Synaptics Reports Record Revenue for Fiscal 2008; Announces 3-for-2 Stock Split
Net revenue for the fourth quarter of fiscal 2008 was $96.9 million, an increase of approximately 35% over $71.6 million in net revenue for the fourth quarter of fiscal 2007. Net income for the fourth quarter of fiscal 2008 was $2.6 million, or $0.11 per diluted share, compared with net income of $7.4 million, or $0.27 per diluted share, for the fourth quarter of fiscal 2007. Net income for the fourth quarter of fiscal 2008 included a non-cash charge for other-than-temporary impairment of $4.7 million related to the Company's investment in auction rate securities. Net income, excluding non-cash charges for share-based compensation and the other-than-temporary impairment, was $10.7 million, or $0.46 per diluted share, for the fourth quarter of fiscal 2008, compared with net income, excluding share-based compensation, of $10.0 million, or $0.36 per diluted share, for the fourth quarter of fiscal 2007.
Net revenue for fiscal 2008 was $361.1 million, an increase of approximately 35% over $266.8 million for fiscal 2007. Net income for fiscal 2008 was $31.1 million, or $1.19 per diluted share. This compares with net income of $26.5 million, or $0.94 per diluted share, for fiscal 2007. Net income, excluding non-cash charges for share-based compensation and non-recurring items for fiscal 2008, was $51.4 million, or $1.96 per diluted share, compared with net income, excluding share-based compensation and non-recurring items, of $37.6 million, or $1.31 per diluted share, for fiscal 2007.
"Fiscal 2008 was a phenomenal year for Synaptics as we achieved both record annual revenue and non-GAAP net income, which grew 35% and 37% year over year, respectively," stated Francis Lee, President and Chief Executive Officer of Synaptics. "Our strong performance reflects solid execution and progress with regard to our diversification strategy as our investments in the mobile phone market are beginning to pay off, generating material revenue for the first time starting in the fiscal fourth quarter. Synaptics continues to benefit from the growing demand for innovative touch interface solutions in today's increasingly complex devices, and we believe we are well-positioned to deliver record revenue and profits in fiscal 2009."
Russ Knittel, Synaptics' Chief Financial Officer, added, "As we look ahead to the current quarter and new fiscal year, we remain mindful of the broader economic concerns and potential impact on customer order patterns. We exited the June quarter with backlog of $50.3 million. Based on our backlog and current visibility, we anticipate revenue in the September quarter will be $108 million to $114 million, an increase of 25% to 31% over the comparable quarter last year. Additionally, our current outlook suggests that revenue may grow 20% to 30% in fiscal 2009."
The Company also announced that its Board of Directors has approved a three-for-two split of Synaptics' common stock to be effected as a stock dividend. Each shareholder of record at the close of market on August 15, 2008 will receive one additional share for every two outstanding shares held on the record date, the payable date will be August 29, 2008, and trading will begin on a split-adjusted basis on September 2, 2008. The Company's Form 10-K for fiscal 2008 will include the effect of the split when filed. In addition, the Board of Directors has authorized the repurchase of up to an additional $80 million of common stock from time to time in the open market or in privately negotiated transactions. The timing and amount of any future purchases will depend upon market conditions and other factors.
Mr. Lee continued, "I am pleased to report that we bought back an additional one million shares during the fourth quarter. This buyback, in conjunction with our impending stock split and authorization of additional stock repurchases, reflects our confidence in Synaptics' prospects and on-going commitment to enhancing long-term stockholder value."
Synaptics' cash and short-term investments at the end of June totaled $146.5 million and exclude all auction rate securities, which have been classified as non-current assets. The Company's total investment in auction rate securities was $47.4 million, all of which are investment grade securities that are paying interest at the contractual rates. Based on a fair value analysis in accordance with U.S. GAAP, the Company has accounted for non-cash impairment during fiscal 2008 of approximately $9.5 million, of which $2.5 million is temporary and $7.0 million is other-than-temporary.
"As we indicated last quarter we will continue to monitor our investments in auction rate securities in light of the current debt market environment. We are confident that our existing cash and other short-term investments and our expected cash flow from operations will be sufficient to allow us to continue to hold our current auction rate securities until the liquidity issues are resolved," stated Mr. Knittel.
Earnings Call Information
The Synaptics fourth quarter teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, July 31, 2008, during which the Company will provide forward-looking information. To participate on the live call, analysts and investors should dial 800-257-2101 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™, 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 its business, Synaptics considers and uses net income per share excluding share-based compensation and unusual or non-recurring items as a supplemental measure of operating performance. Net income excluding share-based compensation and unusual or non-recurring items is not a measurement of the Company's financial performance under GAAP and should not be considered as an alternative to net income. The Company presents net income excluding share-based compensation and unusual or non-recurring items because it considers it an important supplemental measure of its performance. The Company believes 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 unusual or non-recurring items. Net income excluding share-based compensation and unusual or non-recurring items has limitations as an analytical tool and should not be considered in isolation or as a substitute for the Company's GAAP net income. The principal limitations of this measure are that it does not reflect the Company's actual expenses and may thus have the effect of inflating its 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 cash flow from operations; its beliefs regarding the liquidity and quality of its investments in auction rates securities; 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, © 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.
