Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 04, 2020 | Apr. 21, 2020 | |
Document and Entity Information | ||
Entity Registrant Name | SILICON LABORATORIES INC. | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Apr. 4, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-29823 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 74-2793174 | |
Entity Address, Address Line One | 400 West Cesar Chavez | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78701 | |
City Area Code | 512 | |
Local Phone Number | 416-8500 | |
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | SLAB | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 43,687,288 | |
Entity Central Index Key | 0001038074 | |
Current Fiscal Year End Date | --01-02 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 28, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 615,770 | $ 227,146 |
Short-term investments | 442,493 | 498,825 |
Accounts receivable, net | 74,620 | 75,639 |
Inventories | 68,160 | 73,057 |
Prepaid expenses and other current assets | 46,994 | 69,192 |
Total current assets | 1,248,037 | 943,859 |
Property and equipment, net | 136,391 | 135,939 |
Goodwill | 398,402 | 398,402 |
Other intangible assets, net | 124,604 | 134,279 |
Other assets, net | 63,648 | 62,374 |
Total assets | 1,971,082 | 1,674,853 |
Current liabilities: | ||
Accounts payable | 42,147 | 38,899 |
Revolving line of credit | 310,000 | |
Deferred revenue and returns liability | 23,365 | 19,251 |
Other current liabilities | 71,221 | 79,551 |
Total current liabilities | 446,733 | 137,701 |
Convertible debt | 371,993 | 368,257 |
Other non-current liabilities | 52,753 | 53,844 |
Total liabilities | 871,479 | 559,802 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock - $0.0001 par value; 250,000 shares authorized; 43,670 and 43,496 shares issued and outstanding at April 4, 2020 and December 28, 2019, respectively | 4 | 4 |
Additional paid-in capital | 116,553 | 133,793 |
Retained earnings | 983,377 | 980,608 |
Accumulated other comprehensive income (loss) | (331) | 646 |
Total stockholders' equity | 1,099,603 | 1,115,051 |
Total liabilities and stockholders' equity | $ 1,971,082 | $ 1,674,853 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Apr. 04, 2020 | Dec. 28, 2019 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 250,000 | 250,000 |
Common stock, shares issued | 43,670 | 43,496 |
Common stock, shares outstanding | 43,670 | 43,496 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Condensed Consolidated Statements of Income | ||
Revenues | $ 214,877 | $ 188,113 |
Costs of revenues | 85,711 | 72,239 |
Gross profit | 129,166 | 115,874 |
Operating expenses: | ||
Research and development | 71,223 | 61,566 |
Selling, general and administrative | 53,996 | 49,216 |
Operating expenses | 125,219 | 110,782 |
Operating income | 3,947 | 5,092 |
Other income (expense): | ||
Interest income and other, net | 3,251 | 2,823 |
Interest expense | (5,541) | (4,997) |
Income before income taxes | 1,657 | 2,918 |
Provision (benefit) for income taxes | (587) | (2,480) |
Net income | $ 2,244 | $ 5,398 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.05 | $ 0.12 |
Diluted (in dollars per share) | $ 0.05 | $ 0.12 |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 43,642 | 43,189 |
Diluted (in shares) | 44,388 | 43,716 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Condensed Consolidated Statements of Comprehensive Income | ||
Net income | $ 2,244 | $ 5,398 |
Net changes to available-for-sale securities: | ||
Unrealized gains (losses) arising during the period | (469) | 1,426 |
Reclassification for (gains) losses included in net income | (100) | |
Net changes to cash flow hedges: | ||
Unrealized gains (losses) arising during the period | (809) | 12 |
Reclassification for losses included in net income | 141 | 237 |
Other comprehensive income (loss), before tax | (1,237) | 1,675 |
Provision (benefit) for income taxes | (260) | 352 |
Other comprehensive income (loss) | (977) | 1,323 |
Comprehensive income | $ 1,267 | $ 6,721 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at Dec. 29, 2018 | $ 4 | $ 107,517 | $ 961,343 | $ (1,574) | $ 1,067,290 |
Balance (in shares) at Dec. 29, 2018 | 43,088 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 5,398 | 5,398 | |||
Other comprehensive income (loss) | 1,323 | 1,323 | |||
Stock issuances, net of shares withheld for taxes | (14,113) | (14,113) | |||
Stock issuances, net of shares withheld for taxes (in shares) | 430 | ||||
Repurchases of common stock | (15,004) | (15,004) | |||
Repurchases of common stock (in shares) | (177) | ||||
Stock-based compensation | 12,588 | 12,588 | |||
Balance at Mar. 30, 2019 | $ 4 | 90,988 | 966,741 | (251) | 1,057,482 |
Balance (in shares) at Mar. 30, 2019 | 43,341 | ||||
Balance at Dec. 28, 2019 | $ 4 | 133,793 | 980,608 | 646 | $ 1,115,051 |
Balance (in shares) at Dec. 28, 2019 | 43,496 | 43,496 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Cumulative effect of adoption of accounting standard | 525 | $ 525 | |||
Net income | 2,244 | 2,244 | |||
Other comprehensive income (loss) | (977) | (977) | |||
Stock issuances, net of shares withheld for taxes | (16,294) | (16,294) | |||
Stock issuances, net of shares withheld for taxes (in shares) | 384 | ||||
Repurchases of common stock | (16,287) | (16,287) | |||
Repurchases of common stock (in shares) | (210) | ||||
Stock-based compensation | 15,341 | 15,341 | |||
Balance at Apr. 04, 2020 | $ 4 | $ 116,553 | $ 983,377 | $ (331) | $ 1,099,603 |
Balance (in shares) at Apr. 04, 2020 | 43,670 | 43,670 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Operating Activities | ||
Net income | $ 2,244 | $ 5,398 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation of property and equipment | 4,183 | 4,137 |
Amortization of other intangible assets and other assets | 9,827 | 10,320 |
Amortization of debt discount and debt issuance costs | 3,736 | 3,321 |
Stock-based compensation expense | 15,313 | 12,584 |
Deferred income taxes | (2,364) | (3,530) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,542 | 3,323 |
Inventories | 4,777 | 4,488 |
Prepaid expenses and other assets | 23,576 | 6,410 |
Accounts payable | 2,748 | 714 |
Other current liabilities and income taxes | (9,134) | (15,996) |
Deferred revenue and returns liability | 4,114 | 1,477 |
Other non-current liabilities | (862) | (631) |
Net cash provided by operating activities | 59,700 | 32,015 |
Investing Activities | ||
Purchases of available-for-sale investments | (70,910) | (63,577) |
Sales and maturities of available-for-sale investments | 126,920 | 99,068 |
Purchases of property and equipment | (4,135) | (3,874) |
Purchases of other assets | (370) | (414) |
Net cash provided by investing activities | 51,505 | 31,203 |
Financing Activities | ||
Proceeds from revolving line of credit | 310,000 | |
Repurchases of common stock | (16,287) | (15,004) |
Payment of taxes withheld for vested stock awards | (16,294) | (14,113) |
Net cash provided by (used in) financing activities | 277,419 | (29,117) |
Increase in cash and cash equivalents | 388,624 | 34,101 |
Cash and cash equivalents at beginning of period | 227,146 | 197,043 |
