Synaptics Reports Third Quarter Results
SANTA CLARA, Calif., April 26, 2007 /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 third fiscal quarter ended March 31, 2007. The Company's GAAP results reflect the expensing of non-cash share-based compensation for all periods presented.
Net revenue for the third quarter of fiscal 2007 was $64.3 million, an increase of approximately 59% over the $40.4 million for the third quarter of fiscal 2006. Net income for the third quarter of fiscal 2007 was $5.6 million, or $0.20 per diluted share, compared with net income of $1.6 million, or $0.06 per diluted share, for the third quarter of fiscal 2006. Net income excluding share-based compensation for the third quarter of fiscal 2007 was $8.1 million, or $0.28 per diluted share, compared with net income excluding share-based compensation of $4.1 million, or $0.15 per diluted share, for the third quarter of fiscal 2006. During the third quarter of fiscal 2007, the Company used $27.7 million to buy back approximately 1.1 million shares of its common stock.
"The third quarter marks the second highest quarterly revenue in the Company's history and reflects continued strong demand across all of our markets," stated Francis Lee, President and Chief Executive Officer of Synaptics. "In the first nine months of our fiscal year, we have already exceeded total revenue and net income for all of fiscal 2006, excluding stock- based compensation and one-time charges. We expect to finish fiscal 2007 with record revenue and are aggressively investing to scale our organization as we continue to rapidly expand our business."
The Company's balance sheet and internally generated cash flow remains strong with $245.2 million of cash and cash equivalents as of March 31, 2007. The Company also announced that its Board of Directors has authorized the repurchase of up to an additional $80 million of the Company's common stock over the next two years. Under the repurchase program, depending on market conditions and other factors, shares may be purchased on the open market or in privately negotiated transactions. In addition, the Company has determined to repay in cash any conversions of the principal portion of its $125 million Convertible Senior Subordinated Notes. The Company believes these actions are consistent with its confidence in the strong cash flow and long term growth prospects of the Company and its desire to drive higher returns for stockholders. The election to cash settle the principal amount of the Company's convertible debt securities upon conversion will result in the Company using the "treasury stock" method for calculating diluted shares. Going forward, the Company will include diluted shares underlying the convertible notes in its diluted earnings per share calculation only in those periods in which its average closing stock price exceeds the current effective conversion price of $50.53 per share.
"Our recent stock buyback, authorization of additional repurchases, and election to settle any conversions of the Convertible Senior Subordinated Notes in cash further demonstrates our ongoing commitment to enhancing stockholder value while maintaining a capital structure that allows us to continue investing in the growth of our business," concluded Mr. Lee.
Russ Knittel, the Company's Chief Financial Officer, added, "Based on our backlog of $32.3 million entering the June quarter and anticipated new orders during the period, we expect revenue for our fourth fiscal quarter to be up sequentially 6% to 10%, representing a 55% to 61% increase over the comparable period last year. Looking out into the September quarter, current data points and general seasonal trends lead us to believe that revenues will increase on a similar percentage basis sequentially as compared to our June quarter expectations."
