syna-10q_20190330.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2019

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             .

Commission file number 000-49602

 

SYNAPTICS INCORPORATED

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

77-0118518

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. 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)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $.001 per share

SYNA

The NASDAQ Global Select Market

Number of shares of Common Stock outstanding at May 2, 2019: 34,498,484

 

 

 


SYNAPTICS INCORPORATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 30, 2019

TABLE OF CONTENTS

 

 

 

 

  

 

  

Page

Part I. Financial Information

  

 

 

 

 

 

   

 

Item 1.

   

Condensed Consolidated Financial Statements (Unaudited):

  

3

 

 

 

 

 

 

 

  

Condensed Consolidated Balance Sheets—March 31, 2019 and June 30, 2018

  

3

 

 

 

 

 

 

 

  

Condensed Consolidated Statements of Operations—Three and Nine Months Ended March 31, 2019 and 2018

  

4

 

 

 

 

 

 

 

  

Condensed Consolidated Statements of Comprehensive Income/(Loss)—Three and Nine Months Ended March 31, 2019 and 2018

  

5

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

6

 

 

 

 

 

 

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows—Nine Months Ended March 31, 2019 and 2018

  

8

 

 

 

 

 

 

 

  

Notes to Condensed Consolidated Financial Statements

  

9

 

 

 

 

 

 

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

23

 

 

 

 

 

 

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

  

33

 

 

 

 

 

 

Item 4.

  

Controls and Procedures

  

33

 

 

Part II. Other Information

  

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

34

 

 

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

34

 

 

 

 

 

 

 

 

 

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

  

34

 

 

 

 

 

 

Item 6.

  

Exhibits

  

35

 

 

 

 

 

 

 

Signatures

  

36

 

 

 


PART I—FINANCIAL INFORMATION

 

 

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except par value and share amounts)

(unaudited)

 

 

 

March 31,

 

 

June 30,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

323.8

 

 

$

301.0

 

Accounts receivable, net of allowances of $2.1 and $1.8 at March 31, 2019 and

   June 30, 2018, respectively

 

 

266.8

 

 

 

289.1

 

Inventories

 

 

153.1

 

 

 

131.2

 

Prepaid expenses and other current assets

 

 

23.2

 

 

 

18.2

 

Total current assets

 

 

766.9

 

 

 

739.5

 

Property and equipment at cost, net of accumulated depreciation of $137.7

   and $127.4 at March 31, 2019 and June 30, 2018, respectively

 

 

104.8

 

 

 

117.8

 

Goodwill

 

 

372.8

 

 

 

372.8

 

Acquired intangibles, net

 

 

163.1

 

 

 

219.2

 

Non-current other assets

 

 

61.0

 

 

 

50.5

 

 

 

$

1,468.6

 

 

$

1,499.8

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

117.9

 

 

$

156.9

 

Accrued compensation

 

 

22.1

 

 

 

25.4

 

Income taxes payable

 

 

1.0

 

 

 

13.1

 

Acquisition-related liabilities

 

 

 

 

 

8.7

 

Other accrued liabilities

 

 

99.1

 

 

 

79.7

 

Total current liabilities

 

 

240.1

 

 

 

283.8

 

Convertible notes, net

 

 

463.8

 

 

 

450.7

 

Other long-term liabilities

 

 

38.0

 

 

 

36.0

 

Total liabilities

 

 

741.9

 

 

 

770.5

 

Stockholders' Equity:

 

 

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

 

 

$0.001 par value; 120,000,000 shares authorized,

   63,942,166 and 62,889,679 shares issued, and 34,452,290 and 35,249,803 shares

   outstanding, at March 31, 2019 and June 30, 2018, respectively

 

 

0.1

 

 

 

0.1

 

Additional paid-in capital

 

 

1,248.1

 

 

 

1,195.2

 

Treasury stock: 29,489,876 and 27,639,876 common treasury shares at

   March 31, 2019 and June 30, 2018, respectively, at cost

 

 

(1,151.2

)

 

 

(1,073.9

)

Accumulated other comprehensive income

 

 

 

 

 

1.5

 

Retained earnings

 

 

629.7

 

 

 

606.4

 

Total stockholders' equity

 

 

726.7

 

 

 

729.3

 

 

 

$

1,468.6

 

 

$

1,499.8

 

See accompanying notes to condensed consolidated financial statements (unaudited).

