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Synaptics Reports First Quarter Results

SANTA CLARA, Calif., Oct 19, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Synaptics (Nasdaq: SYNA), a leading developer of interface solutions for mobile computing, communications, and entertainment devices, today reported financial results for the first fiscal quarter ended September 30, 2006. The Company's GAAP results reflect the expensing of non-cash share-based compensation for all periods presented.

Net revenue for the first quarter of fiscal 2007 was $54.8 million, an increase of approximately 6% over $51.7 million for the first quarter of fiscal 2006. Net income for the first quarter of fiscal 2007 was $4.1 million, or $0.15 per diluted share, compared with net income of $5.5 million, or $0.20 per diluted share, for the first quarter of fiscal 2006. Net income excluding share-based compensation for the first quarter of fiscal 2007 was $6.4 million, or $0.23 per diluted share, compared with net income excluding share-based compensation of $8.1 million, or $0.29 per diluted share, for the first quarter of fiscal 2006.

"Revenue for the fiscal first quarter grew nearly 25% sequentially and was at the high end of our guidance range," stated Francis Lee, President and Chief Executive Officer of Synaptics. "Our strong top line growth reflects general seasonality in our target markets and, in particular, strong demand within our core PC market based on the ramp of new designs integrating our multi-media oriented products. As anticipated, our product mix during the quarter resulted in lower gross margin, although still within our target range. We expect to see continued momentum into the holiday season and are anticipating record revenue in the December quarter."

Russ Knittel, Synaptics' Chief Financial Officer, added, "Based on our current visibility, which includes a 53% increase in our backlog to $43.9 million, we now expect sequential revenue growth in the fourteen week December quarter of 25% to 35%. This outlook is predicated on continued strong seasonal trends, with increased demand from both PC and non-PC applications. We expect revenue in the March quarter to approach September quarter levels, largely dependent on December quarter sell through and consumer demand relative to seasonal trends in the first calendar quarter. Finally, we are raising our outlook for fiscal 2007 revenue growth to a range of 25% to 30% over the prior year."

Earnings Call Information

The Synaptics first quarter teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, October 19, 2006, during which the Company will provide forward-looking information. To participate on the live call, analysts and investors should dial 800-240-6709 at least ten minutes prior to the call. Synaptics will also offer a live and archived webcast of the conference call, accessible from the "Investor Relations" section of the Company's Web site at www.synaptics.com.

About Synaptics Incorporated

Synaptics is a leading developer of interface solutions for the mobile computing, communications, and entertainment industries. The company creates interface solutions for a variety of devices including notebook PCs, PC peripherals, digital music players, and mobile phones. The TouchPad(TM), Synaptics' flagship product, is integrated into more than 50 percent of today's notebook computers. Consumer electronics and computing manufacturers use Synaptics' solutions to enrich the interaction between humans and intelligent devices through improved usability, functionality, and industrial design. The company is headquartered in Santa Clara, California. www.synaptics.com.

Use of Non-GAAP Financial Information

In evaluating our business, our management considers and uses net income excluding share-based compensation and net income per share excluding share- based compensation as a supplemental measure of operating performance. Net income excluding share-based compensation is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income. We present net income excluding share-based compensation because we consider it an important supplemental measure of our performance. We believe this measure facilitates operating performance comparisons from period to period by eliminating potential differences in net income caused by the existence and timing of non-cash compensation charges. Net income excluding share-based compensation has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for our GAAP net income. The principal limitations of this measure are that it does not reflect our actual expenses and may thus have the effect of inflating our net income and net income per share. We address these limitations by relying primarily on our GAAP net income and using net income excluding share-based compensation only supplementally.

Forward-Looking Statements

This press release contains "forward-looking" statements about Synaptics, as that term is defined under the federal securities laws. Synaptics intends such forward-looking statements to be subject to the safe harbor created by those laws. Such forward-looking statements include, but are not limited to, statements regarding Synaptics' anticipated revenue and revenue growth rates for the remainder of fiscal 2007, its beliefs regarding the markets it serves, its assessment of market demands and trends in target markets, and its assessment of consumer demands for various applications. Synaptics cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward- looking statements contained herein. Such factors include, but are not limited to, (a) demand for Synaptics' products in the PC and portable digital entertainment markets, (b) market demand for OEMs' products using Synaptics' solutions, (c) changing market demand trends in the markets it serves, and consumer demand, and (d) other risks as identified from time to time in Synaptics' SEC reports, including Quarterly Reports on Form 10-Q and the Annual Report on Form 10-K for the fiscal year ended June 30, 2006. All forward-looking statements are based on information available to Synaptics on the date hereof, and Synaptics assumes no obligation to update such statements.


    Contact:  Jennifer Jarman of The Blueshirt Group, +1-415-217-7722, for
Synaptics Incorporated.


