Synaptics Reports Fourth Quarter and Fiscal 2006 Financial Results
SANTA CLARA, Calif., July 27, 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 fourth quarter and fiscal year ended June 30, 2006. The Company's fiscal 2006 GAAP results reflect the adoption of SFAS 123(R) regarding the expensing of non-cash share-based compensation.
Net revenue for the fourth quarter of fiscal 2006 was $43.9 million compared with $56.8 million for the fourth quarter of fiscal 2005. Net income for the fourth quarter of fiscal 2006 was $1.8 million, or $0.07 per diluted share, compared with net income of $12.2 million, or $0.41 per diluted share, for the fourth quarter of fiscal 2005, which included the benefit of a non- recurring item related to patent licensing. Net income excluding share-based compensation and non-recurring items for the fourth quarter of fiscal 2006 was $4.2 million, or $0.15 per diluted share, compared with net income excluding share-based compensation and non-recurring items of $9.9 million, or $0.34 per diluted share, for the fourth quarter of fiscal 2005.
Net revenue for fiscal 2006 was $184.6 million compared with $208.1 million for fiscal 2005. Net income for fiscal 2006 was $13.7 million, or $0.51 per diluted share. This compares with net income of $38.0 million, or $1.30 per diluted share, for fiscal 2005. Net income excluding share-based compensation and non-recurring items for fiscal 2006 was $24.0 million, or $0.85 per diluted share, compared with net income excluding share-based compensation and non-recurring items of $35.9 million, or $1.23 per diluted share, for fiscal 2005.
"Our fiscal fourth quarter performance caps off another positive year for Synaptics, despite the tough comparison to last year's record-breaking results," stated Francis Lee, President and Chief Executive Officer of Synaptics. "During fiscal 2006, we expanded our industry-leading market share in the notebook market and further leveraged our technology into new, emerging digital lifestyle applications. As we enter fiscal 2007, we are very excited by the opportunities ahead of us and are well poised to meet the challenges within the dynamic, fast-growing markets we serve. We look forward to achieving strong year over year revenue growth, continued profitability and further progress towards our long-term growth and diversification strategy."
Russ Knittel, Synaptics' Chief Financial Officer, added, "Based on our current visibility, which includes a significant improvement in our backlog to $28.7 million at year end, we are raising our guidance for sequential revenue growth in the September quarter to 20% to 25%. This outlook is predicated on expected seasonality and, in particular, strong demand for our PC applications. Looking ahead to the seasonally strong December quarter, current indicators suggest revenue may be approximately 8% to 10% above our September quarter guidance levels. Any meaningful increase in demand from the portable digital entertainment market, where our visibility and predictability are limited, would represent upside to our current outlook."
Earnings Call Information
The Synaptics fourth quarter teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, July 27, 2006, during which the company will provide forward-looking information. To participate on the live call, analysts and investors should dial 800-257-7063 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 non-recurring items and net income per share excluding share-based compensation and non-recurring items as a supplemental measure of operating performance. Net income excluding share- based compensation and non-recurring items 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 and non-recurring items 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 and non-recurring items. Net income excluding share-based compensation and non-recurring items 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 and non-recurring items only supplementally.
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 for the first and second quarters 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) the failure of Synaptics' products and OEMs' products to deliver commercially acceptable performance, (d) changing market demand trends in the markets it serves, and consumer demand, and (e) 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, 2005. All forward-looking statements are based on information available to Synaptics on the date hereof, and Synaptics assumes no obligation to update such statements.
