What changed in this filing

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Item 1. Financial Statements

2024-07-24 compared with 2024-04-24 · 96 added, 66 removed, 333 unchanged (33% of the section changed)

32 unchanged sentences

250,000 shares authorized;

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

32,289 and 31,897 shares issued and outstanding at June 29, 2024 and December 30, 2023, respectively

Additional paid-in capital 39,232 16,973

7 unchanged sentences

(In thousands, except per share data)

Three Months Ended

2024 April 1,

Three Months Ended Six Months Ended

2023 June 29,

Revenues $ 145,367 $ 244,866 $ 251,742 $ 491,653

10 unchanged sentences

Income (loss) before income taxes ( 45,494 ) 23,351 ( 102,405 ) 46,104

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

Provision for income taxes 36,663 12,338 36,278 20,091

Equity-method loss — ( 57 ) — ( 1,090 )

8 unchanged sentences

Silicon Laboratories Inc.

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

Three Months Ended

2024 April 1,

Three Months Ended Six Months Ended

2023 June 29,

Net income (loss) $ ( 82,157 ) $ 10,956 $ ( 138,683 ) $ 24,923

4 unchanged sentences

Net changes to cash flow hedges:

Unrealized gains arising during the period 275 38

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

Unrealized gains (losses) arising during the period — ( 580 ) 275 ( 544 )

Reclassification for losses (gains) included in net income (loss) — 186 ( 234 ) 157

Other comprehensive income, before tax 273 2,850 953 8,470

6 unchanged sentences

(In thousands)

Three Months Ended March 30, 2024 Shares Common

Three Months Ended June 29, 2024 Shares Common

Stock Additional

4 unchanged sentences

Stockholders’

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

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

Net loss — — — ( 82,157 ) — ( 82,157 )

1 unchanged sentence

Stock issuances, net of shares withheld for taxes 365 — ( 6,397 ) — — ( 6,397 )

Stock-based compensation — — 15,799 — — 15,799

Balance as of June 29, 2024 32,289 $ 3 $ 39,232 $ 1,054,048 $ ( 254 ) $ 1,093,029

Three Months Ended July 1, 2023 Shares Common

Stock Additional

Capital Retained

Earnings Accumulated Other

Comprehensive

Income (Loss) Total

Stockholders’

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

Net income — — — 10,956 — 10,956

Other comprehensive income — — — — 2,373 2,373

Stock issuances, net of shares withheld for taxes 261 — ( 1,593 ) — — ( 1,593 )

Repurchases of common stock ( 1,317 ) — ( 9,597 ) ( 173,886 ) — ( 183,483 )

Stock-based compensation — — 14,754 — — 14,754

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

Convertible debt activity 920 — ( 3,564 ) — — ( 3,564 )

Balance as of July 1, 2023 31,861 $ 3 $ — $ 1,262,984 $ ( 4,090 ) $ 1,258,897

Six Months Ended June 29, 2024 Shares Common

Stock Additional

5 unchanged sentences

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

Net loss — — — ( 138,683 ) — ( 138,683 )

Other comprehensive income — — — — 771 771

Stock issuances, net of shares withheld for taxes 392 — ( 7,105 ) — — ( 7,105 )

Stock-based compensation — — 29,364 — — 29,364

Balance as of June 29, 2024 32,289 $ 3 $ 39,232 $ 1,054,048 $ ( 254 ) $ 1,093,029

Six Months Ended July 1, 2023 Shares Common

Stock Additional

Capital Retained

Earnings Accumulated Other

Comprehensive

Income (Loss) Total

Stockholders’

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

Net income — — — 24,923 — 24,923

3 unchanged sentences

Stock-based compensation — — 31,418 — — 31,418

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

Convertible debt activity 920 — ( 3,564 ) — — ( 3,564 )

Balance as of July 1, 2023 31,861 $ 3 $ — $ 1,262,984 $ ( 4,090 ) $ 1,258,897

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

2 unchanged sentences

(In thousands)

Three Months Ended

2024 April 1,

Six Months Ended

Operating Activities

22 unchanged sentences

Proceeds from sale of equity investment 12,382 —

Purchases of other assets — ( 215 )

Net cash provided by investing activities 121,101 416,142

Financing Activities

Proceeds from revolving line of credit — 80,000

Payments on debt ( 45,000 ) ( 536,124 )

17 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

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.

The condensed consolidated results of operations for the three and six months ended June 29, 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.

21 unchanged sentences

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

Three Months Ended

2024 April 1,

Three Months Ended Six Months Ended

2023 June 29,

Net income (loss) $ ( 82,157 ) $ 10,956 $ ( 138,683 ) $ 24,923

6 unchanged sentences

Diluted $ ( 2.56 ) $ 0.33 $ ( 4.33 ) $ 0.75

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.

Diluted shares for the three and six months ended June 29, 2024 excluded 0.3 million and 0.3 million shares, respectively, due to the Company’s net loss for the periods.

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 six months ended July 1, 2023, approximately 0.9 million and 1.1 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.

Securities that were anti-dilutive and were excluded from the computation of diluted earnings per share for the three and six months ended July 1, 2023 were insignificant.