Cash and cash equivalents at end of period | $ 615,770 | $ 231,144 |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Apr. 04, 2020 | |
Significant Accounting Policies | |
Significant Accounting Policies | 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 April 4, 2020 and December 28, 2019, the condensed consolidated results of its operations for the three months ended April 4, 2020 and March 30, 2019, the Condensed Consolidated Statements of Comprehensive Income for the three months ended April 4, 2020 and March 30, 2019, the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended April 4, 2020 and March 30, 2019, and the Condensed Consolidated Statements of Cash Flows for the three months ended April 4, 2020 and March 30, 2019. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated results of operations for the three months ended April 4, 2020 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 28, 2019, included in the Company’s Form 10-K filed with the Securities and Exchange Commission (SEC) on January 29, 2020. The Company prepares financial statements on a 52- or 53-week fiscal year that ends on the Saturday closest to December 31. Fiscal 2020 will have 53 weeks with the extra week occurring in the first quarter of the year. Fiscal 2019 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 Accounting Standard The Company adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , on December 29, 2019, the first day of its fiscal year ending January 2, 2021. The adoption did not have a material impact on its financial statements. 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. 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. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Apr. 04, 2020 | |
Earnings Per Share | |
Earnings Per Share | 2. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data): Three Months Ended April 4, March 30, 2020 2019 Net income $ 2,244 $ 5,398 Shares used in computing basic earnings per share 43,642 43,189 Effect of dilutive securities: Stock-based awards and convertible debt 746 527 Shares used in computing diluted earnings per share 44,388 43,716 Earnings per share: Basic $ 0.05 $ 0.12 Diluted $ 0.05 $ 0.12 For the three months ended April 4, 2020 and March 30, 2019, approximately 0.2 million and 0.5 million shares, respectively, consisting of restricted stock awards (RSUs) and market stock awards (MSUs), were not included in the diluted earnings per share calculation since the shares were anti-dilutive. 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 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 per share using the treasury stock method. For three months ended April 4, 2020, approximately 0.3 million shares were included in the denominator for the calculation of diluted earnings per share. For three months ended March 30, 2019, no such shares were included in the denominator for the calculation of diluted earnings per share. See Note 6, Debt |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Apr. 04, 2020 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 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. 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 April 4, 2020 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 $ 167,636 $ — $ — $ 167,636 Corporate debt securities — 5,847 — 5,847 Total cash equivalents $ 167,636 $ 5,847 $ — $ 173,483 Short-term investments: Government debt securities $ 85,519 $ 52,852 $ — $ 138,371 Corporate debt securities — 304,122 — 304,122 Total short-term investments $ 85,519 $ 356,974 $ — $ 442,493 Other assets, net: Auction rate securities $ — $ — $ 5,400 $ 5,400 Total $ — $ — $ 5,400 $ 5,400 Total $ 253,155 $ 362,821 $ 5,400 $ 621,376 Fair Value Measurements at December 28, 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 $ 92,379 $ — $ — $ 92,379 Corporate debt securities — 1,325 — 1,325 Total cash equivalents $ 92,379 $ 1,325 $ — $ 93,704 Short-term investments: Government debt securities $ 85,189 $ 86,682 $ — $ 171,871 Corporate debt securities — 326,954 — 326,954 Total short-term investments $ 85,189 $ 413,636 $ — $ 498,825 Other assets, net: Auction rate securities $ — $ — $ 5,647 $ 5,647 Total $ — $ — $ 5,647 $ 5,647 Total $ 177,568 $ 414,961 $ 5,647 $ 598,176 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 quoted interest swap rates, 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 April 4, 2020 (in thousands): Fair Cost Value Due in one year or less $ 414,159 $ 414,699 Due after one year through ten years 200,796 201,277 Due after ten years 6,000 5,400 $ 620,955 $ 621,376 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 Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of April 4, 2020 Value Losses Value Losses Value Losses Government debt securities $ 5,428 $ (13) $ — $ — $ 5,428 $ (13) Corporate debt securities 164,259 (967) — — 164,259 (967) Auction rate securities — — 5,400 (600) 5,400 (600) $ 169,687 $ (980) $ 5,400 $ (600) $ 175,087 $ (1,580) Less Than 12 Months 12 Months or Greater Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of December 28, 2019 Value Losses Value Losses Value Losses Government debt securities $ 11,947 $ (19) $ 7,183 $ (7) $ 19,130 $ (26) Corporate debt securities 68,116 (81) 20 — 68,136 (81) Auction rate securities — — 5,647 (353) 5,647 (353) $ 80,063 $ (100) $ 12,850 $ (360) $ 92,913 $ (460) The gross unrealized losses as of April 4, 2020 and December 28, 2019 were due primarily to changes in market interest rates and the illiquidity of the Company’s auction-rate securities. The Company’s auction-rate securities have been illiquid since 2008 when auctions for the securities failed because sell orders exceeded buy orders. These securities have a contractual maturity date of 2046. The Company is unable to predict if these funds will become available before their maturity date. 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 April 4, 2020, there were no material declines in the market value of available-for-sale investments due to credit-related factors. At April 4, 2020 and December 28, 2019, there were no material unrealized gains associated with the Company's available-for-sale investments. Level 3 fair value measurements The following summarizes quantitative information about Level 3 fair value measurements. Auction rate securities Fair Value at April 4, 2020 (000s) Valuation Technique Unobservable Input Weighted Average $ 5,400 Discounted cash flow Estimated yield 2.85% Expected holding period 10 years Estimated discount rate 3.28% Significant changes in any of the unobservable inputs used in the fair value measurement of auction rate securities in isolation could result in a significantly lower or higher fair value measurement. An increase in expected yield would result in a higher fair value measurement, whereas an increase in expected holding period or estimated discount rate would result in a lower fair value measurement. Generally, a change in the assumptions used for expected holding period is accompanied by a directionally similar change in the assumptions used for estimated yield and discount rate. The following summarizes the activity in Level 3 financial instruments for the three months ended April 4, 2020 (in thousands): Assets Three Months Auction Rate Securities Ended Beginning balance $ 5,647 Loss included in other comprehensive income (loss) (247) Balance at April 4, 2020 $ 5,400 Fair values of other financial instruments The Company’s debt is recorded at cost, but is measured at fair value for disclosure purposes. The fair value of the Company’s convertible senior notes is determined using observable market prices. The notes are traded in less active markets and are therefore classified as a Level 2 fair value measurement. As of April 4, 2020 and December 28, 2019, the fair value of the convertible senior notes was $423.2 million and $524.0 million, respectively. 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. |
