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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.

 

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  

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).

3


 

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).

4


 

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).

5


 

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)

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, 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