UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

October 20, 2015

Date of Report (Date of earliest event reported)

 

 

SYNAPTICS INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

DELAWARE		000-49602		77-0118518
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

1251 McKay Drive

San Jose, California 95131

(Address of Principal Executive Offices) (Zip Code)

(408) 904-1100

(Registrant’s Telephone Number, Including Area Code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

---

Item 1.01.

Entry into a Material Definitive Agreement.

On October 20, 2015, Synaptics Incorporated (the “Company”) entered into a Commitment Increase Agreement and First Amendment to Credit Agreement (the “First Amendment”) with Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “Administrative Agent”), and each of the lenders party thereto, which amends the Credit Agreement dated September 30, 2014 (the “Credit Agreement”), among the Company, the lenders party thereto and the Administrative Agent.

Pursuant to the First Amendment, the Company exercised its right under the Credit Agreement to request a $100,000,000 increase to the aggregate revolving credit commitment thereunder, for total aggregate revolving credit commitment of $250,000,000, and the lenders under the Credit Agreement agreed to provide such increased revolving credit commitments pursuant to the terms of the First Amendment.

The First Amendment also amends the Credit Agreement by (i) reducing commitment fee rates set forth in the definition of Applicable Margin; (ii) providing that the Company may, from time to time, request incremental increases from the lenders in the aggregate revolving and term commitments by an amount not exceeding $100,000,000, such increases in addition to the increase provided by the First Amendment; and (iii) making certain other administrative changes, all as set forth in the First Amendment.

Borrowings under the Credit Agreement will continue to bear interest at a variable interest rate based on LIBOR or a Base Rate, in each case plus the Applicable Margin. The Applicable Margin is based on the Company’s consolidated total leverage ratio pursuant to a pricing grid set forth in the Credit Agreement.

 

Item 2.02.

Results of Operations and Financial Condition.

The Company is furnishing this Current Report on Form 8-K in connection with the disclosure of information, in the form of a press release released on October 22, 2015 and attached hereto as Exhibit 99.1.

The information in this Current Report on Form 8-K (including Exhibit 99.1) is furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any registration document or other document filed by the Company.

The Company does not have, and expressly disclaims, any obligation to release publicly any updates or any changes in the Company’s expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based.

The text included with this Current Report on Form 8-K is available on the Company’s website located at www.synaptics.com, although the Company reserves the right to discontinue that availability at any time.

 

Item 2.03.

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth above in Item 1.01 of this Form 8-K regarding the First Amendment to the Credit Agreement is incorporated herein by reference.

 

Item 8.01

Other Events.

On October 22, 2015, the Company also announced in its press release that the Board of Directors of the Company increased its stock repurchase program by $200 million for a total available authorization of $273 million, and extended the Company’s stock repurchase program until October 2017. The stock repurchase program authorizes the Company to purchase up to an additional $273 million of its common stock in the open market or in privately negotiated transactions, depending upon market conditions and other factors, through October 2017. The number of shares purchased and the timing of purchases is based on the level of the Company’s cash balances, general business and market conditions, and other factors, including alternative investment opportunities, and does not obligate the Company to repurchase any specific number of shares and may be suspended or terminated at any time without prior notice. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

Item 9.01.

Financial Statements and Exhibits.

 

(a)

Financial Statements of Business Acquired.

Not applicable.

 

(b)

Pro Forma Financial Information.

Not applicable.

 

(c)

Shell Company Transactions.

Not applicable.

 

(d)

Exhibits.

 

Exhibit Number		Exhibit
99.1		Press release from Synaptics Incorporated, dated October 22, 2015, entitled “Synaptics Reports Results for First Quarter Fiscal 2016”

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				SYNAPTICS INCORPORATED
Date: October 22, 2015				By:		/s/ Wajid Ali
						Wajid Ali
						Senior Vice President and Chief Financial Officer

---

EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Press release from Synaptics Incorporated, dated October 22, 2015, entitled “Synaptics Reports Results for First Quarter Fiscal 2016”

Exhibit 99.1

 

		For more information contact:
		Jennifer Jarman
		The Blueshirt Group
		415-217-5866 jennifer@blueshirtgroup.com

Synaptics Reports Results for First Quarter Fiscal 2016

 

•

Record September quarter revenue of $470 million up 66 percent year-over-year

 

•

Record September quarter non-GAAP EPS of $1.49; GAAP EPS of $0.62

 

•

Approximately 1.7 million shares, or 5 percent of shares outstanding, repurchased during the quarter

 

•

Increases available stock repurchase authorization to $273 million

 

•

Increases revolving credit facility by $100 million

SAN JOSE, Calif. – October 22, 2015 – Synaptics (NASDAQ: SYNA), a leading developer of human interface solutions, today reported financial results for its first quarter ended September 30, 2015.