Derivative Financial Instrument
Derivative Financial Instrument | 3 Months Ended |
Apr. 04, 2020 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | 4. Derivative Financial Instruments The Company uses derivative financial instruments to manage certain exposures to the variability of foreign currency exchange rates and interest rates. The Company’s objective is to offset increases and decreases in expenses resulting from these exposures with gains and losses on the derivative contracts, thereby reducing volatility of earnings. The Company does not use derivative contracts for speculative or trading purposes. The Company recognizes derivatives, on a gross basis, in the Consolidated Balance Sheet at fair value. Cash flows from derivatives are classified according to the nature of the cash receipt or payment in the Consolidated Statement of Cash Flows. Cash Flow Hedges Foreign Currency Forward Contracts 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. dollar. Changes in the fair value of the contracts are recorded in accumulated other comprehensive income (loss) in the 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 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 the Norwegian Krone. As of April 4, 2020, the contracts had maturities of one Interest Rate Swaps The Company uses interest rate swap agreements to manage exposure to interest rate risks. The effective portion of the gain or loss on the interest rate swap is recorded in accumulated other comprehensive loss as a separate component of stockholders’ equity and is subsequently recognized as interest expense in the Consolidated Statement of Income when the hedged exposure affects earnings. If the Credit Facility or the interest rate swap agreement is terminated prior to maturity, the fair value of the interest rate swap recorded in accumulated other comprehensive loss may be recognized in the Consolidated Statement of Income based on an assessment of the agreements at the time of termination. The Company did not discontinue any cash flow hedges of interest rates in any of the periods presented. The Company entered into an interest rate swap agreement with an original notional value of $310 million in connection with its Credit Facility on March 27, 2020. The interest rate swap agreement effectively converted the Eurodollar portion of the variable-rate interest payments to fixed-rate interest payments through April 1, 2021. Losses expected to be reclassified into earnings in the next 12 months were not material as of April 4, 2020. Hedge ineffectiveness, the fair value of the swap agreement, contract 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 April 4, 2020, the Company held one foreign currency forward contract denominated in Singapore Dollars with a notional value of $6.1 million. The fair value of foreign contracts and contract losses recognized in income were not material for any of the periods presented. |
Balance Sheet Details
Balance Sheet Details | 3 Months Ended |
Apr. 04, 2020 | |
Balance Sheet Details | |
Balance Sheet Details | 5. Balance Sheet Details The following shows the details of selected Condensed Consolidated Balance Sheet items (in thousands): Inventories April 4, December 28, 2020 2019 Work in progress $ 47,273 $ 52,350 Finished goods 20,887 20,707 $ 68,160 $ 73,057 |
Debt
Debt | 3 Months Ended |
Apr. 04, 2020 | |
Debt | |
Debt | 6. Debt 1.375% Convertible Senior Notes On March 6, 2017, the Company completed a private offering of $400 million principal amount convertible senior notes (the “Notes”). The Notes bear interest semi-annually at a rate of 1.375% per year and will mature on March 1, 2022, unless repurchased, redeemed or converted at an earlier date. The Company used $72.5 million of the proceeds to pay off the then remaining balance under its credit agreement. The Notes are convertible at an initial conversion rate of 10.7744 shares of common stock per $1,000 principal amount of the Notes, or approximately 4.3 million shares of common stock, which is equivalent to a conversion price of approximately $92.81 per share. The conversion rate is subject to adjustment under certain circumstances. Holders may convert the Notes under the following circumstances: during any calendar quarter after the calendar quarter ended on June 30, 2017 if the closing price of the Company’s common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to $120.66 per share, representing 130% of the conversion price of the Notes; during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the closing sale price of our common stock and the conversion rate on each such trading day; if specified distributions or corporate events occur; if the Notes are called for redemption; or at any time after December 1, 2021. The Company may redeem all or any portion of the Notes, at its option, on or after March 6, 2020, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period. Upon conversion, the Notes may be settled in cash, shares of the Company’s common stock or a combination of cash and shares, at the Company’s election. The principal balance of the Notes was separated into liability and equity components, and was recorded initially at fair value. The excess of the principal amount of the liability component over its carrying amount represents the debt discount, which is amortized to interest expense over the term of the Notes using the effective interest method. The carrying amount of the liability component was estimated by discounting the contractual cash flows of similar non-convertible debt at an appropriate market rate at the date of issuance. The Company incurred debt issuance costs of approximately $10.6 million, which was allocated to the liability and equity components in proportion to the allocation of the proceeds. The costs allocated to the liability component are being amortized as interest expense over the term of the Notes using the effective interest method. The carrying amount of the Notes consisted of the following (in thousands): April 4, December 28, 2020 2019 Liability component Principal $ 400,000 $ 400,000 Unamortized debt discount (24,335) (27,580) Unamortized debt issuance costs (3,672) (4,163) Net carrying amount $ 371,993 $ 368,257 Equity component Net carrying amount $ 57,735 $ 57,735 The liability component of the Notes is recorded