Russ Knittel Jennifer Jarman Synaptics Incorporated The Blueshirt Group 408-454-5140 415-217-7722 firstname.lastname@example.org email@example.com SYNAPTICS INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) June 30, June 30, 2006 2005 Assets Current assets: Cash and cash equivalents $38,724 $72,232 Short term investments 206,452 156,689 Total cash, cash equivalents, and short-term investments 245,176 228,921 Receivables, net of allowances of $189 and $165, respectively 34,034 33,790 Inventories 10,010 7,731 Prepaid expenses and other current assets 3,407 3,046 Total current assets 292,627 273,488 Property and equipment, net 16,038 14,615 Goodwill 1,927 1,927 Other assets 20,829 21,175 Total assets $331,421 $311,205 Liabilities and stockholders' equity Current liabilities: Accounts payable $16,542 $12,390 Accrued compensation 4,842 5,638 Income taxes payable 8,078 14,867 Other accrued liabilities 5,377 5,353 Total current liabilities 34,839 38,248 Note payable to a related party 1,500 1,500 Convertible senior subordinated notes 125,000 125,000 Other liabilities 3,040 1,797 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; 27,462,125 and 26,419,447 shares issued, respectively 27 26 Additional paid in capital 134,217 106,686 Less: 2,306,100 and 1,139,000 treasury shares, respectively, at cost (39,999) (21,180) Deferred stock compensation -- (303) Retained earnings 73,261 59,560 Accumulated other comprehensive loss (464) (129) Total stockholders' equity 167,042 144,660 Total liabilities and stockholders' equity $331,421 $311,205 SYNAPTICS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended June 30, June 30, 2006 2005 2006 2005 Net revenue $43,912 $56,837 $184,557 $208,139 Cost of revenue (1) 25,010 30,555 101,704 112,090 Gross margin 18,902 26,282 82,853 96,049 Operating expenses Research and development (1) 9,616 6,543 35,356 24,991 Selling, general, and administrative (1) 7,426 5,332 28,019 18,423 Other operating expense (income) -- (3,800) -- (3,800) Amortization of deferred stock compensation -- 70 -- 328 Total operating expenses 17,042 8,145 63,375 39,942 Operating income 1,860 18,137 19,478 56,107 Interest income 2,353 1,587 7,984 3,370 Interest expense (485) (485) (1,939) (1,145) Income before income taxes 3,728 19,239 25,523 58,332 Provision for income taxes (2) 1,965 7,083 11,822 20,347 Net income $1,763 $12,156 $13,701 $37,985 Net income per share: Basic $0.07 $0.47 $0.55 $1.48 Diluted $0.07 $0.41 $0.51 $1.30 Shares used in computing net income per share: Basic 25,028 25,717 24,708 25,736 Diluted 29,263 30,316 29,075 29,761 (1) Includes share-based compensation charges of: Cost of revenue $157 $-- $682 $-- Research and development 1,099 -- 4,799 -- Selling, general, and administrative 1,967 -- 7,719 -- $3,223 $-- $13,200 $-- (2) Includes tax benefit for share-based compensation charges of: $755 $-- $2,940 $-- Non-GAAP net income per share Basic $0.17 $0.39 $0.97 $1.40 Diluted $0.15 $0.34 $0.85 $1.23 SYNAPTICS INCORPORATED Computation of Basic and Diluted Net Income Per Share (in thousands except per share data) (Unaudited) Three Months Twelve Months Ended Ended June 30, June 30, 2006 2005 2006 2005 Numerator: Basic net income $1,763 $12,156 $13,701 $37,985 Interest expense and amortization of debt issuance costs on convertible notes (net of tax) 266 266 1,064 602 Diluted net income $2,029 $12,422 $14,765 $38,587 Denominator: Shares, basic 25,028 25,717 24,708 25,736 Effect of dilutive stock based awards 1,761 2,125 1,893 2,666 Effect of convertible notes 2,474 2,474 2,474 1,359 Shares, diluted 29,263 30,316 29,075 29,761 Net income per share: Basic $0.07 $0.47 $0.55 $1.48 Diluted $0.07 $0.41 $0.51 $1.30 Computation of non-GAAP basic and diluted net income per share (unaudited): Numerator: Reported net income $1,763 $12,156 $13,701 $37,985 Non-GAAP adjustments: Other operating expense (income), net of tax -- (2,256) -- (2,256) Amortization of deferred stock compensation, net of tax -- 43 -- 213 Share-based compensation, net of tax 2,468 -- 10,260 -- Non-GAAP basic net income 4,231 9,943 23,961 35,942 Interest expense and amortization of debt issuance costs on convertible notes, net of tax 266 266 1,064 602 Non-GAAP diluted net income $4,497 $10,209 $25,025 $36,544 Denominator: Shares, basic 25,028 25,717 24,708 25,736 Effect of dilutive stock based awards 1,997 2,125 2,142 2,666 Effect of convertible notes 2,474 2,474 2,474 1,359 Shares, diluted 29,499 30,316 29,324 29,761 Non-GAAP net income per share: Basic $0.17 $0.39 $0.97 $1.40 Diluted $0.15 $0.34 $0.85 $1.23
SOURCE Synaptics Incorporated
Russ Knittel of Synaptics Incorporated, +1-408-454-5140, or firstname.lastname@example.org; or Jennifer Jarman of The Blueshirt Group, +1-415-217-7722, or email@example.com, for Synaptics Incorporated
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