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Synaptics Reports Results for First Quarter of Fiscal 2010

SANTA CLARA, Calif., Oct 22, 2009 /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 first fiscal quarter ended September 30, 2009.

Net revenue for the first quarter of fiscal 2010 was $119.6 million, an increase of approximately 4% over $115.3 million of net revenue for the fourth quarter of fiscal 2009 and an increase of approximately 3% over $115.9 million of net revenue for the first quarter of fiscal 2009.

GAAP net income for the first quarter of fiscal 2010 was $9.8 million, or $0.27 per diluted share, compared with net income of $12.4 million, or $0.34 per diluted share, for the fourth quarter of fiscal 2009 and $12.7 million, or $0.36 per diluted share, for the first quarter of fiscal 2009.

Non-GAAP net income for the first quarter of fiscal 2010, which excludes non-cash charges for interest expense, share-based compensation, an investment write down, and a one-time income tax charge, was $17.2 million, or $0.48 per diluted share, compared with net income of $17.2 million, or $0.47 per diluted share, for the fourth quarter of fiscal 2009 and net income of $17.9 million, or $0.50 per diluted share, for the first quarter of fiscal 2009. (See attached table for a reconciliation of GAAP to non-GAAP results.)

"We are reporting the highest September quarter net revenue in our company's history. We continue to be the clear leader for touchpads in the notebook sector, with the industry's most comprehensive and innovative product lineup. We saw a sharp year-over-year increase in our mobile touchscreen business, where we are working with the top handset makers to broaden penetration of capacitive touchscreen phones around the world. Synaptics won a number of important new designs during the quarter, and design activity remains robust," said Tom Tiernan, CEO.

PC revenue of $74.6 million represented 62% of total revenue for the quarter, reflecting 14% sequential growth. This growth was driven by solid penetration of Synaptics' technology in netbooks and continued strong uptake of Synaptics' multi-finger, gesture-enabled TouchPads(TM). New product offerings including ClickPad(TM), which eliminates traditional mechanical buttons and incorporates this functionality into the touchpad, are also seeing strong adoption in the market.

Non-PC revenue of $45.0 million comprised 38% of total revenue for the quarter and grew 39% year-over-year. Growth was driven by increased adoption of capacitive touchscreen solutions among major mobile handset manufacturers. Synaptics continues to work with the leading handset OEMs globally to fuel mass market adoption of capacitive touchscreens.

Cash and short-term investments increased to $197.6 million at September 30, 2009. During the quarter, the Company generated $29.9 million of cash flow from operations and bought back one million shares of its common stock at an aggregate cost of approximately $25.5 million under its stock repurchase program.

Kathy Bayless, CFO, added, "Looking ahead to the December quarter and considering the dynamic nature of our markets, customer forecasts, and backlog of $71 million exiting September, we anticipate revenue between $128 million and $134 million. Our revenue outlook for fiscal 2010 of $495 million to $525 million has not changed, and is based on current customer forecasts and new design wins combined with visibility into our pipeline of new business opportunities."

The Company's GAAP results reflect the adoption of ASC 470-20, previously referred to as FSP APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion." The adoption of this accounting standard, which must be applied on a retrospective basis, results in a non-cash interest charge to the current and all prior periods presented. (See attached table for the impact of the new accounting standard on previously reported fiscal 2009 results.)

Earnings Call Information

The Synaptics first quarter fiscal 2010 teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, October 22, 2009, during which the Company will provide forward-looking information. To participate on the live call, analysts and investors should dial 877-941-8416 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 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. www.synaptics.com

NOTE: Synaptics, TouchPad(TM), 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, non-cash interest charges, and unusual or non-recurring items as a supplemental measure of operating performance. Net income excluding share-based compensation, non cash interest charges, 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 GAAP net income. The Company presents net income excluding share-based compensation, non-cash interest charges, 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, non-cash interest charges, and unusual or non-recurring items. Net income excluding share-based compensation, non-cash interest charges, 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.

