EX-99.2 4 a07-8889_1ex99d2.htm EX-99.2

Exhibit 99.2

Silicon Laboratories Inc.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of December 30, 2006

(in thousands, except per share data)

 

 

Historical

 

Disposition
Adjustments

 

Pro Forma

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

68,188

 

$ 

270,750

 (A)

$

338,938

 

Short-term investments

 

318,104

 

—

 

318,104

 

Accounts receivable, net

 

49,701

 

—

 

49,701

 

Inventories

 

40,282

 

(18,266

)(B)

22,016

 

Deferred income taxes

 

13,330

 

(1,212

)(B)

12,118

 

Prepaid expenses and other

 

14,102

 

14,250

 (C)

 

 

 

 

 

 

(1,159

)(B)

27,193

 

Total current assets

 

503,707

 

264,363

 

768,070

 

Property, equipment and software, net

 

43,321

 

(9,251

)(B)

34,070

 

Goodwill

 

78,224

 

(12,544

)(B)

65,680

 

Other intangible assets, net

 

21,970

 

(1,699

)(B)

20,271

 

Other assets, net

 

39,773

 

(16,026

)(B)

23,747

 

Total assets

 

$

686,995

 

$

224,843

 

$

911,838

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

36,396

 

$ 

3,675

 (D)

$

40,071

 

Accrued expenses

 

27,929

 

(4,878

)(B)

 

 

 

 

 

 

700

 (E)

23,751

 

Deferred income on shipments to distributors

 

22,234

 

—

 

22,234

 

Income taxes

 

15,063

 

66,661

 (F)

81,724

 

Total current liabilities

 

101,622

 

66,158

 

167,780

 

Long-term obligations and other liabilities

 

16,691

 

(1,050

)(B)

15,641

 

Total liabilities

 

118,313

 

65,108

 

183,421

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock—$0.0001 par value

 

—

 

—

 

—

 

Common stock—$0.0001 par value

 

5

 

—

 

5

 

Additional paid-in capital

 

373,655

 

5,512

 (E)

379,167

 

Retained earnings

 

195,022

 

154,223

 (G)

349,245

 

Total stockholders’ equity

 

568,682

 

159,735

 

728,417

 

Total liabilities and stockholders’ equity

 

$

686,995

 

$

224,843

 

$

911,838

 

 

The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.



Silicon Laboratories Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Income

For the Year Ended December 30, 2006

(in thousands, except per share data)

 

 

Historical

 

Disposition
Adjustments (H)

 

Pro Forma

 

Revenues

 

$

464,597

 

$

(176,441

)

$

288,156

(I)

Cost of revenues

 

208,217

 

(107,539

)

100,678

 

Gross profit

 

256,380

 

(68,902

)

187,478

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

121,707

 

(31,903

)

89,804

 

Selling, general and administrative

 

102,358

 

(13,336

)

89,022

 

In-process research and development

 

3,200

 

(600

)

2,600

 

Operating expenses

 

227,265

 

(45,839

)

181,426

 

Operating income

 

29,115

 

(23,063

)

6,052

 

Other income (expense):

 

 

 

 

 

 

 

Interest income

 

13,745

 

—

 

13,745

 

Interest expense

 

(872

)

—

 

(872

)

Other income (expense), net

 

744

 

—

 

744

 

Income before income taxes

 

42,732

 

(23,063

)

19,669

 

Provision for income taxes

 

11,574

 

(7,248

)

4,326

 

Net income

 

$

31,158

 

$

(15,815

)

$

15,343

 

Net income per share:

 

 

 

 

 

 

 

Basic

 

$

0.56

 

 

 

$

0.28

 

Diluted

 

$

0.54

 

 

 

$

0.27

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

55,346

 

 

 

55,346

 

Diluted

 

57,201

 

 

 

57,201

 

 

The accompanying notes are an integral part of these unaudited pro forma
 condensed consolidated financial statements.



Silicon Laboratories Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Income

For the Year Ended December 31, 2005

(in thousands, except per share data)

 

 

Historical

 

Disposition
Adjustments (H)

 

Pro Forma

 

Revenues

 

$

425,689

 

$

(187,102

)

$

238,587

 

Cost of revenues

 

193,904

 

(113,954

)

79,950

 

Gross profit

 

231,785

 

(73,148

)

158,637

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

101,222

 

(24,845

)

76,377

 

Selling, general and administrative

 

72,553

 

(9,238

)

63,315

 

Operating expenses

 

173,775

 

(34,083

)

139,692

 

Operating income

 

58,010

 

(39,065

)

18,945

 

Other income (expense):

 

 

 

 

 

 

 

Interest income

 

8,285

 

—

 

8,285

 

Interest expense

 

(322

)

—

 

(322

)

Other income (expense), net

 

(332

)

—

 

(332

)

Income before income taxes

 

65,641

 

(39,065

)

26,576

 

Provision for income taxes

 

18,135

 

(9,259

)

8,876

 

Net income

 

$

47,506

 

$

(29,806

)

$

17,700

 

Net income per share:

 

 

 

 

 

 

 

Basic

 

$

0.89

 

 

 

$

0.33

 

Diluted

 

$

0.86

 

 

 

$

0.32

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

53,399

 

 

 

53,399

 

Diluted

 

55,485

 

 

 

55,485

 

 

The accompanying notes are an integral part of these unaudited pro forma
 condensed consolidated financial statements.



