) $ 126,882 $ ( 1,307 ) $ 167,586 $ ( 1,435 )

The gross unrealized losses as of March 30, 2024 and December 30, 2023 were due primarily to changes in market interest rates.

At March 30, 2024 and December 30, 2023, there were no material unrealized gains associated with the Company’s available-for-sale investments.

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

Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Fair Value of Financial Instruments (Continued)

As of March 30, 2024, there were no material declines in the market value of available-for-sale investments due to credit-related factors.

Fair values of other financial instruments

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 2025 Notes was $ 671.9 million.

No notes were outstanding as of September 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.

8 unchanged sentences

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.

Changes in the fair value of the contracts are recorded in accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheet and subsequently reclassified into earnings in the period during which the hedged transaction is recognized.

Changes in the fair value of the contracts are recorded in accumulated other comprehensive loss in the Condensed 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 Condensed 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 Norwegian Krone.

As of September 30, 2023, the contracts had maturities of one to three months and an aggregate notional value of $ 2.0 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 income (loss) into earnings were not material for any of the periods presented.

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 September 30, 2023, the Company held foreign currency forward contracts denominated in the Euro with an aggregate notional value of $ 7.4 million.

The fair value of the foreign contracts and contract gains and losses recognized in income were not material for any of the periods presented.

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 Condensed Consolidated Statement of Operations based on an assessment of the contracts at the time of termination.

As of March 30, 2024, the company held no such foreign currency forward contracts.

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

Silicon Laboratories Inc.

2 unchanged sentences

The following table shows the details of selected Condensed Consolidated Balance Sheet items (in thousands):

September 30,

2024 December 30,

Work in progress $ 173,379 $ 173,802

Finished goods 24,827 20,493

$ 198,206 $ 194,295

The Company leases a portion of its headquarter facilities to other tenants.

Lease income from operating leases was $ 2.3 million and $ 5.4 million during the nine months ended September 30, 2023 and October 1, 2022, respectively.

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

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

Unamortized debt issuance costs

Net carrying amount

Interest expense related to the 2025 Notes was comprised of the following (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Contractual interest expense

Amortization of debt issuance costs

The 2025 Notes were recorded in convertible debt, net on the Condensed Consolidated Balance Sheet.

The remaining balance of the debt issuance costs was recognized in stockholders’ equity for the 2025 Notes that were converted and as debt extinguishment loss for the 2025 Notes that were redeemed in the second quarter of fiscal 2023.

Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Debt (Continued)

Lease income from operating leases was $ 0.8 million and $ 0.7 million during the three months ended March 30, 2024 and April 1, 2023, respectively.

Credit Facility

6 unchanged sentences

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 September 30, 2023, the Company was in compliance with all covenants of the credit facility.

As of March 30, 2024, 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 September 30, 2023, $ 45.0 million was outstanding on the credit facility.

As of March 30, 2024, no amounts were outstanding on the credit facility.

Commitments and Contingencies

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

2024 April 1,

Industrial & Commercial $ 65,262 $ 150,713

Home & Life 41,113 96,074

$ 106,375 $ 246,787

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.

During the three and nine months ended September 30, 2023, the Company did no t recognize any revenue related to performance obligations that were satisfied in previous reporting periods.

During the three and nine months ended October 1, 2022, the Company recognized revenue of $ 4.5 million and $ 30.7 million, respectively, from performance obligations that were satisfied in previous reporting periods.

During the three months ended March 30, 2024 and April 1, 2023, the Company recognized revenue of $ 4.2 million and $ 4.9 million, respectively, from performance obligations that were satisfied in previous reporting periods.

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

Three Months Ended

Nine Months Ended

September 30,

2024 April 1,

Distributors $ 70,360 $ 204,872

Direct customers 36,015 41,915

$ 106,375 $ 246,787

Stock-Based Compensation

3 unchanged sentences

The fair values of stock options and employee stock purchase plans are estimated using the Black-Scholes option-pricing model.

