Silicon Laboratories Earnings 2019-06-29

SLAB 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to _________

Commission file number: 000-29823

SILICON LABORATORIES INC.

(Exact name of registrant as specified in its charter)


Delaware		74-2793174
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


400 West Cesar Chavez, Austin, Texas		78701
(Address of principal executive offices)		(Zip Code)

(512) 416-8500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	SLAB	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Non-accelerated filer ◻

Accelerated filer ◻	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

As of July 16, 2019, 43,343,867 shares of common stock of Silicon Laboratories Inc. were outstanding.

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Part I. Financial Information		Page Number

Item 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets at June 29, 2019 and December 29, 2018	3

	Condensed Consolidated Statements of Operations for the three and six months ended June 29, 2019 and June 30, 2018	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 29, 2019 and June 30, 2018	5

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 29, 2019 and June 30, 2018	6

	Condensed Consolidated Statements of Cash Flows for the six months ended June 29, 2019 and June 30, 2018	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

Part II. Other Information

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 3.	Defaults Upon Senior Securities	49

Item 4.	Mine Safety Disclosures	49

Item 5.	Other Information	49

Item 6.	Exhibits	50

Cautionary Statement

Except for the historical financial information contained herein, the matters discussed in this report on Form 10-Q (as well as documents incorporated herein by reference) may be considered “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include declarations regarding the intent, belief or current expectations of Silicon Laboratories Inc. and its management and may be signified by the words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan,” “project,” “will” or similar language. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. Actual results could differ materially from those indicated by such forward-looking statements. Factors that could cause or contribute to such differences include those discussed under “Risk Factors” and elsewhere in this report. Silicon Laboratories disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Part I. Financial Information

Item 1. Financial Statements

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)


	June 29,		December 29,
	2019		2018
Assets
Current assets:
Cash and cash equivalents	$	189,549	$	197,043
Short-term investments		452,265		416,779
Accounts receivable, net		72,301		73,194
Inventories		73,865		74,972
Prepaid expenses and other current assets		59,662		64,650
Total current assets		847,642		826,638
Property and equipment, net		137,644		139,049
Goodwill		397,344		397,344
Other intangible assets, net		150,356		170,832
Other assets, net		69,954		90,491
Total assets	$	1,602,940	$	1,624,354

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	41,585	$	41,171
Deferred revenue and returns liability		21,266		22,494
Other current liabilities		68,186		81,180
Total current liabilities		131,037		144,845
Convertible debt		361,430		354,771
Other non-current liabilities		59,202		57,448
Total liabilities		551,669		557,064
Commitments and contingencies
Stockholders’ equity:
Preferred stock – $0.0001 par value; 10,000 shares authorized; no shares issued		—		—
Common stock – $0.0001 par value; 250,000 shares authorized; 43,344 and 43,088 shares issued and outstanding at June 29, 2019 and December 29, 2018, respectively		4		4
Additional paid-in capital		99,665		107,517
Retained earnings		950,712		961,343
Accumulated other comprehensive income (loss)		890		(1,574)
Total stockholders’ equity		1,051,271		1,067,290
Total liabilities and stockholders’ equity	$	1,602,940	$	1,624,354

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

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Silicon Laboratories Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2019		2018		2019		2018
Revenues	$	206,709	$	217,106	$	394,822	$	422,490
Cost of revenues		79,660		85,814		151,899		166,961
Gross profit		127,049		131,292		242,923		255,529
Operating expenses:
Research and development		63,856		59,495		125,422		114,323
Selling, general and administrative		48,637		53,796		97,853		99,490
Operating expenses		112,493		113,291		223,275		213,813
Operating income		14,556		18,001		19,648		41,716
Other income (expense):
Interest income and other, net		3,696		1,609		6,519		4,811
Interest expense		(5,005)		(4,888)		(10,002)		(9,771)
Income before income taxes		13,247		14,722		16,165		36,756
Provision (benefit) for income taxes		29,276		442		26,796		(3,929)

Net income (loss)	$	(16,029)	$	14,280	$	(10,631)	$	40,685

Earnings (loss) per share:
Basic	$	(0.37)	$	0.33	$	(0.25)	$	0.94
Diluted	$	(0.37)	$	0.32	$	(0.25)	$	0.92

