Synaptics Reports Third Quarter Results
SANTA CLARA, Calif., April 20, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Synaptics (Nasdaq: SYNA), a leader in interface solutions for mobile computing, communications, and entertainment devices, today reported financial results for the third fiscal quarter ended March 31, 2006. The Company's GAAP results reflect the adoption of SFAS 123(R) regarding the expensing of non-cash share- based compensation.
Net revenue for the third quarter of fiscal 2006 was $40.4 million, compared with $56.7 million of net revenue for the third quarter of fiscal 2005. Net income for the third quarter of fiscal 2006 was $1.6 million, or $0.06 per diluted share, compared with $11.7 million, or $0.38 per diluted share, for the third quarter of fiscal 2005.
Non-GAAP net income for the third quarter of fiscal 2006, which excludes non-cash share-based compensation net of tax, was $4.1 million, or $0.15 per diluted share, compared with non-GAAP net income of $11.7 million, or $0.38 per diluted share, for the third quarter of fiscal 2005.
"Revenue for the third quarter was below our expectations primarily due to weaker than expected demand in the digital music player market, which has been broadly reported within the industry. Our performance in the notebook sector was within our anticipated range, but at the lower end of our expectations. Despite this near-term shortfall, we believe that our market leadership in notebooks and ongoing activity within the PC industry positions us well moving forward. At the same time, we continue to capitalize on growing opportunities to leverage our technology within emerging digital lifestyle applications," stated Francis Lee, President and Chief Executive Officer of Synaptics.
Russ Knittel, Synaptics' Chief Financial Officer, added, "Based on current indicators and our backlog entering the fourth fiscal quarter, we anticipate top-line growth of up to 10% sequentially. This outlook is predicated on expected seasonality and strength within our core PC market. As we look out into the September quarter, we anticipate continued strong demand for our PC solutions, where we see increasing interest for our multi-media oriented products offering dual functionality in notebook computers, and anticipate that our revenue may grow 10% to 20% from June quarter guidance. Our visibility in the portable digital entertainment market remains very limited, but any meaningful increased demand would represent upside to our current outlook."
Earnings Call Information
The Synaptics third quarter teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, April 20, 2006, during which the Company will provide forward-looking information. To participate on the live call, analysts and investors should dial 800-240-2430 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 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
Synaptics discloses non-GAAP financial measures of net income and net income per share and believes that this non-GAAP information provides historical comparability of its core operating results over multiple reporting periods. These non-GAAP financial measures should not be considered an alternative to net income and net income per share presented in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"). Further, these non-GAAP financial measures are unlikely to be comparable to non-GAAP information provided by other companies. In accordance with SEC regulations, reconciliation of the Synaptics U.S. GAAP information to the non-GAAP information is provided in the tables attached. We will also make available on the investor relations page of our web site at www.synaptics.com this press release, which includes a reconciliation of the U.S. GAAP to non-GAAP financial measures and a replay of the webcast.
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 third and forth quarters of fiscal 2006, its beliefs regarding the markets it serves, its assessment of market demands and trends in target markets, its view of its operating fundamentals, its assessment of consumer demands for various applications, its assessment of market conditions, and its competitive position in the notebook computer and portable audio and video device markets. 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 current reports on Form 8-K as well as 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.