 

 

 

3

 


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net revenue

 

$

334.0

 

 

$

394.0

 

 

$

1,177.1

 

 

$

1,241.8

 

Cost of revenue

 

 

218.0

 

 

 

271.1

 

 

 

770.4

 

 

 

889.3

 

Gross margin

 

 

116.0

 

 

 

122.9

 

 

 

406.7

 

 

 

352.5

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

82.6

 

 

 

93.7

 

 

 

256.9

 

 

 

273.0

 

Selling, general, and administrative

 

 

34.2

 

 

 

37.9

 

 

 

103.6

 

 

 

115.6

 

Acquired intangibles amortization

 

 

3.0

 

 

 

1.4

 

 

 

8.8

 

 

 

8.5

 

Restructuring costs

 

 

 

 

 

2.2

 

 

 

10.4

 

 

 

8.6

 

Total operating expenses

 

 

119.8

 

 

 

135.2

 

 

 

379.7

 

 

 

405.7

 

Operating income/(loss)

 

 

(3.8

)

 

 

(12.3

)

 

 

27.0

 

 

 

(53.2

)

Interest and other expense, net

 

 

(4.3

)

 

 

(4.7

)

 

 

(10.5

)

 

 

(15.4

)

Income/(loss) before provision for income taxes and

   equity investment loss

 

 

(8.1

)

 

 

(17.0

)

 

 

16.5

 

 

 

(68.6

)

Provision/(benefit) for income taxes

 

 

(15.3

)

 

 

(3.9

)

 

 

(8.1

)

 

 

52.6

 

Equity investment loss

 

 

(0.5

)

 

 

(0.6

)

 

 

(1.3

)

 

 

(1.4

)

Net income/(loss)

 

$

6.7

 

 

$

(13.7

)

 

$

23.3

 

 

$

(122.6

)

Net income/(loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.19

 

 

$

(0.40

)

 

$

0.67

 

 

$

(3.61

)

Diluted

 

$

0.19

 

 

$

(0.40

)

 

$

0.66

 

 

$

(3.61

)

Shares used in computing net income/(loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

34.4

 

 

 

34.5

 

 

 

34.7

 

 

 

34.0

 

Diluted

 

 

35.0

 

 

 

34.5

 

 

 

35.5

 

 

 

34.0

 

 

See accompanying notes to condensed consolidated financial statements (unaudited).

 

 

 

4

 


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(in millions)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income/(loss)

 

$

6.7

 

 

$

(13.7

)

 

$

23.3

 

 

$

(122.6

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized net gain on investment

 

 

 

 

 

 

 

 

(1.5

)

 

 

 

Net current period-other comprehensive loss

 

 

 

 

 

 

 

 

(1.5

)

 

 

 

Comprehensive income/(loss)

 

$

6.7

 

 

$

(13.7

)

 

$

21.8

 

 

$

(122.6

)

 

See accompanying notes to condensed consolidated financial statements (unaudited).

 

 

 

5

 


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury

 

 

Comprehensive

 

 

Retained

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Income

 

 

Earnings

 

 

Equity

 

Balance at June 30, 2018

 

 

62,889,679

 

 

$

0.1

 

 

$

1,195.2

 

 

$

(1,073.9

)

 

$

1.5

 

 

$

606.4

 

 

$

729.3

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.8

 

 

 

3.8

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.5

)

 

 

 

 

 

(1.5

)

Issuance of common stock for share-

   based award compensation plans

 

 

140,379

 

 

 

 

 

 

2.1

 

 

 

 

 

 

 

 

 

 

 

 

2.1

 

Payroll taxes for deferred stock units

 

 

 

 

 

 

 

 

(0.9

)

 

 

 

 

 

 

 

 

 

 

 

(0.9

)

Purchases of treasury stock

 

 

 

 

 

 

 

 

 

 

 

(39.4

)

 

 

 

 

 

 

 

 

(39.4

)

Share-based compensation

 

 

 

 

 

 

 

 

16.7

 

 

 

 

 

 

 

 

 

 

 

 

16.7

 

Balance at September 30, 2018

 

 

63,030,058

 

 

 

0.1

 

 

 

1,213.1

 

 

 

(1,113.3

)

 

 

 

 

 

610.2

 

 

 

710.1

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12.8

 

 

 

12.8

 

Issuance of common stock for share-

   based award compensation plans

 

 

773,486

 

 

 

 

 

 

9.3

 

 

 

 

 

 

 

 

 

 

 

 

9.3

 

Payroll taxes for deferred stock units

 

 

 

 

 

 

 

 

(6.3

)

 

 

 

 

 

 

 

 

 

 

 

(6.3

)

Purchases of treasury stock

 

 

 

 

 

 

 

 

 

 

 

(37.9

)

 

 

 

 

 

 

 

 

(37.9

)

Share-based compensation

 

 

 

 

 

 

 

 

16.2

 

 

 

 

 

 

 

 

 

 

 

 

16.2

 

Balance at December 31, 2018

 

 

63,803,544

 

 

 

0.1

 

 

 

1,232.3

 

 

 

(1,151.2

)

 

 

 

 

 

623.0

 

 

 

704.2

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.7

 

 

 

6.7

 

Issuance of common stock for share-

   based award compensation plans

 

 

138,622

 

 

 

 

 

 

1.7

 

 

 

 

 

 

 

 

 

 

 

 

1.7

 

Payroll taxes for deferred stock units

 

 

 

 

 

 

 

 

(1.8

)

 

 

 

 

 

 

 

 

 

 

 

(1.8

)

Share-based compensation

 

 

 

 

 

 

 

 

15.9

 

 

 

 

 

 

 

 

 

 

 

 

15.9

 

Balance at March 31, 2019

 

 

63,942,166

 

 

$

0.1

 

 

$

1,248.1

 

 

$

(1,151.2

)

 

$

 

 

$

629.7

 

 

$

726.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements (unaudited).