Weighted-average common shares outstanding:
Basic		43,386		43,312		43,287		43,138
Diluted		43,386		44,294		43,287		44,106

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

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Silicon Laboratories Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2019		2018		2019		2018
Net income (loss)	$	(16,029)	$	14,280	$	(10,631)	$	40,685

Other comprehensive income (loss), before tax
Net changes to available-for-sale securities
Unrealized gains (losses) arising during the period		1,207		396		2,632		(363)
Reclassification for losses included in net income (loss)		—		—		—		49
Net changes to cash flow hedges
Unrealized gains (losses) arising during the period		44		(397)		56		(420)
Reclassification for losses included in net income (loss)		194		33		431		33
Other comprehensive income (loss), before tax		1,445		32		3,119		(701)

Provision (benefit) for income taxes		304		7		655		(148)

Other comprehensive income (loss)		1,141		25		2,464		(553)

Comprehensive income (loss)	$	(14,888)	$	14,305	$	(8,167)	$	40,132

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

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Silicon Laboratories Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands)

(Unaudited)

				Additional				Accumulated Other		Total
		Common		Paid-In		Retained		Comprehensive		Stockholders’
Three Months Ended June 29, 2019	Shares	Stock		Capital		Earnings		Income (Loss)		Equity
Balance as of March 30, 2019	43,341	$	4	$	90,988	$	966,741	$	(251)	$	1,057,482
Net income (loss)	—		—		—		(16,029)		—		(16,029)
Other comprehensive income (loss)	—		—		—		—		1,141		1,141
Stock issuances, net of shares withheld for taxes	127		—		6,713		—		—		6,713
Repurchases of common stock	(124)		—		(11,712)		—		—		(11,712)
Stock-based compensation	—		—		13,676		—		—		13,676
Balance as of June 29, 2019	43,344	$	4	$	99,665	$	950,712	$	890	$	1,051,271

				Additional				Accumulated Other		Total
		Common		Paid-In		Retained		Comprehensive		Stockholders’
Three Months Ended June 30, 2018	Shares	Stock		Capital		Earnings		Income (Loss)		Equity
Balance as of March 31, 2018	43,227	$	4	$	98,396	$	904,160	$	(1,985)	$	1,000,575
Net income (loss)	—		—		—		14,280		—		14,280
Other comprehensive income (loss)	—		—		—		—		25		25
Stock issuances, net of shares withheld for taxes	159		—		4,836		—		—		4,836
Repurchases of common stock	(36)		—		(3,397)		—		—		(3,397)
Stock-based compensation	—		—		12,149		—		—		12,149
Balance as of June 30, 2018	43,350	$	4	$	111,984	$	918,440	$	(1,960)	$	1,028,468

				Additional				Accumulated Other		Total
		Common		Paid-In		Retained		Comprehensive		Stockholders’
Six Months Ended June 29, 2019	Shares	Stock		Capital		Earnings		Income (Loss)		Equity
Balance as of December 29, 2018	43,088	$	4	$	107,517	$	961,343	$	(1,574)	$	1,067,290
Net income (loss)	—		—		—		(10,631)		—		(10,631)
Other comprehensive income (loss)	—		—		—		—		2,464		2,464
Stock issuances, net of shares withheld for taxes	557		—		(7,400)		—		—		(7,400)
Repurchases of common stock	(301)		—		(26,716)		—		—		(26,716)
Stock-based compensation	—		—		26,264		—		—		26,264
Balance as of June 29, 2019	43,344	$	4	$	99,665	$	950,712	$	890	$	1,051,271

				Additional				Accumulated Other		Total
		Common		Paid-In		Retained		Comprehensive		Stockholders’
Six Months Ended June 30, 2018	Shares	Stock		Capital		Earnings		Income (Loss)		Equity
Balance as of December 30, 2017	42,707	$	4	$	102,862	$	851,307	$	(1,157)	$	953,016
Cumulative effect of adoption of accounting standard	—		—		—		26,448		(250)		26,198
Net income (loss)	—		—		—		40,685		—		40,685
Other comprehensive income (loss)	—		—		—		—		(553)		(553)
Stock issuances, net of shares withheld for taxes	679		—		(11,823)		—		—		(11,823)
Repurchases of common stock	(36)		—		(3,397)		—		—		(3,397)
Stock-based compensation	—		—		24,342		—		—		24,342
Balance as of June 30, 2018	43,350	$	4	$	111,984	$	918,440	$	(1,960)	$	1,028,468