For more information contact: Jennifer Jarman The Blueshirt Group 415-217-7722 firstname.lastname@example.org SYNAPTICS INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) March 31, June 30, 2006 2005 Assets Current assets: Cash and cash equivalents $57,254 $72,232 Short term investments 180,214 156,689 Total cash, cash equivalents, and short-term investments 237,468 228,921 Receivables, net of allowances of $189 and $165, respectively 29,720 33,790 Inventories 10,646 7,731 Prepaid expenses and other current assets 3,692 3,046 Total current assets 281,526 273,488 Property and equipment, net 15,786 14,615 Goodwill 1,927 1,927 Other assets 23,819 21,175 Total assets $323,058 $311,205 Liabilities and stockholders' equity Current liabilities: Accounts payable $14,007 $12,390 Accrued compensation 4,889 5,638 Income taxes payable 11,489 14,867 Other accrued liabilities 5,483 5,353 Total current liabilities 35,868 38,248 Note payable to a related party 1,500 1,500 Convertible senior subordinated notes 125,000 125,000 Other liabilities 1,888 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; 27,212,044 and 26,419,447 shares issued, respectively 27 26 Additional paid in capital 127,629 106,686 Less: 2,306,100 and 1,139,000 treasury shares, respectively, at cost (39,999) (21,180) Deferred stock compensation -- (303) Retained earnings 71,498 59,560 Accumulated other comprehensive loss (353) (129) Total stockholders' equity 158,802 144,660 Total liabilities and stockholders' equity $323,058 $311,205 SYNAPTICS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2006 2005 2006 2005 Net revenue $40,365 $56,668 $140,645 $151,302 Cost of revenue (1) 22,257 30,481 76,694 81,535 Gross margin 18,108 26,187 63,951 69,767 Operating expenses Research and development (1) 9,106 6,157 25,740 18,448 Selling, general, and administrative (1) 6,952 4,937 20,593 13,091 Amortization of deferred stock compensation -- 71 -- 258 Total operating expenses 16,058 11,165 46,333 31,797 Operating income 2,050 15,022 17,618 37,970 Interest income 2,179 1,118 5,631 1,783 Interest expense (485) (483) (1,454) (660) Income before income taxes 3,744 15,657 21,795 39,093 Provision for income taxes (2) 2,121 3,983 9,857 13,264 Net income $1,623 $11,674 $11,938 $25,829 Net income per share: Basic $0.07 $0.44 $0.49 $1.00 Diluted $0.06 $0.38 $0.44 $0.88 Shares used in computing net income per share: Basic 24,737 26,315 24,602 25,743 Diluted 29,201 31,464 29,002 29,588 (1) Includes share-based compensation charges of: Cost of revenue $145 $-- $525 $-- Research and development 1,165 -- 3,700 -- Selling, general, and administrative 1,967 -- 5,752 -- $3,277 $-- $9,977 $-- (2) Includes tax benefit for share-based compensation charges of: $771 $-- $2,185 $-- Non-GAAP net income per share Basic $0.17 $0.45 $0.80 $1.01 Diluted $0.15 $0.38 $0.70 $0.89 SYNAPTICS INCORPORATED Computation of Basic and Diluted Net Income Per Share (in thousands except per share data) (Unaudited) Three Nine Months Ended Months Ended March 31, March 31, 2006 2005 2006 2005 Numerator: Basic net income $1,623 $11,674 $11,938 $25,829 Interest expense and amortization of debt issuance costs on convertible notes (net of tax) 266 266 798 335 Diluted net income $1,889 $11,940 $12,736 $26,164 Denominator: Shares, basic 24,737 26,315 24,602 25,743 Effect of dilutive stock based awards 1,990 2,675 1,926 2,857 Effect of convertible notes 2,474 2,474 2,474 988 Shares, diluted 29,201 31,464 29,002 29,588 Net income per share: Basic $0.07 $0.44 $0.49 $1.00 Diluted $0.06 $0.38 $0.44 $0.88 Computation of non-GAAP basic and diluted net income per share (unaudited): Numerator: Reported net income $1,623 $11,674 $11,938 $25,829 Non-GAAP adjustments: Amortization of deferred stock compensation (net of tax) -- 58 -- 170 Share-based compensation (net of tax) 2,506 -- 7,792 -- Non-GAAP basic net income 4,129 11,732 19,730 25,999 Interest expense and amortization of debt issuance costs on convertible notes (net of tax) 266 266 798 335 Non-GAAP diluted net income $4,395 $11,998 $20,528 $26,334 Denominator: Shares, basic 24,737 26,315 24,602 25,743 Effect of dilutive stock based awards 2,334 2,675 2,196 2,857 Effect of convertible notes 2,474 2,474 2,474 988 Shares, diluted 29,545 31,464 29,272 29,588 Non-GAAP net income per share: Basic $0.17 $0.45 $0.80 $1.01 Diluted $0.15 $0.38 $0.70 $0.89
SOURCE Synaptics Incorporated
Jennifer Jarman of The Blueshirt Group, +1-415-217-7722, or email@example.com, for Synaptics
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