(Tables to Follow) SYNAPTICS INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) June 30, June 30, 2008 2007 Assets Current assets: Cash and cash equivalents $96,218 $45,915 Short term investments 50,298 219,102 Total cash, cash equivalents, and short-term investments 146,516 265,017 Receivables, net of allowances of $539 and $419, respectively 69,362 56,721 Inventories 21,065 12,034 Prepaid expenses and other current assets 3,417 4,245 Total current assets 240,360 338,017 Property and equipment, net 22,459 19,400 Goodwill 1,927 1,927 Non-current auction rate securities 37,946 - Other assets 3,669 13,968 Total assets $306,361 $373,312 Liabilities and stockholders' equity Current liabilities: Accounts payable $27,784 $21,552 Accrued compensation 6,510 5,372 Income taxes payable 7,095 3,400 Other accrued liabilities 9,120 6,272 Note payable - 1,500 Total current liabilities 50,509 38,096 Convertible senior subordinated notes 125,000 125,000 Other liabilities 17,075 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; 31,363,057 and 29,666,660 shares issued, respectively 31 30 Additional paid in capital 222,555 180,746 Less: 9,088,100 and 3,588,100 treasury shares, respectively, at cost (237,387) (72,345) Retained earnings 130,895 99,795 Accumulated other comprehensive loss (2,317) (139) Total stockholders' equity 113,777 208,087 Total liabilities and stockholders' equity $306,361 $373,312 SYNAPTICS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended June 30, June 30, 2008 2007 2008 2007 Net revenue $96,854 $71,576 $361,057 $266,787 Cost of revenue (1) 58,085 43,635 213,606 160,913 Gross margin 38,769 27,941 147,451 105,874 Operating expenses Research and development (1) 14,438 10,755 50,093 39,386 Selling, general, and administrative (1) 13,780 10,180 48,126 36,247 Restructuring costs - - - 915 Total operating expenses 28,218 20,935 98,219 76,548 Operating income 10,551 7,006 49,232 29,326 Interest income 1,351 2,825 9,652 11,055 Interest expense (449) (487) (1,822) (1,950) Gain on settlement of debt - - 2,689 - Impairment of investment - - (4,000) - Impairment of auction rate securities investments (4,726) - (6,963) - Income before income taxes 6,727 9,344 48,788 38,431 Provision for income taxes (2) 4,093 1,913 17,688 11,897 Net income $2,634 $7,431 $31,100 $26,534 Net income per share: Basic $0.12 $0.29 $1.24 $1.04 Diluted $0.11 $0.27 $1.19 $0.94 Shares used in computing net income per share: Basic 22,646 25,710 25,111 25,558 Diluted 23,493 27,678 26,243 29,064 (1) Includes share-based compensation charges of: Cost of revenue $136 $258 $1,102 $750 Research and development 1,765 1,355 6,321 5,091 Selling, general, and administrative 2,934 2,284 10,080 8,453 $4,835 $3,897 $17,503 $14,294 (2) Includes tax benefit for share-based compensation charges of: $1,486 $1,365 $6,114 $4,140 Non-GAAP net income per share Basic $0.47 $0.39 $2.05 $1.47 Diluted $0.46 $0.36 $1.96 $1.31 SYNAPTICS INCORPORATED Computation of Basic and Diluted Net Income Per Share (in thousands except per share data) (Unaudited) Three Months Ended Twelve Months Ended June 30, June 30, 2008 2007 2008 2007 Numerator: Basic net income $2,634 $7,431 $31,100 $26,534 Interest expense and amortization of debt issuance costs on convertible notes (net of tax) - 76 - 878 Diluted net income $2,634 $7,507 $31,100 $27,412 Denominator: Shares, basic 22,646 25,710 25,111 25,558 Effect of dilutive share-based awards 847 1,261 1,132 1,465 Effect of convertible notes - 707 - 2,041 Shares, diluted 23,493 27,678 26,243 29,064 Net income per share: Basic $0.12 $0.29 $1.24 $1.04 Diluted $0.11 $0.27 $1.19 $0.94 Computation of non-GAAP basic and diluted net income per share (unaudited): Numerator: Reported net income $2,634 $7,431 $31,100 $26,534 Non-GAAP adjustments: Gain on settlement of debt, net of tax - - (2,078) - Impairment of investment, net of tax - - 4,000 - Impairment of auction rate securities investments 4,726 - 6,963 - Restructuring costs (net of tax) - - - 890 Share-based compensation (net of tax) 3,349 2,532 11,389 10,154 Non-GAAP basic net income 10,709 9,963 51,374 37,578 Interest expense and amortization of debt issuance costs on convertible notes (net of tax) - 76 - 878 Non-GAAP diluted net income $10,709 $10,039 $51,374 $38,456 Denominator: Shares, basic 22,646 25,710 25,111 25,558 Effect of dilutive share-based awards 847 1,587 1,132 1,763 Effect of convertible notes - 707 - 2,041 Shares, diluted 23,493 28,004 26,243 29,362 Non-GAAP net income per share: Basic $0.47 $0.39 $2.05 $1.47 Diluted $0.46 $0.36 $1.96 $1.31 SOURCE Synaptics Incorporated http://www.synaptics.com Copyright (C) 2008 PR Newswire. All rights reserved News Provided by COMTEX