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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 December 26, 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 January 29, 2021: 34,952,361

 

 

 

 


 

 

SYNAPTICS INCORPORATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 26, 2020

TABLE OF CONTENTS

 

 

 

 

  

 

  

Page

Part I. Financial Information

  

 

 

 

 

 

   

 

Item 1.

   

Condensed Consolidated Financial Statements (Unaudited):

  

3

 

 

 

 

 

 

 

  

Condensed Consolidated Balance Sheets—December 26, 2020 and June 27, 2020

  

3

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income—Three and Six Months Ended December 26, 2020 and December 28, 2019

 

4

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

5

 

 

 

 

 

 

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows—Three and Six Months Ended December 26, 2020 and December 28, 2019

  

6

 

 

 

 

 

 

 

  

Notes to Condensed Consolidated Financial Statements

  

7

 

 

 

 

 

 

Item 2.

  

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

  

27

 

 

 

 

 

 

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

  

37

 

 

 

 

 

 

Item 4.

  

Controls and Procedures

  

37

 

 

Part II. Other Information

  

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

38

 

 

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

38

 

 

 

 

 

 

 

 

 

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

  

38

 

 

 

 

 

 

Item 6.

  

Exhibits

  

39

 

 

 

 

 

 

 

Signatures

  

40

 

 

 


 

 

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)

 

 

 

December

 

 

June

 

 

 

2020

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

309.9

 

 

$

763.4

 

Short-term investments

 

 

7.0

 

 

 

 

Accounts receivable, net of allowances of $5.8 at December 2020 and June 2020

 

 

249.3

 

 

 

195.3

 

Inventories

 

 

73.1

 

 

 

102.0

 

Prepaid expenses and other current assets

 

 

32.3

 

 

 

16.9

 

Total current assets

 

 

671.6

 

 

 

1,077.6

 

Property and equipment at cost, net of accumulated depreciation of $129.0 and $131.2 at

   December 2020 and June 2020, respectively

 

 

93.6

 

 

 

84.3

 

Goodwill

 

 

568.6

 

 

 

360.8

 

Acquired intangibles, net

 

 

354.6

 

 

 

93.4

 

Non-current other assets

 

 

103.8

 

 

 

77.7

 

 

 

$

1,792.2

 

 

$

1,693.8

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

74.4

 

 

$

60.6

 

Accrued compensation

 

 

37.5

 

 

 

59.5

 

Income taxes payable

 

 

16.2

 

 

 

33.0

 

Other accrued liabilities

 

 

97.4

 

 

 

91.0

 

Total current liabilities

 

 

225.5

 

 

 

244.1

 

Long-term debt

 

 

100.0

 

 

 

100.0

 

Convertible notes, net

 

 

496.1

 

 

 

486.6

 

Other long-term liabilities

 

 

82.6

 

 

 

44.0

 

Total liabilities

 

 

904.2

 

 

 

874.7

 

Stockholders' Equity:

 

 

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

 

 

$0.001 par value; 120,000,000 shares authorized, 66,677,341 and 65,871,648 shares

   issued, and  34,928,146 and 34,122,453 shares outstanding, at December 2020

   and June 2020, respectively

 

 

0.1

 

 

 

0.1

 

Additional paid-in capital

 

 

1,362.3

 

 

 

1,340.2

 

Treasury stock:  31,749,195 common treasury shares at December

   2020 and June 2020, at cost

 

 

(1,222.6

)

 

 

(1,222.6

)

Retained earnings

 

 

748.2

 

 

 

701.4

 

Total stockholders' equity

 

 

888.0

 

 

 

819.1

 

 

 

$

1,792.2

 

 

$

1,693.8

 

 

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

3


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December

 

 

December

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net revenue

 

$

357.6

 

 

$

388.3

 

 

$

686.0

 

 

$

728.2

 

Cost of revenue

 

 

207.2

 

 

 

229.0

 

 

 

401.1

 

 

 

442.7

 

Gross margin

 

 

150.4

 

 

 

159.3

 

 

 

284.9

 

 

 

285.5

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

77.3

 

 

 

77.0

 

 

 

158.2

 

 

 

163.0

 

Selling, general, and administrative

 

 

39.5

 

 

 

31.5

 

 

 

74.8

 

 

 

59.0

 

Acquired intangibles amortization

 

 

8.7

 

 

 

3.0

 

 

 

15.4

 

 

 

5.9

 

Restructuring costs

 

 

0.6

 

 

 

13.3

 

 

 

6.2

 

 

 

19.9

 

Gain on sale of audio technology assets

 

 

(34.2

)

 

 

 

 

 

(34.2

)

 

 

 

Total operating expenses

 

 

91.9

 

 

 

124.8

 

 

 

220.4

 

 

 

247.8

 

Operating income

 

 

58.5

 

 

 

34.5

 

 

 

64.5

 

 

 

37.7

 

Interest and other expense, net

 

 

(6.0

)

 

 

(2.3

)

 

 

(10.7

)

 

 

(5.9

)

Income before provision for income taxes

   and equity investment loss

 

 

52.5

 

 

 

32.2

 