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

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Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended
	June 29,		June 30,
	2019		2018
Operating Activities
Net income (loss)	$	(10,631)	$	40,685
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation of property and equipment		8,447		7,643
Amortization of other intangible assets and other assets		20,476		18,366
Amortization of debt discount and debt issuance costs		6,659		6,354
Stock-based compensation expense		26,253		24,311
Deferred income taxes		24,043		(5,830)
Changes in operating assets and liabilities:
Accounts receivable		893		(16,705)
Inventories		1,118		(565)
Prepaid expenses and other assets		11,326		(1,759)
Accounts payable		5,321		2,980
Other current liabilities and income taxes		(18,101)		(17,249)
Deferred income, deferred revenue and returns liability		(1,228)		(4,193)
Other non-current liabilities		(3,222)		(3,260)
Net cash provided by operating activities		71,354		50,778

Investing Activities
Purchases of available-for-sale investments		(184,170)		(148,437)
Sales and maturities of available-for-sale investments		151,428		295,405
Purchases of property and equipment		(9,402)		(11,406)
Purchases of other assets		(2,588)		(5,893)
Acquisition of business, net of cash acquired		—		(239,729)
Net cash used in investing activities		(44,732)		(110,060)

Financing Activities
Repurchases of common stock		(26,716)		(3,397)
Payment of taxes withheld for vested stock awards		(14,509)		(18,408)
Proceeds from the issuance of common stock		7,109		6,585
Net cash used in financing activities		(34,116)		(15,220)

Decrease in cash and cash equivalents		(7,494)		(74,502)
Cash and cash equivalents at beginning of period		197,043		269,366
Cash and cash equivalents at end of period	$	189,549	$	194,864

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

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Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The Condensed Consolidated Financial Statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments which, in the opinion of management, are necessary to present fairly the condensed consolidated financial position of Silicon Laboratories Inc. and its subsidiaries (collectively, the “Company”) at June 29, 2019 and December 29, 2018, the condensed consolidated results of its operations for the three and six months ended June 29, 2019 and June 30, 2018, the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 29, 2019 and June 30, 2018, the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 29, 2019 and June 30, 2018, and the Condensed Consolidated Statements of Cash Flows for the six months ended June 29, 2019 and June 30, 2018. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated results of operations for the three and six months ended June 29, 2019 are not necessarily indicative of the results to be expected for the full year.

The accompanying unaudited Condensed Consolidated Financial Statements do not include certain footnotes and financial presentations normally required under U.S. generally accepted accounting principles (GAAP). Therefore, these Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 29, 2018, included in the Company’s Form 10-K/A filed with the Securities and Exchange Commission (SEC) on May 3, 2019.

The Company prepares financial statements on a 52- or 53-week fiscal year that ends on the Saturday closest to December 31. Fiscal 2019 will have 52 weeks and fiscal 2018 had 52 weeks. In a 52-week year, each fiscal quarter consists of 13 weeks.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Among the significant estimates affecting the financial statements are those related to inventories, goodwill, acquired intangible assets, other long-lived assets, revenue recognition, stock-based compensation and income taxes. Actual results could differ from those estimates, and such differences could be material to the financial statements.

Adoption of New Lease Accounting Standard

The Company adopted Accounting Standards Codification (ASC) Topic 842, Leases, on December 30, 2018, the first day of its fiscal year ending December 28, 2019. We elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to not reassess historical lease classifications, initial direct costs of existing leases or whether any expired or existing contracts were or contained leases.

The Company elected the retrospective 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	Increase (Decrease)
Prepaid expenses and other current assets	$	(481)
Other assets, net	$	18,166
Other current liabilities	$	3,516
Other non-current liabilities	$	14,169

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Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

The primary impact of the Company’s adoption of ASC 842 resulted from the recognition of right-of-use assets and operating lease liabilities. The adoption had no significant impact to the Condensed Consolidated Statements of Operations or to cash provided by or used in net operating, investing or financing activities in the Condensed Consolidated Statements of Cash Flows.