in convertible debt on the Consolidated Balance Sheet. The equity component of the Notes is recorded in additional paid-in capital. The effective interest rate for the liability component was 4.75%. As of April 4, 2020, the remaining period over which the debt discount and debt issuance costs will be amortized was 1.9 years. Interest expense related to the Notes was comprised of the following (in thousands): Three Months Ended April 4, March 30, 2020 2019 Contractual interest expense $ 1,467 $ 1,390 Amortization of debt discount 3,246 2,886 Amortization of debt issuance costs 490 435 $ 5,203 $ 4,711 Credit Facility On August 7, 2019, the Company and certain of its domestic subsidiaries (the “Guarantors”) amended its existing credit agreement. The amended agreement (the “Credit Facility”) consists of a $400 million revolving credit facility with a maturity date of August 7, 2024. The Credit Facility includes a $25 million letter of credit sublimit and a $10 million swingline loan sublimit. The Company also has an option to increase the size of the borrowing capacity by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured leverage ratio (funded debt secured by assets/EBITDA) to exceed 3.25 to 1.00, subject to certain conditions. On March 27, 2020, the Company borrowed $310 million under the Credit Facility. The revolving credit facility, other than swingline loans, will bear interest at the Eurodollar rate plus an applicable margin or, at the option of the Company, a base rate (defined as the highest of the Wells Fargo prime rate, the Federal Funds rate plus 0.50% and the Eurodollar Base Rate plus 1.00%) plus an applicable margin. Swingline loans accrue interest at the base rate plus the applicable margin for base rate loans. The applicable margins for the Eurodollar rate loans range from 1.00% to 1.75% and for base rate loans range from 0.00% to 0.75%, depending in each case, on the leverage ratio as defined in the Credit Facility. The Credit Facility contains various conditions, covenants and representations with which the Company must be in compliance in order to borrow funds and to avoid an event of default, including financial covenants that the Company must maintain a leverage ratio (funded debt/EBITDA) of no more than 4.25 to 1, a secured leverage ratio of no more than 3.50 to 1, and a minimum interest coverage ratio (EBITDA/interest payments) of no less than 2.50 to 1. As of April 4, 2020, 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. Interest Rate Swap Agreement On March 27, 2020, the Company entered into an interest rate swap agreement and effectively converted the Eurodollar portion of the interest on the Credit Facilities to a fixed interest rate of 0.5% through April 1, 2021. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 04, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 7. Commitments and Contingencies Legal Proceedings The Company is involved in various legal proceedings that have arisen in the normal course of business. While the ultimate results cannot be predicted with certainty, the Company does not expect them to have a material adverse effect on its Consolidated Financial Statements. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Apr. 04, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | 8. Stockholders’ Equity Common Stock The Company issued 0.4 million shares of common stock during the three months ended April 4, 2020. Share Repurchase Program In April 2020, the Board of Directors terminated the Company's existing share repurchase program, effective immediately, which had an authorization amount of $200 million and a termination date of December 2020. This program allowed for repurchases to be made in the open market or in private transactions, including structured or accelerated transactions, subject to applicable legal requirements and market conditions. The Company repurchased 0.2 million shares and 0.2 million shares of its common stock for $16.3 million and $15.0 million during the three months ended April 4, 2020 and March 30, 2019, respectively. These shares were retired upon repurchase. Reclassifications From Accumulated Other Comprehensive Income (Loss) The following table summarizes the effect on net income from reclassifications out of accumulated other comprehensive loss (in thousands): Three Months Ended April 4, March 30, Reclassification 2020 2019 Gains (losses) on available-for-sales securities to: Interest income and other, net $ 100 $ — Gains (losses) on cash flow hedges to: Operating expenses (141) (237) (41) (237) Income tax expense 9 50 Total reclassifications $ (32) $ (187) |
Revenues
Revenues | 3 Months Ended |
Apr. 04, 2020 | |
Revenues | |
Revenues | 9. Revenues The Company groups its revenues into two categories, based on the markets and applications in which its products may be used. The following disaggregates the Company's revenue by product category (in thousands): Three Months Ended April 4, March 30, 2020 2019 Internet of Things $ 118,041 $ 106,421 Infrastructure and automotive 96,836 81,692 $ 214,877 $ 188,113 The Company has combined its previous product groups, Infrastructure, Broadcast and Access, into the Infrastructure and automotive product group. Prior periods were retrospectively adjusted. 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 months ended April 4, 2020 and March 30, 2019, the Company recognized revenue of $11.1 million and $11.0 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 April 4, March 30, 2020 2019 Distributors $ 163,463 $ 134,129 Direct customers 51,414 53,984 $ 214,877 $ 188,113 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Apr. 04, 2020 | |
Stock-Based Compensation | |
Stock-Based Compensation | 10. Stock-Based Compensation In fiscal 2009, the stockholders of the Company approved the 2009 Stock Incentive Plan (the “2009 Plan”) and the 2009 Employee Stock Purchase Plan (the “2009 Purchase Plan”). In fiscal 2017, the stockholders of the Company approved amendments to both the 2009 Plan and the 2009 Purchase Plan. These amendments authorized additional shares of common stock for issuance, to comply with changes in applicable law, improve the Company’s corporate governance and to implement other best practices. Stock-based compensation costs are based on the fair values on the date of grant for stock awards and stock options and on the date of enrollment for the employee stock purchase plans. The fair values of stock awards (such as restricted stock units (RSUs), performance stock units (PSUs) and restricted stock awards (RSAs)) are estimated based on their intrinsic values. The fair values of market stock awards (MSUs) are estimated using a Monte Carlo simulation. 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): Three Months Ended April 4, March 30, 2020 2019 Cost of revenues $ 335 $ 318 Research and development 7,370 6,097 Selling, general and administrative 7,608 6,169 15,313 12,584 Income tax benefit 1,366 3,320 $ 13,947 $ 9,264 The Company had approximately $98.4 million of total unrecognized compensation costs related to granted stock options and awards as of April 4, 2020 that are expected to be recognized over a weighted-average period of approximately 2.4 years. There were no significant stock-based compensation costs capitalized into assets in any of the periods presented. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 04, 2020 | |
