SEC Filing | Synaptics Incorporated

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syna-10q_20200328.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 28, 2020


☐	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)

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

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.

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 ☒

Number of shares of Common Stock outstanding at April 30, 2020: 34,035,706

SYNAPTICS INCORPORATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 28, 2020

TABLE OF CONTENTS

			Page
Part I. Financial Information

	Item 1.	Condensed Consolidated Financial Statements (Unaudited):	3

		Condensed Consolidated Balance Sheets—March 31, 2020 and June 30, 2019	3

		Condensed Consolidated Statements of Income—Three and Nine Months Ended March 31, 2020 and 2019	4

		Condensed Consolidated Statements of Comprehensive Income—Three and Nine Months Ended March 31, 2020 and 2019	5

		Condensed Consolidated Statements of Stockholders’ Equity	6

		Condensed Consolidated Statements of Cash Flows—Nine Months Ended March 31, 2020 and 2019	8

		Notes to Condensed Consolidated Financial Statements	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

	Item 4.	Controls and Procedures	35

Part II. Other Information

	Item 1.	Legal Proceedings	36

	Item 1A.	Risk Factors	36

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

	Item 6.	Exhibits	38

Signatures			39

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,
	2020			2019
ASSETS
Current Assets:
Cash and cash equivalents	$	472.1		$	327.8
Accounts receivable, net of allowances of $1.7 at March 31, 2020 and $2.1 at June 30, 2019		238.4			230.0
Inventories		95.5			158.7
Current assets held for sale		12.5			-
Prepaid expenses and other current assets		14.4			14.6
Total current assets		832.9			731.1
Property and equipment at cost, net of accumulated depreciation of $139.1 and $133.1 at March 31, 2020 and June 30, 2019, respectively		83.4			103.0
Non-current assets held for sale		17.6			—
Goodwill		361.8			372.8
Acquired intangibles, net		104.4			144.8
Non-current other assets		81.0			58.1
	$	1,481.1		$	1,409.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	86.9		$	98.3
Accrued compensation		47.7			30.4
Income taxes payable		11.8			19.1
Other accrued liabilities		92.8			106.1
Total current liabilities		239.2			253.9
Convertible notes, net		482.0			468.3
Other long-term liabilities		47.0			30.3
Total liabilities		768.2			752.5
Stockholders' Equity:
Common stock:
$0.001 par value; 120,000,000 shares authorized, 65,752,215 and 64,283,948 shares issued, and 34,004,920 and 33,349,735 shares outstanding, at March 31, 2020 and June 30, 2019, respectively		0.1			0.1
Additional paid-in capital		1,323.9			1,266.1
Treasury stock: 31,747,295 and 30,934,213 common treasury shares at March 31, 2020 and June 30, 2019, respectively, at cost		(1,222.5	)		(1,192.4	)
Retained earnings		611.4			583.5
Total stockholders' equity		712.9			657.3
	$	1,481.1		$	1,409.8

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

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2020			2019			2020			2019
Net revenue	$	328.1		$	334.0		$	1,056.3		$	1,177.1
Cost of revenue		192.5			218.0			635.2			770.4
Gross margin		135.6			116.0			421.1			406.7
Operating expenses:
Research and development		75.8			82.6			238.8			256.9
Selling, general, and administrative		31.6			34.2			90.6			103.6
Acquired intangibles amortization		2.9			3.0			8.8			8.8
Restructuring costs		6.3			-			26.2			10.4
Total operating expenses		116.6			119.8			364.4			379.7
Operating income		19.0			(3.8	)		56.7			27.0
Interest and other expense, net		(3.2	)		(4.3	)		(9.1	)		(10.5	)
Income/(loss) before provision/(benefit) for income taxes and equity investment loss		15.8			(8.1	)		47.6			16.5
Provision/(benefit) for income taxes		10.2			(15.3	)		17.3			(8.1	)
Equity investment loss		(0.6	)		(0.5	)		(1.5	)		(1.3	)
Net income	$	5.0		$	6.7		$	28.8		$	23.3
Net income per share:
Basic	$	0.15		$	0.19		$	0.86		$	0.67
Diluted	$	0.14		$	0.19		$	0.83		$	0.66
Shares used in computing net income per share:
Basic		34.0			34.4			33.5			34.7
Diluted		35.0			35.0			34.5			35.5

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

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(unaudited)

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2020		2019		2020		2019
Net income	$	5.0	$	6.7	$	28.8	$	23.3
Other comprehensive income:
Change in unrealized net gain on investment		—		—		—		(1.5	)
Comprehensive income	$	5.0	$	6.7	$	28.8	$	21.8

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

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

					Additional									Total
	Common Stock				Paid-in			Treasury			Retained			Stockholders'
	Shares		Amount		Capital			Stock			Earnings			Equity
Balance at June 30, 2019, as reported		64,283,948	$	0.1	$	1,266.1		$	(1,192.4	)	$	583.5		$	657.3
Cumulative effect of changes in accounting principles		—		—		—			—			(0.9	)	$	(0.9	)
Balance at June 30, 2019, as adjusted		64,283,948		0.1		1,266.1			(1,192.4	)		582.6			656.4
Net income		—		—		—			—			4.0			4.0
Issuance of common stock for share- based award compensation plans		209,110		—		1.7			—			—			1.7
Payroll taxes for deferred stock units		—		—		(1.5	)		—			—			(1.5	)
Purchases of treasury stock		—		—		—			(17.0	)		—			(17.0	)
Share-based compensation		—		—		11.2			—			—			11.2
Balance at September 30, 2019		64,493,058		0.1		1,277.5			(1,209.4	)		586.6			654.8
Net income		—		—		—			—			19.8			19.8
Issuance of common stock for share- based award compensation plans		895,755		—		11.8			—			—			11.8
Payroll taxes for deferred stock units		—		—		(7.2	)		—			—			(7.2	)
Share-based compensation		—		—		12.1			—			—			12.1
Balance at December 31, 2019		65,388,813		0.1		1,294.2			(1,209.4	)		606.4			691.3
Net income		—		—		—			—			5.0			5.0
Issuance of common stock for share- based award compensation plans		363,402		—		16.5			—			—			16.5
Payroll taxes for deferred stock units		—		—		(0.6	)		—			—			(0.6	)
Purchases of treasury stock		—		—		—			(13.1	)		—			(13.1	)
Share-based compensation		—		—		13.8			—			—			13.8
Balance at March 31, 2020		65,752,215	$	0.1	$	1,323.9		$	(1,222.5	)	$	611.4		$	712.9

See accompanying notes to condensed consolidated financial statements (unaudited)

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