Leases

At the commencement date of a lease, the Company recognizes a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The lease liability is measured at the present value of lease payments over the lease term. As its leases typically do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date taking into consideration necessary adjustments for collateral, depending on the facts and circumstances of the lessee and the leased asset, and term to match the lease term. The right-of-use (“ROU”) asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred by the Company and excludes lease incentives. Lease liabilities are recorded in other current liabilities and other non-current liabilities. ROU assets are recorded in other assets, net.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease costs are recognized on a straight-line basis over the lease term. Lease agreements that contain both lease and non-lease components are generally accounted for separately.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Substantially all of the Company’s contracts with customers contain a single performance obligation, the sale of mixed-signal integrated circuit (IC) products. This performance obligation is satisfied when control of the product is transferred to the customer, which typically occurs upon delivery. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates and with an original expected duration of one year or less. As allowed under ASC 606, 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 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.

Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 from the goodwill impairment test, which previously measured an impairment loss by comparing the implied fair value of goodwill with its carrying amount. Instead, an entity should recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently evaluating the effect of the adoption of this ASU, but anticipates that the adoption will not have a material impact on its financial statements.

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Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU requires instruments measured at amortized cost to be presented at the net amount expected to be collected. Entities are also required to record allowances for available-for-sale debt securities rather than reduce the carrying amount. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company expects that the adoption will not have a material impact on its financial statements.

2. Earnings (Loss) Per Share

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


	Three Months Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2019		2018		2019		2018
Net income (loss)	$	(16,029)	$	14,280	$	(10,631)	$	40,685

Shares used in computing basic earnings (loss) per share		43,386		43,312		43,287		43,138

Effect of dilutive securities:
Stock-based awards and convertible debt		—		982		—		968
Shares used in computing diluted earnings (loss) per share		43,386		44,294		43,287		44,106

Earnings (loss) per share:
Basic	$	(0.37)	$	0.33	$	(0.25)	$	0.94
Diluted	$	(0.37)	$	0.32	$	(0.25)	$	0.92

Diluted shares used in calculating net loss per share for the three and six months ended June 29, 2019 excluded 0.6 million shares due to the Company’s net loss for the periods.

The Company intends to settle the principal amount of its convertible senior notes in cash and any excess value in shares in the event of a conversion. Accordingly, shares issuable upon conversion of the principal amount have been excluded from the calculation of diluted earnings (loss) per share. If the market value of the notes under certain prescribed conditions exceeds the conversion amount, the excess is included in the denominator for the computation of diluted earnings (loss) per share using the treasury stock method. Due to the net loss in the three and six months ended June 29, 2019, approximately 0.2 million shares and 0.1 million shares, respectively, were not included in the denominator for the calculation of diluted earnings (loss) per share. For the three and six months ended June 30, 2018, approximately 0.3 million shares and 0.2 million shares, respectively, were included in the denominator for the calculation of diluted earnings (loss) per share. See Note 7, Debt, to the Condensed Consolidated Financial Statements for additional information.

3. Fair Value of Financial Instruments

The fair values of the Company's financial instruments are recorded using a hierarchical disclosure framework based upon the level of subjectivity of the inputs used in measuring assets and liabilities. The three levels are described below:

Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

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Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Level 2 - Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Inputs are unobservable for the asset or liability and are developed based on the best information available in the circumstances, which might include the Company’s own data.

The following summarizes the valuation of the Company’s financial instruments (in thousands). The tables do not include either cash on hand or assets and liabilities that are measured at historical cost or any basis other than fair value.


	Fair Value Measurements
	at June 29, 2019 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	84,467	$	—	$	—	$	84,467
Corporate debt securities		—		11,626		—		11,626
Total cash equivalents	$	84,467	$	11,626	$	—	$	96,093

Short-term investments:
Government debt securities	$	72,422	$	93,899	$	—	$	166,321
Corporate debt securities		—		285,944		—		285,944
Total short-term investments	$	72,422	$	379,843	$	—	$	452,265

Other assets, net:
Auction rate securities	$	—	$	—	$	5,647	$	5,647
Total	$	—	$	—	$	5,647	$	5,647

Total	$	156,889	$	391,469	$	5,647	$	554,005

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Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)


	Fair Value Measurements
	at December 29, 2018 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	74,990	$	—	$	—	$	74,990
Corporate debt securities		—		18,820		—		18,820
Government debt securities		9,338		—		—		9,338
Total cash equivalents	$	84,328	$	18,820	$	—	$	103,148