 

 

 

 

 

6

 


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury

 

 

Comprehensive

 

 

Retained

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Income

 

 

Earnings

 

 

Equity

 

Balance at June 30, 2017

 

 

60,579,911

 

 

$

0.1

 

 

$

1,005.8

 

 

$

(980.3

)

 

$

1.5

 

 

$

730.5

 

 

$

757.6

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26.5

)

 

 

(26.5

)

Issuance of common stock for share-

   based award compensation plans

 

 

68,858

 

 

 

 

 

 

1.1

 

 

 

 

 

 

 

 

 

 

 

 

1.1

 

Issuance of common stock for acquisition

 

 

726,666

 

 

 

 

 

 

 

39.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39.1

 

Payroll taxes for deferred stock units

 

 

 

 

 

 

 

 

(0.5

)

 

 

 

 

 

 

 

 

 

 

 

(0.5

)

Purchases of treasury stock

 

 

 

 

 

 

 

 

 

 

 

(93.6

)

 

 

 

 

 

 

 

 

(93.6

)

Share-based compensation

 

 

 

 

 

 

 

 

16.5

 

 

 

 

 

 

 

 

 

 

 

 

16.5

 

Issuance of Convertible debt

 

 

 

 

 

 

 

 

52.1

 

 

 

 

 

 

 

 

 

 

 

 

52.1

 

Balance at September 30, 2017

 

 

61,375,435

 

 

 

0.1

 

 

 

1,114.1

 

 

 

(1,073.9

)

 

 

1.5

 

 

 

704.0

 

 

 

745.8

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(82.4

)

 

 

(82.4

)

Issuance of common stock for share-

   based award compensation plans

 

 

557,907

 

 

 

 

 

 

8.1

 

 

 

 

 

 

 

 

 

 

 

 

8.1

 

Payroll taxes for deferred stock units

 

 

 

 

 

 

 

 

(4.1

)

 

 

 

 

 

 

 

 

 

 

 

(4.1

)

Share-based compensation

 

 

 

 

 

 

 

 

17.8

 

 

 

 

 

 

 

 

 

 

 

 

17.8

 

Balance at December 31, 2017

 

 

61,933,342

 

 

 

0.1

 

 

 

1,135.9

 

 

 

(1,073.9

)

 

 

1.5

 

 

 

621.6

 

 

 

685.2

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13.7

)

 

 

(13.7

)

Issuance of common stock for share-

   based award compensation plans

 

 

300,769

 

 

 

 

 

 

5.8

 

 

 

 

 

 

 

 

 

 

 

 

5.8

 

Payroll taxes for deferred stock units

 

 

 

 

 

 

 

 

(0.2

)

 

 

 

 

 

 

 

 

 

 

 

(0.2

)

Share-based compensation

 

 

 

 

 

 

 

 

18.8

 

 

 

 

 

 

 

 

 

 

 

 

18.8

 

Balance at March 31, 2018

 

 

62,234,111

 

 

$

0.1

 

 

$

1,160.3

 

 

$

(1,073.9

)

 

$

1.5

 

 

$

607.9

 

 

$

695.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements (unaudited).

 

 

7

 


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

 

 

 

Nine Months Ended

 

 

 

March 31,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

23.3

 

 

$

(122.6

)

Adjustments to reconcile net income/(loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Share-based compensation costs

 

 

48.7

 

 

 

53.1

 

Depreciation and amortization

 

 

27.5

 

 

 

28.6

 

Acquired intangibles amortization

 

 

56.1

 

 

 

62.0

 

Deferred taxes

 

 

(12.4

)

 

 

16.8

 

Amortization of convertible debt discount and issuance costs

 

 

13.1

 

 

 

12.7

 

Amortization of debt issuance costs

 

 

0.4

 

 

 

1.5

 

Impairment recovery on investments

 

 

(2.8

)

 

 

 

Arbitration settlement

 

 

(1.9

)

 

 

 

Equity investment loss

 

 

1.3

 

 

 

1.4

 

Foreign currency remeasurement loss

 

 

0.2

 

 

 

0.1

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

27.5

 

 

 

8.2

 

Inventories

 

 

(21.9

)

 

 

102.2

 

Prepaid expenses and other current assets

 

 

(5.1

)

 

 

20.9

 

Other assets

 

 

(1.3

)

 

 

(7.2

)

Accounts payable

 

 

(35.8

)

 

 

(15.9

)

Accrued compensation

 

 

(3.3

)

 

 

(15.4

)

Acquisition-related liabilities

 

 

(6.8

)

 

 

 

Income taxes payable

 

 

(9.6

)

 

 

1.8

 

Other accrued liabilities

 

 

13.6

 

 

 

(11.1

)

Net cash provided by operating activities

 

 

110.8

 

 

 

137.1