Income Taxes | |
Income Taxes | 11. Income Taxes Provision (benefit) 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 and other permanent differences. Income tax expense (benefit) was $(0.6) million and $(2.5) million for the three months ended April 4, 2020 and March 30, 2019, resulting in effective tax rates of (35.4)% and (85.0)%, respectively. The effective tax rate for the three months ended April 4, 2020 increased from the prior period primarily due to a decrease in the Company’s excess tax benefits from stock-based compensation , offset by an increase in the Company's Federal research and development credit benefit year over year, further impacted by its relation to pre-tax book income. On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. v. Commissioner which concluded that related parties in an intercompany cost-sharing arrangement are not required to share costs related to stock-based compensation. In February 2016, the U.S. Internal Revenue Service (“IRS”) appealed the decision to the U.S Court of Appeals for the Ninth Circuit (the “Ninth Circuit”). On June 7, 2019, the Ninth Circuit reversed the 2015 decision of the U.S. Tax Court. As a result of the Ninth Circuit decision, the Company no longer reflects a tax benefit related to the removal or exclusion of stock-based compensation from its intercompany cost-sharing arrangement within its financial statements. On November 12, 2019, the Ninth Circuit denied a petition for rehearing the case en banc and on February 10, 2020, Altera filed a petition to the U.S. Supreme Court for review of the Ninth Circuit’s decision. As of April 10, 2020, the IRS has received extensions from the Supreme Court until May 14, 2020 to file their response to Altera's petition.The Company will continue to monitor ongoing developments in this matter and potential impacts to its financial statements. Uncertain Tax Positions As of April 4, 2020, the Company had gross unrecognized tax benefits, inclusive of interest, of $3.0 million, of which $2.1 million would affect the effective tax rate if recognized. During the three months ended April 4, 2020, the Company did not release any of its 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, 2014, 2015 and 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 $13.5 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, and if unable to resolve this matter through administrative remedies with the NTA, the Company plans to pursue judicial remedies. The Company believes that it has accrued adequate reserves related to all matters contained in tax periods open to examination. Should the Company experience an unfavorable outcome in the NTA matter, however, such an outcome could have a material impact on its financial statements. Tax years 2015 through 2020 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company is not currently under audit in any major taxing jurisdiction. The Company does not believe gross unrecognized tax benefits will decrease in the next 12 months. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Apr. 04, 2020 | |
Subsequent Event. | |
Subsequent Event | 12. Subsequent Event On April 28, 2020, the Company acquired the Wi-Fi® and Bluetooth® business of Redpine Signals. The acquisition will accelerate the Company’s roadmap for Wi-Fi and Bluetooth silicon and software solutions. Under the terms of the agreement, the Company paid approximately $314 million as part of the closing. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 04, 2020 | |
Significant Accounting Policies | |
Use of Estimates | 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 | Adoption of New Accounting Standard The Company adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , on December 29, 2019, the first day of its fiscal year ending January 2, 2021. The adoption did not have a material impact on its financial statements. |
Revenue Recognition | 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. 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. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Earnings Per Share | |
Schedule of computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data): Three Months Ended April 4, March 30, 2020 2019 Net income $ 2,244 $ 5,398 Shares used in computing basic earnings per share 43,642 43,189 Effect of dilutive securities: Stock-based awards and convertible debt 746 527 Shares used in computing diluted earnings per share 44,388 43,716 Earnings per share: Basic $ 0.05 $ 0.12 Diluted $ 0.05 $ 0.12 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Fair Value of Financial Instruments | |
Summary of valuation of the financial instruments | 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 April 4, 2020 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 $ 167,636 $ — $ — $ 167,636 Corporate debt securities — 5,847 — 5,847 Total cash equivalents $ 167,636 $ 5,847 $ — $ 173,483 Short-term investments: Government debt securities $ 85,519 $ 52,852 $ — $ 138,371 Corporate debt securities — 304,122 — 304,122 Total short-term investments $ 85,519 $ 356,974 $ — $ 442,493 Other assets, net: Auction rate securities $ — $ — $ 5,400 $ 5,400 Total $ — $ — $ 5,400 $ 5,400 Total $ 253,155 $ 362,821 $ 5,400 $ 621,376 Fair Value Measurements at December 28, 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 $ 92,379 $ — $ — $ 92,379 Corporate debt securities — 1,325 — 1,325 Total cash equivalents $ 92,379 $ 1,325 $ — $ 93,704 Short-term investments: Government debt securities $ 85,189 $ 86,682 $ — $ 171,871 Corporate debt securities — 326,954 — 326,954 Total short-term investments $ 85,189 $ 413,636 $ — $ 498,825 Other assets, net: Auction rate securities $ — $ — $ 5,647 $ 5,647 Total $ — $ — $ 5,647 $ 5,647 Total $ 177,568 $ 414,961 $ 5,647 $ 598,176 |
Schedule of maturities of the Company's available-for-sale investments | Fair Cost Value Due in one year or less $ 414,159 $ 414,699 Due after one year through ten years 200,796 201,277 Due after ten years 6,000 5,400 $ 620,955 $ 621,376 |
Schedule of available-for-sale investments in continuous unrealized loss position by length of time | 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 Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of April 4, 2020 Value Losses Value Losses Value Losses Government debt securities $ 5,428 $ (13) $ — $ — $ 5,428 $ (13) Corporate debt securities 164,259 (967) — — 164,259 (967) Auction rate securities — — 5,400 (600) 5,400 (600) $ 169,687 $ (980) $ 5,400 $ (600) $ 175,087 $ (1,580) Less Than 12 Months 12 Months or Greater Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of December 28, 2019 Value Losses Value Losses Value Losses Government debt securities $ 11,947 $ (19) $ 7,183 $ (7) $ 19,130 $ (26) Corporate debt securities 68,116 (81) 20 — 68,136 (81) Auction rate securities — — 5,647 (353) 5,647 (353) $ 80,063 $ (100) $ 12,850 $ (360) $ 92,913 $ (460) |