Short-term investments:
Government debt securities	$	48,141	$	99,211	$	—	$	147,352
Corporate debt securities		—		269,427		—		269,427
Total short-term investments	$	48,141	$	368,638	$	—	$	416,779

Other assets, net:
Auction rate securities	$	—	$	—	$	5,759	$	5,759
Total	$	—	$	—	$	5,759	$	5,759

Total	$	132,469	$	387,458	$	5,759	$	525,686

Valuation methodology

The Company’s cash equivalents and short-term investments that are classified as Level 2 are valued using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments in active markets; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Investments classified as Level 3 are valued using a discounted cash flow model. The assumptions used in preparing the discounted cash flow model include estimates for interest rates, amount of cash flows, expected holding periods of the securities and a discount to reflect the Company’s inability to liquidate the securities. The Company’s derivative instruments are valued using discounted cash flow models. The assumptions used in preparing the valuation models include foreign exchange rates, forward and spot prices for currencies, and market observable data of similar instruments.

Available-for-sale investments

The Company’s investments are reported at fair value, with unrealized gains and losses, net of tax, recorded as a component of accumulated other comprehensive income (loss) in the Consolidated Balance Sheet. The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at June 29, 2019 (in thousands):


			Fair
	Cost		Value
Due in one year or less	$	394,836	$	395,419
Due after one year through ten years		144,592		145,639
Due after ten years		13,300		12,947
	$	552,728	$	554,005

Table of Contents

Silicon Laboratories Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

The available-for-sale investments that were in a continuous unrealized loss position, aggregated by length of time that individual securities have been in a continuous loss position, were as follows (in thousands):

Less Than 12 Months

12 Months or Greater

Total

Gross

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

As of June 29, 2019

Value

Losses

Value

Losses

Value

Losses

Government debt securities

12,126

(6)

58,758

(98)

70,884

(

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$102.05	43	$4,420

10-Q	2019-06-29	Quarter: 2019-06-29
10-Q	2019-03-30	Quarter: 2019-03-30
10-K	2018-12-29	Annual: 2018-12-29
10-Q	2018-09-29	Quarter: 2018-09-29
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-30	Annual: 2017-12-30
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-07-01	Quarter: 2017-07-01
10-Q	2017-04-01	Quarter: 2017-04-01
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-10-01	Quarter: 2016-10-01
10-Q	2016-07-02	Quarter: 2016-07-02
10-Q	2016-04-02	Quarter: 2016-04-02
10-K	2016-01-02	Annual: 2016-01-02
10-Q	2015-10-03	Quarter: 2015-10-03
10-Q	2015-07-04	Quarter: 2015-07-04
10-Q	2015-04-04	Quarter: 2015-04-04
10-K	2015-01-03	Annual: 2015-01-03
10-Q	2014-09-27	Quarter: 2014-09-27
10-Q	2014-06-28	Quarter: 2014-06-28
10-Q	2014-03-29	Quarter: 2014-03-29
10-K	2013-12-28	Annual: 2013-12-28

8-K	2019-08-07	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2019-07-24	Earnings, Exhibits
8-K	2019-04-24	Earnings, Exhibits
8-K	2019-04-18	Shareholder Vote
8-K	2019-01-30	Earnings, Exhibits
8-K	2019-01-24	Officers, Exhibits
8-K	2019-01-24	Officers
8-K	2019-01-24	Officers
8-K	2019-01-24	Officers, Exhibits
8-K	2018-10-24	Earnings, Exhibits
8-K	2018-10-23	Officers, Exhibits
8-K	2018-07-25	Earnings, Exhibits
8-K	2018-04-19	Shareholder Vote
8-K	2018-04-18	M&A, Exhibits
8-K	2018-01-25	Officers, Exhibits

NVRO	Nevro	1,910
NXGN	Nextgen Healthcare	1,260
CUE	Cue Biopharma	167
MVIS	Microvision	94
CLIR	Clearsign Combustion	21
UTGN	UTG	0
BBOX	Black Box	0
RAS	RAIT Financial Trust	0
POWW	Ammo	0
C130	Ministry Partners Investment Company	0

EX-31.1	slab-20190629ex3111ed677.htm
EX-31.2	slab-20190629ex312046cbc.htm
EX-32.1	slab-20190629ex321c1472f.htm