Net revenue for the first quarter of fiscal 2016 grew 66 percent over the comparable quarter last year to $470.0 million. Net income for the first quarter of fiscal 2016 was $23.8 million, or $0.62 per diluted share.

Non-GAAP net income for the first quarter of fiscal 2016 grew 39 percent over the prior year period to $56.9 million, or $1.49 per diluted share. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)

“We are pleased to report record fiscal first quarter revenue and non-GAAP net income as healthy contributions from our fingerprint authentication and display driver products helped offset softness from our PC products,” stated Rick Bergman, President and CEO. “Synaptics is successfully executing across its expanding product roadmap, most recently with the inclusion of force sensing into our ClearPad touch offerings. We are experiencing increasing momentum for our fingerprint authentication and TDDI solutions, which we expect to be significant growth drivers in the second half of the fiscal year.”

First Quarter 2016 Business Metrics

 

•

Revenue mix from mobile and PC products was approximately 88 percent and 12 percent respectively. Fingerprint authentication products have been classified according to type of device.

 

•

Revenue from mobile products of $412.1 million was up 106 percent year-over-year. Mobile products revenue includes all touchscreen, display driver, and applicable fingerprint authentication products.

 

•

Revenue from PC products totaled $57.9 million, a decrease of 30 percent year-over-year, and includes applicable fingerprint authentication products.

 

---

Wajid Ali, CFO, added, “Considering our backlog of $214 million entering the December quarter, subsequent bookings, customer forecasts, product sell-in and sell-through timing patterns, as well as expected product mix, we anticipate revenue in the December quarter to be in the range of $460 to $500 million, with the revenue mix from mobile and PC products roughly similar to the preceding quarter. By prudently managing our operating expenses we expect to drive incremental earnings results in the December quarter relative to expected top-line performance.”

Cash at September 30, 2015 was $275 million. In the first quarter of fiscal 2016, cash flow from operations was $12.3 million, and the company used $125 million to repurchase approximately 1.7 million shares of its common stock, or 5 percent of the total shares outstanding. In October, the company increased its revolving credit facility commitment by $100 million for an aggregate of $250 million; $150 million remains available under the credit facility for various purposes, including its stock repurchase program. The company also announced that its board of directors has increased and extended the authorization for stock repurchases by another $200 million, for a total available authorization of $273 million available through October 2017.

Earnings Call Information

The Synaptics first quarter fiscal 2016 teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, October 22, 2015, during which the company will provide forward-looking information. To participate on the live call, analysts and investors should dial 800-505-9573 (conference ID: 789383) 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 Website at www.synaptics.com.

About Synaptics Incorporated

Synaptics is the pioneer and leader of the human interface revolution, bringing innovative and intuitive user experiences to intelligent devices. Synaptics’ broad portfolio of touch, display, and biometrics products is built on the company’s rich R&D and supply chain capabilities. With solutions designed for mobile, PC and automotive industries, Synaptics combines ease of use, functionality and aesthetics to enable products that help make our digital lives more productive, secure and enjoyable. (NASDAQ: SYNA) www.synaptics.com.

---

Use of Non-GAAP Financial Information

In evaluating its business, Synaptics considers and uses net income excluding share-based compensation, change in contingent consideration, and certain non-cash or non-recurring items as a supplemental measure of operating performance. Net income excluding share-based compensation, change in contingent consideration, and certain non-cash 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, change in contingent consideration, and certain non-cash 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 share-based compensation charges, change in contingent consideration, and certain non-cash or non-recurring items. Net income excluding share-based compensation, change in contingent consideration liability, and certain non-cash 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 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 the fiscal year ended June 27, 2015 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.