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

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

Three Months Ended

Nine Months Ended

September 30,

2024 April 1,

Cost of revenues $ 412 $ 298

1 unchanged sentence

Selling, general and administrative 3,478 6,849

Income tax benefit

For the three months ended September 30, 2023, the Company recognized an expense reversal of $ 9.5 million to reflect a reduction in the estimated levels of achievement related to unvested performance stock units.

The Company had approximately $ 103.8 million of total unrecognized compensation cost related to equity grants as of September 30, 2023 that is 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.

13,612 16,638

Income tax provision 1,727 1,786

Total $ 11,885 $ 14,852

The Company had approximately $ 80.3 million of total unrecognized compensation cost related to equity grants as of March 30, 2024 that is expected to be recognized over a weighted-average period of approximately 2.0 years.

Silicon Laboratories Inc.

1 unchanged sentence

Provision for income taxes includes both domestic and foreign income taxes at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits, global intangible low-taxed income, Subpart F income inclusions, and other permanent differences.

Typically, the Company’s interim provision for income taxes is determined using an estimated annual effective tax rate, adjusted for discrete tax items.

Under certain circumstances where the Company is unable to make a reliable estimate of the annual effective tax rate, it uses the actual effective tax rate for the year-to-date period.

For the three and nine months ended September 30, 2023, the Company used this approach due to the variability of the rate as a result of fluctuations in forecasted pre-tax income.

Income tax expense was $ 3.4 million and $ 14.2 million for the three months ended September 30, 2023 and October 1, 2022, resulting in effective tax rates of 24.7 % and 40.3 %, respectively.

Income tax expense was $ 23.5 million and $ 36.9 million for the nine months ended September 30, 2023, and October 1, 2022, resulting in effective tax rates of 40.0 % and 35.8 %, respectively.

The decrease in the effective tax rate for the three months ended September 30, 2023 as compared to the prior period was primarily due to a decrease in nondeductible stock compensation and a delay in the application of unfavorable foreign tax credit Treasury regulations that was announced during the recent quarter, partially offset by the increased impact of global intangible low-taxed income relative to lower pre-tax book income.

The increase in the effective tax rate for the nine months ended September 30, 2023 as compared to the prior period was primarily due the increased impact of global intangible low-taxed income relative to lower pre-tax book income, partially offset by discrete U.S.

federal and state return-to-provision benefits recorded in the recent nine-month period.

Income tax benefit was $ 0.4 million and expense was $ 7.8 million for the three months ended March 30, 2024 and April 1, 2023, resulting in effective tax rates of 0.7 % and 35.7 %, respectively.

The decrease in the provision for income taxes for the three months ended March 30, 2024 is primarily due to reporting a tax benefit on pre-tax book loss for the current period compared to tax expense on pre-tax book income for the three months ended April 1, 2023.

Uncertain Tax Positions

As of September 30, 2023, the Company had gross unrecognized tax benefits, inclusive of interest, of $ 5.2 million, all of which would affect the effective tax rate if recognized.

During the nine months ended September 30, 2023, the Company did not release any unrecognized tax benefits.

As of March 30, 2024, the Company had gross unrecognized tax benefits, inclusive of interest, of $ 5.9 million, of which $ 5.3 million would affect the effective tax rate if recognized.

During the three months ended March 30, 2024, the Company did not release any unrecognized tax benefits.

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

12 unchanged sentences

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

The Company does not expect material changes to its gross unrecognized tax benefits in the next 12 months.

Subsequent Event

The Company expects to incur approximately $ 6.5 million of restructuring related expense in the fourth quarter of fiscal year 2023, consisting primarily of reduction-in-force severance charges.

The Company believes it is reasonably possible that its gross unrecognized tax benefits will decrease by approximately $ 1.9 million, inclusive of interest, in the next 12 months due to the lapse of the statute of limitations.

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.

The following table summarizes the activity of the restructuring liability during the periods presented (in millions):

Three Months Ended

March 30, 2024

Balance, beginning of period $ 4.4

Balance, end of period $ 3.9

Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Restructuring Activities (Continued)

During the three months ended March 30, 2024, restructuring charges of $ 0.5 million were recognized in operating expenses in the Condensed Consolidated Statements of Operations.

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-Q

Item 1. Financial Statements