                            SYNAPTICS INCORPORATED
                         CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share data)
                                 (Unaudited)


                                       September 30,                 June 30,
                                          2006                         2006

    Assets
    Current assets:
       Cash and cash equivalents         $51,796                      $38,724
       Short term investments            193,867                      206,452
          Total cash, cash equivalents,
           and short-term investments    245,663                      245,176
       Receivables, net of allowances of
        $222 and $189, respectively       41,813                       34,034
       Inventories                         9,017                       10,010
       Prepaid expenses and other
        current assets                     3,732                        3,407
    Total current assets                 300,225                      292,627

    Property and equipment, net           16,099                       16,038
    Goodwill                               1,927                        1,927
    Other assets                          20,365                       20,829
    Total assets                        $338,616                     $331,421

    Liabilities and stockholders' equity
    Current liabilities:
       Accounts payable                  $16,152                      $16,542
       Accrued compensation                3,864                        4,842
       Income taxes payable               10,969                        8,078
       Other accrued liabilities           7,447                        5,377
       Note payable to a related party     1,500                          -
    Total current liabilities             39,932                       34,839

    Note payable to a related party          -                          1,500
    Convertible senior subordinated
     notes                               125,000                      125,000
    Other liabilities                      2,071                        3,040

    Commitments and contingencies

    Stockholders' equity:
       Preferred stock;
          $.001 par value; 10,000,000
           shares authorized;
           no shares issued and
           outstanding                       -                            -
       Common stock;
          $.001 par value; 60,000,000
           shares authorized; 27,575,943
           and 27,462,125 shares
           issued, respectively               28                           27
       Additional paid in capital        139,013                      134,217
       Less: 2,521,100 and 2,306,100
        treasury shares,
        respectively, at cost            (44,611)                     (39,999)
       Deferred stock compensation           -                            -
       Retained earnings                  77,388                       73,261
       Accumulated other comprehensive
        loss                                (205)                        (464)
    Total stockholders' equity           171,613                      167,042
    Total liabilities and stockholders'
     equity                             $338,616                     $331,421


                              SYNAPTICS INCORPORATED
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share data)
                                   (Unaudited)


                                                      Three Months Ended
                                                         September 30,
                                                     2006               2005

    Net revenue                                    $54,815            $51,725
    Cost of revenue (1)                             32,420             28,053
    Gross margin                                    22,395             23,672
    Operating expenses
       Research and development (1)                  9,188              8,289
       Selling, general, and
        administrative (1)                           7,801              6,728
    Total operating expenses                        16,989             15,017

    Operating income                                 5,406              8,655
    Interest income                                  2,539              1,551
    Interest expense                                  (487)              (484)
    Income before income taxes                       7,458              9,722
    Provision for income taxes (2)                   3,331              4,210
    Net income                                      $4,127             $5,512

    Net income per share:
       Basic                                         $0.16              $0.22
       Diluted                                       $0.15              $0.20

    Shares used in computing net income
       per share:
       Basic                                        25,134             24,769
       Diluted                                      29,253             29,036



    (1) Includes share-based compensation
     charges of:

          Cost of revenue                             $147               $192
          Research and development                   1,035              1,292
          Selling, general, and
           administrative                            1,919              1,826
                                                    $3,101             $3,310

    (2) Includes tax benefit for share-
     based compensation charges of:

                                                      $781               $690



    Non-GAAP net income per share
          Basic                                      $0.26              $0.33
          Diluted                                    $0.23              $0.29


                             SYNAPTICS INCORPORATED
              Computation of Basic and Diluted Net Income Per Share
                      (in thousands, except per share data)
                                   (Unaudited)




                                                      Three Months Ended
                                                         September 30,
                                                     2006              2005

    Numerator:
       Basic net income                             $4,127            $5,512
       Interest expense and amortization
        of debt issuance costs on
        convertible notes (net
        of tax)                                        266               266
       Diluted net income                           $4,393            $5,778

    Denominator:
       Shares, basic                                25,134            24,769
       Effect of dilutive share-based
        awards                                       1,645             1,793
       Effect of convertible notes                   2,474             2,474
       Shares, diluted                              29,253            29,036

    Net income per share:
       Basic                                         $0.16             $0.22
       Diluted                                       $0.15             $0.20


    Computation of non-GAAP basic and
     diluted net income per share
     (unaudited):

    Numerator:
       Reported net income                          $4,127            $5,512
       Non-GAAP adjustments:
          Share-based compensation, net
           of tax                                    2,320             2,620
       Non-GAAP basic net income                     6,447             8,132
       Interest expense and amortization
        of debt issuance
          costs on convertible notes, net
           of tax                                      266               266
       Non-GAAP diluted net income                  $6,713            $8,398

    Denominator:
       Shares, basic                                25,134            24,769
       Effect of dilutive share-based
        awards                                       1,780             1,960
       Effect of convertible notes                   2,474             2,474
       Shares, diluted                              29,388            29,203

    Non-GAAP net income per share:
       Basic                                         $0.26             $0.33
       Diluted                                       $0.23             $0.29


SOURCE Synaptics Incorporated

Jennifer Jarman of The Blueshirt Group, +1-415-217-7722, for Synaptics Incorporated
http://www.synaptics.com/

Copyright (C) 2006 PR Newswire. All rights reserved

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This website contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business, and can be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements may include words such as "expect," "anticipate," "intend," "believe," "estimate," "plan," "target," "strategy," "continue," "may," "will," "should," variations of such words, or other words and terms of similar meaning. All forward-looking statements reflect our best judgment and are based on several factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Such factors include, but are not limited to, the risks as identified in the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" sections of our Annual Report on Form 10-K for our most recent fiscal year, and other risks as identified from time to time in our Securities and Exchange Commission reports. Forward-looking statements are based on information available to us on the date hereof, and we do not have, and expressly disclaim, any obligation to publicly release any updates or any changes in our expectations, or any change in events, conditions, or circumstances on which any forward-looking statement is based. Our actual results and the timing of certain events could differ materially from the forward-looking statements. These forward-looking statements do not reflect the potential impact of any mergers, acquisitions, or other business combinations that had not been completed as of the date of this filing.