Earnings Call Information
The Synaptics third quarter teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, April 26, 2007, during which the Company will provide forward-looking information. To participate on the live call, analysts and investors should dial 800-240-4186 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 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, 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, our management considers and uses net income per share excluding share-based compensation and restructuring costs as a supplemental measure of operating performance. Net income excluding share- based compensation and restructuring costs 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 restructuring costs 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 restructuring costs. Net income excluding share- based compensation and restructuring costs 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 restructuring costs 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 and revenue growth rates, cash flow, and ability to generate stockholder returns, 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, (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, 2006. 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 email@example.com SYNAPTICS INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) March 31, June 30, 2007 2006 Assets Current assets: Cash and cash equivalents $47,456 $38,724 Short term investments 197,771 206,452 Total cash, cash equivalents, and short-term investments 245,227 245,176 Receivables, net of allowances of $419 and $189, respectively 49,103 34,034 Inventories 9,125 10,010 Income taxes receivable 8,736 - Prepaid expenses and other current assets 4,324 3,407 Total current assets 316,515 292,627 Property and equipment, net 18,252 16,038 Goodwill 1,927 1,927 Other assets 17,252 20,829 Total assets $353,946 $331,421 Liabilities and stockholders' equity Current liabilities: Accounts payable $18,186 $16,542 Accrued compensation 4,343 4,842 Income taxes payable 8,153 8,078 Other accrued liabilities 8,343 5,377 Note payable to a related party 1,500 - Total current liabilities 40,525 34,839 Note payable to a related party - 1,500 Convertible senior subordinated notes 125,000 125,000 Other liabilities 2,032 3,040 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; 29,003,393 and 27,462,125 shares issued, respectively 29 27 Additional paid in capital 166,451 134,217 Less: 3,588,100 and 2,306,100 treasury shares, respectively, at cost (72,345) (39,999) Retained earnings 92,364 73,261 Accumulated other comprehensive loss (110) (464) Total stockholders' equity 186,389 167,042 Total liabilities and stockholders' equity $353,946 $331,421 SYNAPTICS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2007 2006 2007 2006 Net revenue $64,309 $40,365 $195,211 $140,645 Cost of revenue (1) 39,162 22,257 117,278 76,694 Gross margin 25,147 18,108 77,933 63,951 Operating expenses Research and development (1) 9,485 9,106 28,631 25,740 Selling, general, and administrative (1) 9,339 6,952 26,067 20,593 Restructuring costs - - 915 - Total operating expenses 18,824 16,058 55,613 46,333 Operating income 6,323 2,050 22,320 17,618 Interest income 2,713 2,179 8,230 5,631 Interest expense (488) (485) (1,463) (1,454) Income before income taxes 8,548 3,744 29,087 21,795 Provision for income taxes (2) 2,913 2,121 9,984 9,857 Net income $5,635 $1,623 $19,103 $11,938 Net income per share: Basic $0.22 $0.07 $0.75 $0.49 Diluted $0.20 $0.06 $0.67 $0.44 Shares used in computing net income per share: Basic 25,823 24,737 25,509 24,602 Diluted 29,592 29,201 29,512 29,002 (1) Includes share-based compensation charges of: Cost of revenue $160 $145 $492 $525 Research and development 1,262 1,165 3,736 3,700 Selling, general, and administrative 1,966 1,967 6,169 5,752 $3,388 $3,277 $10,397 $9,977 (2) Includes tax benefit for share-based compensation charges of: $896 $771 $2,775 $2,185 Non-GAAP net income per share Basic $0.31 $0.17 $1.08 $0.80 Diluted $0.28 $0.15 $0.95 $0.70 SYNAPTICS INCORPORATED Computation of Basic and Diluted Net Income Per Share (in thousands except per share data) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2007 2006 2007 2006 Numerator: Basic net income $5,635 $1,623 $19,103 $11,938 Interest expense and amortization of debt issuance costs on convertible notes (net of tax) 266 266 798 798 Diluted net income $5,901 $1,889 $19,901 $12,736 Denominator: Shares, basic 25,823 24,737 25,509 24,602 Effect of dilutive share-based awards 1,295 1,990 1,529 1,926 Effect of convertible notes 2,474 2,474 2,474 2,474 Shares, diluted 29,592 29,201 29,512 29,002 Net income per share: Basic $0.22 $0.07 $0.75 $0.49 Diluted $0.20 $0.06 $0.67 $0.44 Computation of non-GAAP basic and diluted net income per share (unaudited): Numerator: Reported net income $5,635 $1,623 $19,103 $11,938 Non-GAAP adjustments: Restructuring costs (net of tax) - - 890 - Share-based compensation (net of tax) 2,492 2,506 7,622 7,792 Non-GAAP basic net income 8,127 4,129 27,615 19,730 Interest expense and amortization of debt issuance costs on convertible notes (net of tax) 266 266 798 798 Non-GAAP diluted net income $8,393 $4,395 $28,413 $20,528 Denominator: Shares, basic 25,823 24,737 25,509 24,602 Effect of dilutive share-based awards 1,587 2,334 1,798 2,196 Effect of convertible notes 2,474 2,474 2,474 2,474 Shares, diluted 29,884 29,545 29,781 29,272 Non-GAAP net income per share: Basic $0.31 $0.17 $1.08 $0.80 Diluted $0.28 $0.15 $0.95 $0.70
Jennifer Jarman of The Blueshirt Group, +1-415-217-7722, firstname.lastname@example.org, for
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