(Tables to Follow)

---

SYNAPTICS INCORPORATED

CONSOLIDATED BALANCE SHEETS

(In millions except share data)

(Unaudited)

 

		September 30, 2015				June 30, 2015
Assets
Current assets:
Cash and cash equivalents		$	274.5			$	399.9
Accounts receivables, net of allowances of $2.9			349.1				324.6
Inventories			146.5				140.2
Prepaid expenses and other current assets			41.9				51.3
Total current assets			812.0				916.0
Property and equipment at cost, net			117.4				123.4
Goodwill			206.8				206.8
Purchased intangibles, net			220.7				235.4
Non-current other assets			37.2				37.8
Total assets		$	1,394.1			$	1,519.4
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	169.4			$	188.5
Accrued compensation			33.7				35.9
Income taxes payable			25.4				34.7
Acquisition-related liabilities			97.6				102.2
Other accrued liabilities			77.5				74.1
Current portion of long-term debt			13.1				11.3
Total current liabilities			416.7				446.7
Long-term debt			227.5				231.1
Deferred tax liabilities			28.7				33.9
Other long-term liabilities			15.5				14.6
Total liabilities			688.4				726.3
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; 120,000,000 shares authorized; 58,460,636 and 58,249,107 shares issued, and 36,072,424 and 37,529,608 shares outstanding, respectively			0.1				0.1
Additional paid in capital			858.3				843.8
Less: 22,388,212 and 20,719,499 treasury shares, respectively, at cost			(776.7	)			(651.7	)
Accumulated other comprehensive income			7.1				7.8
Retained earnings			616.9				593.1
Total stockholders’ equity			705.7				793.1
Total liabilities and stockholders’ equity		$	1,394.1			$	1,519.4

---

SYNAPTICS INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions except per share data)

(Unaudited)

 

		Three Months Ended September 30,
		2015				2014
Net revenue		$	470.0			$	282.8
Acquisition and integration related costs (1)			14.5				4.0
Cost of revenue			291.7				158.5
Gross margin			163.8				120.3
Operating expenses
Research and development			80.5				57.5
Selling, general, and administrative			40.2				30.7
Acquisition related costs (2)			7.4				(4.2	)
Restructuring costs (3)			1.9				—
Total operating expenses			130.0				84.0
Operating income			33.8				36.3
Interest and other income/(expense), net			(0.8	)			0.6
Income before provision for income taxes			33.0				36.9
Provision for income taxes			9.2				10.3
Net income		$	23.8			$	26.6
Net income per share:
Basic		$	0.65			$	0.72
Diluted		$	0.62			$	0.68
Shares used in computing net income per share:
Basic			36.8				37.0
Diluted			38.2				39.2

 

(1)	These acquisition and integration related costs consist primarily of amortization associated with certain acquired intangible assets and integration costs associated with acquisitions.

(2)	These acquisition related costs consist primarily of changes in contingent consideration and amortization associated with certain acquired intangible assets.

(3)	Restructuring costs include severance costs associated with operational restructuring of a recent acquisition.

---

SYNAPTICS INCORPORATED

Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures

(In millions except per share data)

(Unaudited)

 

		Three Months Ended September 30,
		2015				2014
GAAP gross margin		$	163.8			$	120.3
Acquisition and integration related costs			14.5				4.0
Share-based compensation			0.4				0.3
Non-GAAP gross margin		$	178.7			$	124.6
GAAP gross margin - percentage of revenue			34.9	%			42.5	%
Acquisition and integration related costs - percentage of revenue			3.1	%			1.4	%
Share-based compensation - percentage of revenue			0.1	%			0.1	%
Non-GAAP gross margin - percentage of revenue			38.0	%			44.1	%
GAAP research and development expense		$	80.5			$	57.5
Acquisition and integration related costs			—				(0.3	)
Share-based compensation			(6.5	)			(5.4	)
Non-GAAP research and development expense		$	74.0			$	51.8
GAAP selling, general, and administrative expense		$	40.2			$	30.7
Acquisition and integration related costs			—				(3.1	)
Share-based compensation			(5.0	)			(3.8	)
Non-GAAP selling, general, and administrative expense		$	35.2			$	23.8
GAAP operating income		$	33.8			$	36.3
Acquisition and integration related costs			21.9				3.2
Share-based compensation			11.9				9.5
Restructuring costs			1.9				—
Non-GAAP operating income		$	69.5			$	49.0
GAAP net income		$	23.8			$	26.6
Acquisition and integration related costs			21.9				3.2
Share-based compensation			11.9				9.5
Other non-cash items, net			(0.2	)			(0.3	)
Restructuring costs			1.9				—
Tax adjustments			(2.4	)			1.9
Non-GAAP net income		$	56.9			$	40.9
GAAP net income per share - diluted		$	0.62			$	0.68
Acquisition and integration related costs			0.57				0.08
Share-based compensation			0.31				0.24
Other non-cash items, net			—				(0.01	)
Restructuring costs			0.05				—
Tax adjustments			(0.06	)			0.05
Non-GAAP net income per share - diluted		$	1.49			$	1.04