Silicon Laboratories Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Income

For the Year Ended January 1, 2005

(in thousands, except per share data)

 

 

Historical

 

Disposition
Adjustments (H)

 

Pro Forma

 

Revenues

 

$

456,225

 

$

(220,258

)

$

235,967

 

Cost of revenues

 

206,320

 

(120,974

)

85,346

 

Gross profit

 

249,905

 

(99,284

)

150,621

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

78,056

 

(21,258

)

56,798

 

Selling, general and administrative

 

65,164

 

(11,576

)

53,588

 

Operating expenses

 

143,220

 

(32,834

)

110,386

 

Operating income

 

106,685

 

(66,450

)

40,235

 

Other income (expense):

 

 

 

 

 

 

 

Interest income

 

3,054

 

—

 

3,054

 

Interest expense

 

(311

)

—

 

(311

)

Other income (expense), net

 

2,148

 

—

 

2,148

 

Income before income taxes

 

111,576

 

(66,450

)

45,126

 

Provision for income taxes

 

34,883

 

(21,736

)

13,147

 

 Net income

 

$

76,693

 

$

(44,714

)

$

31,979

 

Net income per share:

 

 

 

 

 

 

 

Basic

 

$

1.49

 

 

 

$

0.62

 

Diluted

 

$

1.39

 

 

 

$

0.58

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

51,471

 

 

 

51,471

 

Diluted

 

54,983

 

 

 

54,983

 

 

The accompanying notes are an integral part of these unaudited pro forma
 condensed consolidated financial statements.



Silicon Laboratories Inc.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

1. Basis of Presentation

As disclosed in Item 2.01 of this Form 8-K, Silicon Laboratories Inc. (the “Company”) completed the sale of its Aero transceiver, AeroFONE single-chip phone and power amplifier product lines to NXP, on March 23, 2007 (the “Sale”). The unaudited pro forma condensed consolidated financial statements included herein have been prepared based on the Company’s historical consolidated balance sheet as of December 30, 2006 and consolidated statements of income for the fiscal years ended December 30, 2006, December 31, 2005 and January 1, 2005, after giving effect to the disposition of the net assets and operations related to the sold product lines.  This disposition will be accounted for as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”

The pro forma condensed consolidated balance sheet gives effect to the Sale as if it had occurred on December 30, 2006.  The pro forma balance sheet also reflects the effects of nonrecurring items attributed directly to the Sale, including the gain on sale, net of taxes, and direct transaction costs, including stock compensation charges, as though the Sale occurred on December 30, 2006.   The pro forma gain as of December 30, 2006 is expected to differ from the actual gain that ultimately will be recognized as of the closing date of March 23, 2007.

The pro forma condensed consolidated statements of income give effect to the Sale as if it had occurred on January 4, 2004.  The disposition adjustments reflect the elimination of revenues and direct costs of the discontinued operations.  The pro forma statements of income do not include adjustments for nonrecurring items attributed directly to the Sale.  Such items will be recorded in our quarter ended March 31, 2007.

This pro forma financial information is presented for illustrative purposes only, and is not necessarily indicative of the operating results and financial position that might have been achieved had the Sale occurred on the dates indicated, nor are they necessarily indicative of the operating results and financial position that may occur in the future.  The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the three fiscal years in the period ended December 30, 2006, included in the Company’s Form 10-K filed with the Securities and Exchange Commission (SEC) on February 7, 2007.

2. Pro Forma Adjustments

The unaudited pro forma condensed consolidated financial statements reflect the following adjustments:

(A)      Cash proceeds received from the Sale, excluding $14.3 million of funds held in escrow which are included under “Prepaid expenses and other.”

(B)        Removal of balances related to assets and liabilities that will be transferred in the Sale.

(C)        Includes $14.3 million of funds held in escrow subject to potential indemnification claims in accordance with the Purchase Agreement.

(D)       Accrual of estimated direct transaction costs, other than stock compensation charges.

(E)         Accrual of $5.5 million of additional paid-in capital and $0.7 million of payroll taxes for stock compensation charges resulting from modifications of share-based awards held by certain Company employees who were hired by NXP in connection with the Sale.

(F)         Represents the estimated tax effect of the pro forma adjustments, including the estimated gain on sale, estimated direct transaction costs and stock compensation charges.

(G)        Adjustment for the pro forma gain on sale, net of tax, as though the sale closed on December 30, 2006.



(H)       Removal of historical revenues and costs associated with the sold product lines. Unaudited condensed operating results related to the sold product lines for the three fiscal years in the period ended December 30, 2006 are as follows (in thousands):

 

Year Ended

 

 

 

December 30,
2006

 

December 31,
2005

 

January 1,
2005

 

Revenues

 

$

176,441

 

$

187,102

 

$

220,258

 

Gross profit

 

68,902

 

73,148

 

99,284

 

Operating income

 

23,063

 

39,065

 

66,450

 

Net income

 

$

15,815

 

$

29,806

 

$

44,714

 

 

(I)            The following are the Company’s fiscal 2006 pro forma revenues (excluding the sold product lines) by quarter (in thousands):

Quarter

 

 

 

Pro Forma
Revenue

 

First

 

$

66,652

 

Second

 

73,936

 

Third

 

72,956

 

Fourth

 

74,612

 

Total

 

$

288,156