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 for the second quarter of fiscal 2010 and Synaptics' anticipated revenue for fiscal 2010. 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, (d) the success of our customers' products that utilize our product solutions, (e) the development and launch cycles of our customers' products, (f) market pressures on selling prices, (g) changes in product mix, (h) the market acceptance of our product solutions compared with competitors solutions, (i) general economic conditions, including consumer confidence and demand, and (j) 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, 2009. 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)

                                                 September 30,   June 30,
                                                      2009         2009*
                                                      ----         ----

    Assets
    Current assets:
      Cash and cash
       equivalents                                   $180,040  $169,036
      Short term investments                           17,580    22,934
                                                       ------    ------
        Total cash, cash equivalents,
         and short-term investments                   197,620   191,970
      Receivables, net of allowances of $513
       and $513, respectively                          91,062    84,739
      Inventories                                      15,678    14,950
      Prepaid expenses and other
       current assets                                   3,899     3,094
                                                        -----     -----
    Total current
     assets                                           308,259   294,753

    Property and
     equipment, net                                    25,429    25,431
    Goodwill                                            1,927     1,927
    Non-current auction rate securities                28,854    28,767
    Other assets                                       23,519    25,272
                                                       ------    ------
    Total assets                                     $387,988  $376,150
                                                     ========  ========

    Liabilities and stockholders' equity
    Current liabilities:
      Accounts payable                                $48,409   $32,210
      Accrued compensation                              8,379     8,450
      Income taxes payable                              9,788     9,128
      Current deferred tax liability                    8,483    10,225
      Other accrued
       liabilities                                     12,110    11,813
      Note payable                                     64,465    63,234
                                                       ------    ------
    Total current liabilities                         151,634   135,060

    Other liabilities                                  18,549    18,484

    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; 44,056,636 and
          43,779,011 shares issued, and
           33,968,536 and 34,690,911                       44        44
          shares outstanding,
           respectively
      Additional paid in capital                      303,349   293,666
      Less: 10,088,100 and 9,088,100 treasury shares,
        respectively, at cost                        (262,858) (237,387)
      Retained earnings                               175,958   166,154
      Accumulated other comprehensive income            1,312       129
                                                        -----       ---
    Total stockholders'
     equity                                           217,805   222,606
                                                      -------   -------
    Total liabilities and
     stockholders' equity                            $387,988  $376,150
                                                     ========  ========


    *  Adjusted for retrospective application of ASC 470-20



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


                                             Three Months Ended
                                               September  30,
                                         --------------------------
                                         2009                  2008*
                                         ----                  ----

    Net revenue                      $119,592              $115,857
    Cost of revenue (1)                71,270                69,264
                                       ------                ------
    Gross margin                       48,322                46,593
    Operating expenses
      Research and development (1)     19,975                15,805
      Selling, general, and
       administrative (1)              13,764                14,570
                                       ------                ------
    Total operating expenses           33,739                30,375
                                       ------                ------

    Operating income                   14,583                16,218
    Interest income                       331                 1,258
    Interest expense                   (1,423)               (2,541)
    Net loss on investments              (443)                    -
                                         ----                  ----
    Income before income taxes         13,048                14,935
    Provision for income taxes (2)      3,244                 2,224
                                        -----                 -----
    Net income                         $9,804               $12,711
                                       ======               =======

    Net income per share:
      Basic                             $0.29                 $0.38
                                        =====                 =====
      Diluted                           $0.27                 $0.36
                                        =====                 =====

    Shares used in computing net
     income
      per share:
      Basic                            34,341                33,640
                                       ======                ======
      Diluted                          35,968                35,459
                                       ======                ======

    -----------------------------------

    (1) Includes share-based compensation
        charges of:

        Cost of revenue                  $448                  $411
        Research and development        2,798                 2,016
        Selling, general, and
         administrative                 3,802                 3,454
                                        -----                 -----
                                       $7,048                $5,881
                                       ======                ======

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

                                       $2,201                $1,968
                                       ======                ======

    ===============================================================

    Non-GAAP net income per share:
        Basic                           $0.50                 $0.53
                                        =====                 =====
        Diluted                         $0.48                 $0.50
                                        =====                 =====


    *  Adjusted for retrospective application of ASC 470-20



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


                                                     Three Months Ended
                                                        September 30,
                                                     ------------------
                                                     2009          2008*
                                                     ----          ----

    Numerator:
      Basic and diluted net income                 $9,804       $12,711

