Synaptics Reports Record Revenue and Profits in Second Quarter of Fiscal 2008
SANTA CLARA, Calif., Jan 24, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Synaptics (Nasdaq: SYNA), a leading developer of human interface solutions for mobile computing, communications, and entertainment devices, today reported financial results for the second quarter ended December 31, 2007. The Company's GAAP results reflect the expensing of non-cash share-based compensation for all periods presented.
Net revenue for the second quarter of fiscal 2008 was a record $98.7 million, an increase of approximately 30% over $76.1 million for the second quarter of fiscal 2007. Net income for the second quarter of fiscal 2008 was a record $14.2 million, or $0.50 per diluted share, compared with net income of $9.3 million, or $0.32 per diluted share, for the second quarter of fiscal 2007, which included a non-recurring restructuring charge of $915,000. Net income, excluding share-based compensation, was $17.0 million, or $0.60 per diluted share, for the second quarter of fiscal 2008, compared with $13.0 million, or $0.44 per diluted share, for the second quarter of fiscal 2007, which excludes the non-recurring restructuring charge.
"We are pleased to have delivered record revenue and profits in the second quarter and first half of fiscal 2008 as we experienced strong year-over-year growth across all of our target markets. Synaptics has helped lead the way as touch interfaces have been adopted across a wide variety of consumer electronics devices, and our results demonstrate solid execution and the success of our diversification strategy," stated Francis Lee, President and Chief Executive Officer of Synaptics. "Despite concerns regarding the current outlook for consumer spending, we believe that we are well positioned to take advantage of the positive long-term trends for emerging digital life style products focused on mobility, connectivity, feature-rich applications, and ease of use."
Russ Knittel, Synaptics' Chief Financial Officer, added, "It is clear that issues concerning the economy are impacting the general business outlook and the behavior of our customers. Given the 34% decline in our backlog exiting the December quarter to $37.5 million and recent reductions in customers' forecasts, our current revenue outlook for the March quarter is in the range of $76 to $82 million, representing an 18% to 27% increase over the comparable period last year. Looking out to the June quarter, we currently anticipate sequential revenue growth in the range of 11% to 19% relative to the mid-point of our March quarter outlook. Despite uncertainty in the market, Synaptics is on track to exceed the 25-30% revenue growth outlook for fiscal 2008 that we provided entering the fiscal year, along with record profitability."
Earnings Call Information
The Synaptics second quarter teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, January 24, 2008, during which the Company will provide forward-looking information. To participate on the live call, analysts and investors should dial 800-218-0530 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 http://www.synaptics.com.
About Synaptics Incorporated
Synaptics is a leading developer of human interface solutions for mobile computing, communications, and entertainment devices. 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 a majority 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. http://www.synaptics.com
NOTE: Synaptics, TouchPad, and the Synaptics logo are trademarks of Synaptics in the United States and/or other countries.
Use of Non-GAAP Financial Information
In evaluating our business, we consider and use 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.
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, revenue growth rates and anticipated customer orders in the third and fourth quarters of fiscal 2008; its beliefs regarding the markets it serves; its position and opportunities in those markets; 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, (b) market demand for OEMs' products using Synaptics' solutions, (c) changing market demand trends in the markets it serves, 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, 2007. All forward-looking statements are based on information available to Synaptics on the date hereof, and Synaptics assumes no obligation to update such statements.