Summary of quantitative information about level 3 fair value measurements | Auction rate securities Fair Value at April 4, 2020 (000s) Valuation Technique Unobservable Input Weighted Average $ 5,400 Discounted cash flow Estimated yield 2.85% Expected holding period 10 years Estimated discount rate 3.28% |
Summary of activity in Level 3 financial instruments | The following summarizes the activity in Level 3 financial instruments for the three months ended April 4, 2020 (in thousands): Assets Three Months Auction Rate Securities Ended Beginning balance $ 5,647 Loss included in other comprehensive income (loss) (247) Balance at April 4, 2020 $ 5,400 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Balance Sheet Details | |
Schedule of Inventories | The following shows the details of selected Condensed Consolidated Balance Sheet items (in thousands): Inventories April 4, December 28, 2020 2019 Work in progress $ 47,273 $ 52,350 Finished goods 20,887 20,707 $ 68,160 $ 73,057 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Debt | |
Summary of information about the equity and liability components of convertible debt | The carrying amount of the Notes consisted of the following (in thousands): April 4, December 28, 2020 2019 Liability component Principal $ 400,000 $ 400,000 Unamortized debt discount (24,335) (27,580) Unamortized debt issuance costs (3,672) (4,163) Net carrying amount $ 371,993 $ 368,257 Equity component Net carrying amount $ 57,735 $ 57,735 |
Schedule of components of interest expense | Interest expense related to the Notes was comprised of the following (in thousands): Three Months Ended April 4, March 30, 2020 2019 Contractual interest expense $ 1,467 $ 1,390 Amortization of debt discount 3,246 2,886 Amortization of debt issuance costs 490 435 $ 5,203 $ 4,711 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Stockholders' Equity | |
Schedule of reclassifications out of accumulated other comprehensive loss | The following table summarizes the effect on net income from reclassifications out of accumulated other comprehensive loss (in thousands): Three Months Ended April 4, March 30, Reclassification 2020 2019 Gains (losses) on available-for-sales securities to: Interest income and other, net $ 100 $ — Gains (losses) on cash flow hedges to: Operating expenses (141) (237) (41) (237) Income tax expense 9 50 Total reclassifications $ (32) $ (187) |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Revenues | |
Schedule of disaggregation of revenue by product category | The Company groups its revenues into two categories, based on the markets and applications in which its products may be used. The following disaggregates the Company's revenue by product category (in thousands): Three Months Ended April 4, March 30, 2020 2019 Internet of Things $ 118,041 $ 106,421 Infrastructure and automotive 96,836 81,692 $ 214,877 $ 188,113 |
Schedule of disaggregation of revenue by sales channel | The following disaggregates the Company's revenue by sales channel (in thousands): Three Months Ended April 4, March 30, 2020 2019 Distributors $ 163,463 $ 134,129 Direct customers 51,414 53,984 $ 214,877 $ 188,113 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Stock-Based Compensation | |
Schedule of stock-based compensation costs recognized in the Condensed Consolidated Statements of Income | The following table presents details of stock-based compensation costs recognized in the Condensed Consolidated Statements of Income (in thousands): Three Months Ended April 4, March 30, 2020 2019 Cost of revenues $ 335 $ 318 Research and development 7,370 6,097 Selling, general and administrative 7,608 6,169 15,313 12,584 Income tax benefit 1,366 3,320 $ 13,947 $ 9,264 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) | 3 Months Ended | 12 Months Ended |
Apr. 04, 2020 | Dec. 28, 2019 | |
Significant Accounting Policies | ||
Length of fiscal year | 371 days | 364 days |
Number of days in each fiscal quarter for 52-week fiscal year | 91 days | |
Low end of range | ||
Significant Accounting Policies | ||
Length of fiscal year | 364 days | |
High end of range | ||
Significant Accounting Policies | ||
Length of fiscal year | 371 days |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Earnings Per Share | ||
Net income | $ 2,244 | $ 5,398 |
Shares used in computing basic earnings per share | 43,642 | 43,189 |
Effect of dilutive securities: | ||
Stock-based awards and convertible debt | 746 | 527 |
Shares used in computing diluted earnings per share | 44,388 | 43,716 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.05 | $ 0.12 |
Diluted (in dollars per share) | $ 0.05 | $ 0.12 |
Shares attributable to dilutive effect of conversion of debt securities | 300 | 0 |
RSUs and MSUs | ||
Earnings per share: | ||
Shares excluded from computation of diluted earning per share | 200 | 500 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Summary of financial instruments (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 28, 2019 |
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total short-term investments | $ 442,493 | $ 498,825 |
Recurring | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total cash equivalents | 173,483 | 93,704 |
Total short-term investments | 442,493 | 498,825 |
Other assets, net | 5,400 | 5,647 |
Total assets at fair value | 621,376 | 598,176 |
Recurring | Money market funds | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total cash equivalents | 167,636 | 92,379 |
Recurring | Corporate debt securities | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total cash equivalents | 5,847 | 1,325 |
Total short-term investments | 304,122 | 326,954 |
Recurring | Government debt securities | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total short-term investments | 138,371 | 171,871 |
Recurring | Auction rate securities | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Other assets, net | 5,400 | 5,647 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total cash equivalents | 167,636 | 92,379 |
Total short-term investments | 85,519 | 85,189 |
Total assets at fair value | 253,155 | 177,568 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total cash equivalents | 167,636 | 92,379 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Government debt securities | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total short-term investments | 85,519 | 85,189 |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total cash equivalents | 5,847 | 1,325 |
Total short-term investments | 356,974 | 413,636 |
Total assets at fair value | 362,821 | 414,961 |
Recurring | Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total cash equivalents | 5,847 | 1,325 |
Total short-term investments | 304,122 | 326,954 |
Recurring | Significant Other Observable Inputs (Level 2) | Government debt securities | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total short-term investments | 52,852 | 86,682 |
Recurring | Significant Unobservable Inputs (Level 3) | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Other assets, net | 5,400 | 5,647 |
Total assets at fair value | 5,400 | 5,647 |