Fair Value of Financial Instruments

10 unchanged sentences

Fair Value Measurements

at March 30, 2024 Using

at June 29, 2024 Using

Description Quoted Prices in

37 unchanged sentences

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

As of June 29, 2024 Amortized Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash Equivalent Marketable Securities

Corporate debt securities $ 47,485 $ 19 $ ( 182 ) $ 47,322 $ — $ 47,322

9 unchanged sentences

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 March 30, 2024 (in thousands):

The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at June 29, 2024 (in thousands):

Cost Fair Value

5 unchanged sentences

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

As of June 29, 2024 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses

Corporate debt securities $ 15,530 $ ( 6 ) $ 19,457 $ ( 176 ) $ 34,987 $ ( 182 )

9 unchanged sentences

$ 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 gross unrealized losses as of June 29, 2024 and December 30, 2023 were due primarily to changes in market interest rates.

At June 29, 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 March 30, 2024, there were no material declines in the market value of available-for-sale investments due to credit-related factors.

As of June 29, 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

12 unchanged sentences

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.

As of June 29, 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.

8 unchanged sentences

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

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.

Lease income from operating leases was $ 1.5 million and $ 1.4 million during the six months ended June 29, 2024 and July 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 March 30, 2024, the Company was in compliance with all covenants of the credit facility.

The Company was granted a waiver of compliance for the minimum interest coverage ratio through March 29, 2025.

Based on the waiver, as of June 29, 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 March 30, 2024, no amounts were outstanding on the credit facility.

As of June 29, 2024, no amounts were outstanding on the credit facility.

Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

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 Condensed Consolidated Financial Statements.

Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

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

The following represents revenue by product category (in thousands):

Three Months Ended

2024 April 1,

Three Months Ended Six Months Ended

2023 June 29,

Industrial & Commercial $ 88,083 $ 165,303 $ 153,345 $ 316,016

3 unchanged sentences

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

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.

During the three and six months ended June 29, 2024, the Company recognized revenue of $ 0.0 million and $ 2.1 million, respectively, from performance obligations that were satisfied in previous reporting periods.

During the three and six months ended July 1, 2023, the Company did not recognize any revenue related to performance obligations that were satisfied in previous reporting periods.

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

Three Months Ended

2024 April 1,

Three Months Ended Six Months Ended

2023 June 29,

Distributors $ 99,931 $ 187,646 $ 170,290 $ 392,518

6 unchanged sentences

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

Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Stock-Based Compensation (Continued)

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

Three Months Ended

2024 April 1,

Three Months Ended Six Months Ended

2023 June 29,

Cost of revenues $ 412 $ 283 $ 824 $ 582

2 unchanged sentences

15,844 14,739 29,455 31,377

Income tax provision 1,727 1,786

Income tax benefit 2,075 2,155 3,802 3,941

Total $ 13,769 $ 12,584 $ 25,653 $ 27,436

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.

Notes to Condensed Consolidated Financial Statements (Continued)

The Company had approximately $ 124.4 million of total unrecognized compensation cost related to equity grants as of June 29, 2024 that is expected to be recognized over a weighted-average period of approximately 2.3 years.

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.

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.

Income tax expense was $ 36.7 million and $ 12.3 million for the three months ended June 29, 2024 and July 1, 2023, resulting in effective tax rates of ( 80.6 )% and 53.0 %, respectively.

Income tax expense was $ 36.3 million and $ 20.1 million for the six months ended June 29, 2024 and July 1, 2023, resulting in effective tax rates of ( 35.4 )% and 44.6 %, respectively.

The increase in the provision for income taxes for the three and six months ended June 29, 2024 is primarily due to a change in the Company’s valuation allowance assessment and subsequent recording of a valuation allowance against certain of the Company’s deferred tax assets.

For the three months ended June 29, 2024, the Company’s provision for income taxes includes $ 43.9 million of non-cash tax expense to establish a valuation allowance against certain deferred tax assets in the U.S.

and Singapore.

The Company establishes a valuation allowance when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

In the three months ended June 29, 2024, the Company determined that there is a need for the valuation allowance due to a forecasted three-year cumulative pre-tax loss for the current and two preceding years in conjunction with the downturn in the semiconductor industry.

The Company intends to maintain the valuation allowance until its ability to forecast sufficient future sources of taxable income is reestablished.

Uncertain Tax Positions

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.

These amounts were not material for any of the periods presented.

Following the completion of the Norwegian Tax Administration (“NTA”) examination of the Company’s Norwegian subsidiary for income tax matters relating to fiscal years 2013 - 2016, the Company received an assessment from the NTA in December 2017 concerning an adjustment to its 2013 taxable income related to the pricing of an intercompany transaction.

The Company is currently appealing the assessment.

The adjustment to the pricing of the intercompany transaction results in approximately 141.3 million Norwegian kroner, or $ 13.0 million, additional Norwegian income tax.

The Company disagrees with the NTA’s assessment and believes the Company’s position on this matter is more likely than not to be sustained.

The Company plans to exhaust all available administrative remedies.

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.

As of June 29, 2024, the Company had gross unrecognized tax benefits, inclusive of interest, of $ 6.1 million, of which $ 5.5 million would affect the effective tax rate if recognized.

During the six months ended June 29, 2024, the Company did not release any unrecognized tax benefits.

Tax years 2015 through 2024 remain open to examination by the major taxing jurisdictions in which the Company operates.

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

The Company’s 2021 and 2022 tax years are 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.

1 unchanged sentence

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.

Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Restructuring Activities

1 unchanged sentence

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

Three Months Ended

March 30, 2024

Six Months Ended

June 29, 2024

Balance, beginning of period $ 4.4

Payments ( 2.2 )

Balance, end of period $ 3.1

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.

During the three and six months ended June 29, 2024, restructuring charges of $ 0.4 million and $ 0.9 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