SYNAPTICS INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) December 31, June 30, 2007 2007 Assets Current assets: Cash and cash equivalents $130,000 $45,915 Short term investments 156,315 219,102 Total cash, cash equivalents, and short-term investments 286,315 265,017 Receivables, net of allowances of $364 and $419, respectively 66,914 56,721 Inventories 20,147 12,034 Prepaid expenses and other current assets 13,518 4,245 Total current assets 386,894 338,017 Property and equipment, net 20,837 19,400 Goodwill 1,927 1,927 Other assets 6,353 13,968 Total assets $416,011 $373,312 Liabilities and stockholders' equity Current liabilities: Accounts payable $19,384 $21,552 Accrued compensation 5,262 5,372 Income taxes payable 4,274 3,400 Other accrued liabilities 8,032 6,272 Note payable -- 1,500 Total current liabilities 36,952 38,096 Convertible senior subordinated notes 125,000 125,000 Other liabilities 14,620 2,129 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; 31,109,034 and 29,666,660 shares issued, respectively 31 30 Additional paid in capital 209,408 180,746 Less: 4,088,100 and 3,588,100 treasury shares, respectively, at cost (91,296) (72,345) Retained earnings 125,253 99,795 Accumulated other comprehensive loss (3,957) (139) Total stockholders' equity 239,439 208,087 Total liabilities and stockholders' equity $416,011 $373,312 SYNAPTICS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended December 31, December 31, 2007 2006 2007 2006 Net revenue $ $98,650 $76,087 $185,342 $130,902 Cost of revenue (1) 57,605 45,696 108,833 78,116 Gross margin 41,045 30,391 76,509 52,786 Operating expenses Research and development (1) 11,693 9,958 22,095 19,146 Selling, general, and administrative (1) 11,415 8,927 22,165 16,728 Restructuring costs -- 915 -- 915 Total operating expenses 23,108 19,800 44,260 36,789 Operating income 17,937 10,591 32,249 15,997 Interest income 3,013 2,978 6,008 5,517 Interest expense (449) (488) (924) (975) Gain on settlement of debt -- -- 2,689 -- Impairment of investment -- -- (4,000) -- Income before income taxes 20,501 13,081 36,022 20,539 Provision for income taxes (2) 6,305 3,740 10,564 7,071 Net income $14,196 $9,341 $25,458 $13,468 Net income per share: Basic $0.53 $0.37 $0.96 $0.53 Diluted $0.50 $0.32 $0.91 $0.48 Shares used in computing net income per share: Basic 26,827 25,568 26,519 25,359 Diluted 28,320 29,692 28,020 29,468 (1) Includes share-based compensation charges of: Cost of revenue $350 $185 $589 $332 Research and development 1,588 1,439 2,759 2,474 Selling, general, and administrative 2,547 2,284 4,466 4,203 $4,485 $3,908 $7,814 $7,009 (2) Includes tax benefit for share-based compensation charges of: $1,676 $1,098 $3,373 $1,879 Non-GAAP net income per share Basic $0.63 $0.51 $1.20 $0.77 Diluted $0.60 $0.44 $1.14 $0.67 SYNAPTICS INCORPORATED Computation of Basic and Diluted Net Income Per Share (in thousands except per share data) (Unaudited) Three Months Ended Six Months Ended December 31, December 31, 2007 2006 2007 2006 Numerator: Basic net income $14,196 $9,341 $25,458 $13,468 Interest expense and amortization of debt issuance costs on convertible notes (net of tax) -- 266 -- 532 Diluted net income $14,196 $9,607 $25,458 $14,000 Denominator: Shares, basic 26,827 25,568 26,519 25,359 Effect of dilutive share-based awards 1,432 1,650 1,501 1,635 Effect of convertible notes 61 2,474 -- 2,474 Shares, diluted 28,320 29,692 28,020 29,468 Net income per share: Basic $0.53 $0.37 $0.96 $0.53 Diluted $0.50 $0.32 $0.91 $0.48 Computation of non-GAAP basic and diluted net income per share (unaudited): Numerator: Reported net income $14,196 $9,341 $25,458 $13,468 Non-GAAP adjustments: Gain on settlement of debt, net of tax -- -- (2,078) -- Impairment of investment, net of tax -- -- 4,000 -- Restructuring costs (net of tax) -- 890 -- 890 Share-based compensation (net of tax) 2,809 2,810 4,441 5,130 Non-GAAP basic net income 17,005 13,041 31,821 19,488 Interest expense and amortization of debt issuance costs on convertible notes (net of tax) -- 266 -- 532 Non-GAAP diluted net income $17,005 $13,307 $31,821 $20,020 Denominator: Shares, basic 26,827 25,568 26,519 25,359 Effect of dilutive share-based awards 1,432 1,973 1,501 1,892 Effect of convertible notes 61 2,474 -- 2,474 Shares, diluted 28,320 30,015 28,020 29,725 Non-GAAP net income per share: Basic $0.63 $0.51 $1.20 $0.77 Diluted $0.60 $0.44 $1.14 $0.67 For more information contact: Molly Plyler The Blueshirt Group 415-217-7722 firstname.lastname@example.org
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