Recurring | Significant Unobservable Inputs (Level 3) | Auction rate securities | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Other assets, net | $ 5,400 | $ 5,647 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Available-for-sale investments (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 28, 2019 |
Cost | ||
Due in one year or less, Cost | $ 414,159 | |
Due after one year through ten years, Cost | 200,796 | |
Due after ten years, Cost | 6,000 | |
Total Cost | 620,955 | |
Fair Value | ||
Due in one year or less, Fair Value | 414,699 | |
Due after one year through ten years, Fair Value | 201,277 | |
Due after ten years, Fair Value | 5,400 | |
Total Fair Value | 621,376 | |
Continuous unrealized loss position, Fair Value | ||
Fair value of available-for-sale securities, continuous loss position for less than twelve months | 169,687 | $ 80,063 |
Fair value of available-for-sale securities, continuous loss position for twelve months or greater | 5,400 | 12,850 |
Total fair value of available-for-sale securities, continuous loss position | 175,087 | 92,913 |
Continuous unrealized loss position, Gross Unrealized Losses | ||
Available-for-sale securities, continuous loss position for less than 12 months, gross unrealized losses | (980) | (100) |
Available-for-sale securities, continuous loss position for 12 months or greater, gross unrealized losses | (600) | (360) |
Available-for-sale securities, total gross unrealized losses | (1,580) | (460) |
Government debt securities | ||
Continuous unrealized loss position, Fair Value | ||
Fair value of available-for-sale securities, continuous loss position for less than twelve months | 5,428 | 11,947 |
Fair value of available-for-sale securities, continuous loss position for twelve months or greater | 7,183 | |
Total fair value of available-for-sale securities, continuous loss position | 5,428 | 19,130 |
Continuous unrealized loss position, Gross Unrealized Losses | ||
Available-for-sale securities, continuous loss position for less than 12 months, gross unrealized losses | (13) | (19) |
Available-for-sale securities, continuous loss position for 12 months or greater, gross unrealized losses | (7) | |
Available-for-sale securities, total gross unrealized losses | (13) | (26) |
Corporate debt securities | ||
Continuous unrealized loss position, Fair Value | ||
Fair value of available-for-sale securities, continuous loss position for less than twelve months | 164,259 | 68,116 |
Fair value of available-for-sale securities, continuous loss position for twelve months or greater | 20 | |
Total fair value of available-for-sale securities, continuous loss position | 164,259 | 68,136 |
Continuous unrealized loss position, Gross Unrealized Losses | ||
Available-for-sale securities, continuous loss position for less than 12 months, gross unrealized losses | (967) | (81) |
Available-for-sale securities, total gross unrealized losses | (967) | (81) |
Auction rate securities | ||
Continuous unrealized loss position, Fair Value | ||
Fair value of available-for-sale securities, continuous loss position for twelve months or greater | 5,400 | 5,647 |
Total fair value of available-for-sale securities, continuous loss position | 5,400 | 5,647 |
Continuous unrealized loss position, Gross Unrealized Losses | ||
Available-for-sale securities, continuous loss position for 12 months or greater, gross unrealized losses | (600) | (353) |
Available-for-sale securities, total gross unrealized losses | $ (600) | $ (353) |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Auction rate securities (Details) - Auction rate securities - Significant Unobservable Inputs (Level 3) $ in Thousands | Apr. 04, 2020USD ($)itemY | Dec. 28, 2019USD ($) |
Weighted Average | Estimated yield | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements Assets | ||
Unobservable Input | 0.0285 | |
Weighted Average | Expected holding period | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements Assets | ||
Unobservable Input | Y | 10 | |
Weighted Average | Estimated discount rate | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements Assets | ||
Unobservable Input | 0.0328 | |
Recurring | ||
Quantitative information for Level 3 Fair Value Measurements Assets | ||
Fair value balance at the end of the period | $ | $ 5,400 | $ 5,647 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Activity in Level 3 financial instruments (Details) - Significant Unobservable Inputs (Level 3) - Recurring - Auction rate securities $ in Thousands | 3 Months Ended |
Apr. 04, 2020USD ($) | |
Fair value assets reconciliation of changes | |
Balance at the beginning of the period | $ 5,647 |
Loss included in other comprehensive income (loss) | (247) |
Balance at the end of the period | $ 5,400 |
Fair Value of Financial Instr_7
Fair Value of Financial Instruments - Fair Values of Other Financial Instruments (Details) - USD ($) $ in Millions | Apr. 04, 2020 | Dec. 28, 2019 |
Convertible Senior Notes | ||
Fair values of other financial instruments | ||
Fair value of debt | $ 423.2 | $ 524 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Details) $ in Millions | 3 Months Ended | |
Apr. 04, 2020USD ($)contract | Mar. 27, 2020USD ($) | |
Non-designated Hedges | Foreign currency forward contracts | ||
Derivative Financial Instruments | ||
Number of foreign currency forward contracts held | contract | 1 | |
Derivative, notional amount | $ 6.1 | |
Cash flow hedges | Foreign currency forward contracts | ||
Derivative Financial Instruments | ||
Derivative, notional amount | $ 2.8 | |
Cash flow hedges | Foreign currency forward contracts | Low end of range | ||
Derivative Financial Instruments | ||
Maturity of contracts | 1 month | |
Cash flow hedges | Foreign currency forward contracts | High end of range | ||
Derivative Financial Instruments | ||
Maturity of contracts | 3 months | |
Cash flow hedges | Interest rate swaps | ||
Derivative Financial Instruments | ||
Derivative, notional amount | $ 310 |
Balance Sheet Details (Details)
Balance Sheet Details (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 28, 2019 |
Inventories | ||
Work in progress | $ 47,273 | $ 52,350 |
Finished goods | 20,887 | 20,707 |
Inventories | $ 68,160 | $ 73,057 |
Debt - Convertible Senior Notes
Debt - Convertible Senior Notes (Details) $ in Millions | Mar. 06, 2017USD ($)D$ / shares |
1.375% Convertible Senior Notes | |
Debt | |
Principal amount | $ | $ 400 |
Semi-annual interest rate | 1.375% |
Conversion rate, shares per $1,000 principal | 10.7744 |
Number of shares of common stock | $ | 4.3 |
Initial conversion price | $ / shares | $ 92.81 |
Debt issuance costs | $ | $ 10.6 |
1.375% Convertible Senior Notes | Conversion of Notes, Holders | |
Debt | |
Number of trading days within 30 trading day period | 20 |
Number of consecutive trading days | 30 |
Stock Price Trigger | $ / shares | $ 120.66 |
Minimum amount the sales price of the Company's stock exceeds the conversion price (as a percent) | 130.00% |
Maximum amount the sales price of the Company's stock exceeds the conversion price (as a percent) | 98.00% |
Number of consecutive business days after the 10 consecutive trading day period | 5 |