    Denominator:
      Shares, basic                                34,341        33,640
      Effect of dilutive share-based awards         1,627         1,819
                                                    -----         -----
      Shares, diluted                              35,968        35,459
                                                   ======        ======

    Net income per share:
      Basic                                         $0.29         $0.38
                                                    =====         =====
      Diluted                                       $0.27         $0.36
                                                    =====         =====


    ===================================================================


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

    Numerator:
      Reported net income                          $9,804       $12,711
      Non-GAAP adjustments:
        Net loss on investments                       443             -
        Non cash interest expense, net of tax         709         1,248
        One-time tax charge                         1,445             -
        Share-based compensation, net of tax        4,847         3,913
                                                    -----         -----
      Non-GAAP basic and diluted net income       $17,248       $17,872
                                                  -------       -------

    Non-GAAP net income per share:
      Basic                                         $0.50         $0.53
                                                    =====         =====
      Diluted                                       $0.48         $0.50
                                                    =====         =====


    *  Adjusted for retrospective application of ASC 470-20



                       SYNAPTICS INCORPORATED
        Impact of Retrospective Application of ASC 470-20
              (in thousands, except per share data)
                           (Unaudited)

       Impact on Previously Reported Fiscal 2009 Condensed
                Consolidated Statements of Income

                                          Accounting
                                           Standard
                            As Reported     Impact    As Revised
                            -----------     -------   ----------

      For the quarter ended
       September 30, 2008:
        Interest expense          (449)     (2,092)     (2,541)
        Provision for
         income
         taxes                   (3,068)        844      (2,224)
        Net Income               13,959      (1,248)     12,711
        Net income per share:
          Basic                    0.41       (0.03)       0.38
          Diluted                  0.39       (0.03)       0.36

      For the quarter ended
       December 31, 2008:
        Interest expense           (321)     (1,418)     (1,739)
        Gain/ (loss) on early
         retirement of debt       3,600      (4,653)     (1,053)
        Provision for income
         taxes                   (4,699)      2,449      (2,250)
        Net Income               21,197      (3,622)     17,575
        Net income per share:
          Basic                    0.63       (0.11)       0.52
          Diluted                  0.60       (0.10)       0.50

      For the quarter ended
       March 31, 2009:
        Interest expense           (234)     (1,140)     (1,374)
        Provision for
         income taxes            (1,959)        460      (1,499)
        Net Income                6,086        (680)      5,406
        Net income per share:
          Basic                    0.18       (0.02)       0.16
          Diluted                  0.17       (0.02)       0.15

      For the quarter ended
       June 30, 2009:
        Interest expense           (234)     (1,165)     (1,399)
        Provision for
         income taxes            (1,760)        470      (1,290)
        Net Income               13,082        (695)     12,387
        Net income per share:
          Basic                    0.38       (0.02)       0.36
          Diluted                  0.36       (0.02)       0.34

      For the year ended
       June 30, 2009:
        Interest expense         (1,238)     (5,815)     (7,053)
        Gain/ (loss)
         on early retirement
         of debt                  3,600      (4,653)     (1,053)
        Provision for income
         taxes                  (11,486)      4,223      (7,263)
        Net Income               54,324      (6,245)     48,079
        Net income per share:
          Basic                    1.60       (0.19)       1.41
          Diluted                  1.53       (0.18)       1.35

    ============================================================

       Impact on Previously Reported Consolidated Balance
                              Sheets

                            As Reported    Accounting  As Revised
                               June 30,      Standard    June 30,
                                 2009         Impact       2009
                                 ----         -------      ----

        Other assets             25,343         (71)     25,272
        Total assets            376,221         (71)    376,150
        Current deferred tax
         liability                9,419         806      10,225
        Note payable             65,303      (2,069)     63,234
        Total current
         liabilities            136,323      (1,263)    135,060
        Additional paid in
         capital                270,962      22,704     293,666
        Retained earnings       187,666     (21,512)    166,154
        Total stockholders'
         equity                 221,414       1,192     222,606
        Total liabilities
         and stockholders'
         equity                 376,221         (71)    376,150


    For more information contact:

    Alex Wellins
    The Blueshirt Group
    415-217-7722
    alex@blueshirtgroup.com


SOURCE Synaptics

http://www.synaptics.com

Copyright (C) 2009 PR Newswire. All rights reserved

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.