 

 

53.8

 

 

 

31.8

 

Provision for income taxes

 

 

2.4

 

 

 

12.0

 

 

 

6.0

 

 

 

7.1

 

Equity investment loss

 

 

(0.5

)

 

 

(0.4

)

 

 

(1.0

)

 

 

(0.9

)

Net income and Comprehensive income

 

$

49.6

 

 

$

19.8

 

 

$

46.8

 

 

$

23.8

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.43

 

 

$

0.59

 

 

$

1.36

 

 

$

0.72

 

Diluted

 

$

1.36

 

 

$

0.58

 

 

$

1.29

 

 

$

0.70

 

Shares used in computing net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

34.8

 

 

 

33.5

 

 

 

34.5

 

 

 

33.2

 

Diluted

 

 

36.5

 

 

 

34.4

 

 

 

36.4

 

 

 

34.1

 

 

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

4


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury

 

 

Retained

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Earnings

 

 

Equity

 

Balance at June 2020

 

 

65,871,648

 

 

$

0.1

 

 

$

1,340.2

 

 

$

(1,222.6

)

 

$

701.4

 

 

$

819.1

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2.8

)

 

 

(2.8

)

Issuance of common stock for share-

   based award compensation plans

 

 

296,917

 

 

 

 

 

 

10.4

 

 

 

 

 

 

 

 

 

10.4

 

Payroll taxes for deferred stock units

 

 

 

 

 

 

 

 

(5.6

)

 

 

 

 

 

 

 

 

(5.6

)

Share-based compensation attributable to acquisition

 

 

 

 

 

 

 

 

3.2

 

 

 

 

 

 

 

 

 

3.2

 

Share-based compensation

 

 

 

 

 

 

 

 

14.4

 

 

 

 

 

 

 

 

 

14.4

 

Balance at September 2020

 

 

66,168,565

 

 

 

0.1

 

 

 

1,362.6

 

 

 

(1,222.6

)

 

 

698.6

 

 

 

838.7

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49.6

 

 

 

49.6

 

Issuance of common stock for share-

   based award compensation plans

 

 

508,776

 

 

 

 

 

 

0.8

 

 

 

 

 

 

 

 

 

0.8

 

Payroll taxes for deferred stock units

 

 

 

 

 

 

 

 

(20.2

)

 

 

 

 

 

 

 

 

(20.2

)

Share-based compensation

 

 

 

 

 

 

 

 

19.1

 

 

 

 

 

 

 

 

 

19.1

 

Balance at December 2020

 

 

66,677,341

 

 

$

0.1

 

 

$

1,362.3

 

 

$

(1,222.6

)

 

$

748.2

 

 

$

888.0

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury

 

 

Retained

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Earnings

 

 

Equity

 

Balance at June 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 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 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 2019

 

 

65,388,813

 

 

$

0.1

 

 

$

1,294.2

 

 

$

(1,209.4

)

 

$

606.4

 

 

$

691.3

 

 

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

5


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

 

 

 

Six Months Ended

 

 

 

December

 

 

 

2020

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

46.8

 

 

$

23.8

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Share-based compensation costs

 

 

33.5

 

 

 

23.3

 

Depreciation and amortization

 

 

10.2

 

 

 

15.3

 

Acquired intangibles amortization

 

 

57.0

 

 

 

29.3

 

Gain on sale of audio technology assets

 

 

(34.2

)

 

 

 

Deferred taxes

 

 

(5.8

)

 

 

 

Amortization of convertible debt discount and issuance costs

 

 

9.5

 

 

 

9.1

 

Amortization of debt issuance costs

 

 

0.4

 

 

 

0.2

 

Amortization of cost of development services

 

 

4.2

 

 

 

 

Acquired in-process research and development

 

 

 

 

 

3.7

 

Equity investment loss

 

 

1.0

 

 

 

0.9

 

Foreign currency remeasurement loss

 

 

(0.6

)

 

 

(0.3

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(46.9

)

 

 

(16.4

)

Inventories

 

 

62.0

 

 

 

55.6

 

Prepaid expenses and other current assets

 

 

(8.6

)

 

 

(2.5

)

Other assets

 

 

(7.9

)

 

 

0.8

 

Accounts payable

 

 

9.1

 

 

 

(7.4

)

Accrued compensation

 

 

(24.6

)

 

 

15.1

 

Income taxes payable

 

 

(15.3

)

 

 

(0.5

)

Other accrued liabilities

 

 

(11.9

)

 

 

(30.0

)

Net cash provided by operating activities

 

 

77.9

 

 

 

120.0

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Acquisition of businesses, net of cash and cash equivalents acquired

 

 

(623.0

)

 

 

 

Proceeds from sale of audio technology assets

 

 

34.2

 

 

 

 

Purchase of in-process research and development

 

 

 

 

 

(2.5

)

Proceeds from maturities of investments

 

 

88.0

 

 

 

 

Purchases of property and equipment

 

 

(12.2

)

 

 

(8.2

)

Cost method investment

 

 

(5.0

)

 

 

 

Net cash used in investing activities

 

 

(518.0

)