Number of consecutive trading days before the five consecutive business days | 10 |
1.375% Convertible Senior Notes | Conversion of Notes, Company | |
Debt | |
Number of trading days within 30 trading day period | 20 |
Number of consecutive trading days | 30 |
Minimum amount the sales price of the Company's stock exceeds the conversion price (as a percent) | 130.00% |
Amended Credit Agreement | Credit Facility | |
Debt | |
Repayment of credit facility amount | $ | $ 72.5 |
Debt - Carrying amount of Notes
Debt - Carrying amount of Notes (Details) - 1.375% Convertible Senior Notes - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Dec. 28, 2019 | |
Liability component | ||
Principal | $ 400,000 | $ 400,000 |
Unamortized debt discount | (24,335) | (27,580) |
Unamortized debt issuance costs | (3,672) | (4,163) |
Net carrying amount | 371,993 | 368,257 |
Equity component | ||
Net carrying amount | $ 57,735 | $ 57,735 |
Effective interest rate | 4.75% | |
Amortization period of debt discount and debt issuance costs | 1 year 10 months 24 days |
Debt - Interest expense (Detail
Debt - Interest expense (Details) - 1.375% Convertible Senior Notes - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Interest expense related to the Notes | ||
Contractual interest expense | $ 1,467 | $ 1,390 |
Amortization of debt discount | 3,246 | 2,886 |
Amortization of debt issuance costs | 490 | 435 |
Interest Expense, Total | $ 5,203 | $ 4,711 |
Debt - Credit Facility (Details
Debt - Credit Facility (Details) - USD ($) $ in Millions | Aug. 07, 2019 | Apr. 04, 2020 | Mar. 27, 2020 |
Interest rate swaps | |||
Debt | |||
Derivative fixed interest rate | 0.50% | ||
Credit Facility | |||
Debt | |||
Amount borrowed | $ 310 | ||
Revolving credit facility, other than swingline loans | Federal Funds | |||
Debt | |||
Interest rate margin (as a percent) | 0.50% | ||
Revolving credit facility, other than swingline loans | Eurodollar Base Rate | |||
Debt | |||
Interest rate margin (as a percent) | 1.00% | ||
Revolving credit facility, other than swingline loans | Eurodollar Base Rate | Low end of range | |||
Debt | |||
Interest rate margin (as a percent) | 1.00% | ||
Revolving credit facility, other than swingline loans | Eurodollar Base Rate | High end of range | |||
Debt | |||
Interest rate margin (as a percent) | 1.75% | ||
Revolving credit facility, other than swingline loans | Base Rate | Low end of range | |||
Debt | |||
Interest rate margin (as a percent) | 0.00% | ||
Revolving credit facility, other than swingline loans | Base Rate | High end of range | |||
Debt | |||
Interest rate margin (as a percent) | 0.75% | ||
Amended Credit Agreement | Credit Facility | Scenario: Company's option to increase borrowing capacity | |||
Debt | |||
Additional increase in borrowing capacity of the line of credit available at the entity's option | $ 250 | ||
Additional increase in borrowing capacity based on EBITDA (as a percent) | 100.00% | ||
Maximum secured leverage ratio | 3.25 | ||
Amended Credit Agreement | Credit Facility | Scenario: Credit facility debt covenants | |||
Debt | |||
Maximum leverage ratio | 4.25 | ||
Maximum secured leverage ratio | 3.50 | ||
Minimum interest coverage ratio | 2.50 | ||
Amended Credit Agreement | Revolving Credit Facility | |||
Debt | |||
Maximum borrowing capacity | $ 400 | ||
Amended Credit Agreement | Letter of Credit | |||
Debt | |||
Maximum borrowing capacity | 25 | ||
Amended Credit Agreement | Swingline Loans | |||
Debt | |||
Maximum borrowing capacity | $ 10 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock and Share Repurchase Program (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Apr. 04, 2020 | Mar. 30, 2019 | Oct. 31, 2018 | |
Share Repurchase Programs | |||
Value of shares repurchased and retired | $ 16,287 | $ 15,004 | |
Common Stock | |||
Common Stock | |||
Number of shares issued during the period | 400 | ||
Share Repurchase Programs | |||
Number of shares repurchased and retired | 210 | 177 | |
Program Authorization Date October 2017 | |||
Share Repurchase Programs | |||
Program amount authorized to repurchase | $ 200,000 | ||
Program Authorization Date October 2017 | Common Stock | |||
Share Repurchase Programs | |||
Number of shares repurchased and retired | 200 | 200 | |
Value of shares repurchased and retired | $ 16,300 | $ 15,000 |
Stockholders' Equity - Reclassi
Stockholders' Equity - Reclassified from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Amounts Reclassified from AOCI | ||
Operating expenses | $ (125,219) | $ (110,782) |
Income before income taxes | 1,657 | 2,918 |
Income tax expense | (587) | (2,480) |
Net income | 2,244 | 5,398 |
Reclassifications From Accumulated Other Comprehensive Income (Loss) | ||
Amounts Reclassified from AOCI | ||
Income before income taxes | (41) | (237) |
Income tax expense | (9) | (50) |
Net income | (32) | (187) |
Reclassifications From Accumulated Other Comprehensive Income (Loss) | Gains (losses) on available-for-sales securities | ||
Amounts Reclassified from AOCI | ||
Interest income and other, net | 100 | |
Reclassifications From Accumulated Other Comprehensive Income (Loss) | Gains (losses) on cash flow hedges | ||
Amounts Reclassified from AOCI | ||
Operating expenses | $ (141) | $ (237) |
Revenues (Details)
Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Revenues | ||
Revenues | $ 214,877 | $ 188,113 |
Revenue from performance obligations | 11,100 | 11,000 |
Distributors | ||
Revenues | ||
Revenues | 163,463 | 134,129 |
Direct customers | ||
Revenues | ||
Revenues | 51,414 | 53,984 |
Internet of Things | ||
Revenues | ||
Revenues | 118,041 | 106,421 |
Infrastructure and automotive | ||
Revenues | ||
Revenues | $ 96,836 | $ 81,692 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Stock-based compensation costs | ||
Stock based compensation costs | $ 15,313 | $ 12,584 |
Income tax benefit | 1,366 | 3,320 |
Share based compensation costs after tax | 13,947 | 9,264 |
Total unrecognized compensation costs related to awards | $ 98,400 | |
Weighted-average period of recognition of unrecognized compensation costs | 2 years 4 months 24 days | |
Cost of revenues | ||
Stock-based compensation costs | ||
Stock based compensation costs | $ 335 | 318 |
Research and development | ||
Stock-based compensation costs | ||
Stock based compensation costs | 7,370 | 6,097 |
Selling, general and administrative | ||
Stock-based compensation costs | ||
Stock based compensation costs | $ 7,608 | $ 6,169 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Income Taxes | ||
Provision (benefit) for income taxes | $ (587) | $ (2,480) |
Effective income tax rate (as a percent) | (35.40%) | (85.00%) |
Gross unrecognized tax benefits | $ 3,000 | |
Gross unrecognized tax benefits which would affect the effective tax rate if recognized | 2,100 | |
Norwegian | ||
Income Taxes | ||
Additional income tax expense | 13,500 | |
Norwegian | 2013 | Under appeal | ||
Income Taxes | ||
Additional income tax expense | $ 141,300 |
Subsequent Event (Details)
Subsequent Event (Details) $ in Millions | Apr. 28, 2020USD ($) |
Redpine Signals | Subsequent event | |
Subsequent Event [Line Items] | |
Payments to Acquire Businesses, Gross | $ 314 |