10-Q
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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 25, 2021

 

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 27, 2022: 39,523,705

 

 


 

SYNAPTICS INCORPORATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED DECember 25, 2021

TABLE OF CONTENTS

 

 

 

 

 

 

 

Page

Part I. Financial Information

 

 

 

 

 

 

 

 

Item 1.

 

Condensed Consolidated Financial Statements (Unaudited):

 

3

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets—December 25, 2021 and June 26, 2021

 

3

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Income—Three and six months Ended December 25, 2021 and December 26, 2020

 

4

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity—Three and six months Ended December 25, 2021 and December 26, 2020

 

5

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows—Six months ended December 25, 2021 and December 26, 2020

 

7

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

8

 

 

 

 

 

 

Item 2.

 

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

 

26

 

 

 

 

 

 

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

 

 

 

2021

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

502.8

 

 

$

836.3

 

Short-term investments

 

 

71.1

 

 

 

-

 

Accounts receivable, net of allowances of $5.9 and $5.8 at December 2021 and June 2021, respectively

 

 

312.2

 

 

 

228.3

 

Inventories

 

 

133.3

 

 

 

82.0

 

Prepaid expenses and other current assets

 

 

55.3

 

 

 

33.1

 

Total current assets

 

 

1,074.7

 

 

 

1,179.7

 

Property and equipment at cost, net of accumulated depreciation of $119.3 and $131.0 at
   December 2021 and June 2021, respectively

 

 

56.9

 

 

 

91.2

 

Goodwill

 

 

826.6

 

 

 

570.0

 

Acquired intangibles, net

 

 

447.6

 

 

 

301.5

 

Non-current assets held for sale

 

 

50.8

 

 

 

-

 

Non-current other assets

 

 

110.8

 

 

 

84.4

 

 

 

$

2,567.4

 

 

$

2,226.8

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

134.5

 

 

$

97.6

 

Accrued compensation

 

 

68.4

 

 

 

76.4

 

Income taxes payable

 

 

23.8

 

 

 

29.4

 

Other accrued liabilities

 

 

138.5

 

 

 

96.2

 

Convertible notes, net

 

 

-

 

 

 

487.1

 

Total current liabilities

 

 

365.2

 

 

 

786.7

 

Long-term debt

 

 

983.5

 

 

 

394.4

 

Other long-term liabilities

 

 

154.8

 

 

 

78.5

 

Total liabilities

 

 

1,503.5

 

 

 

1,259.6

 

Stockholders' Equity:

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

$0.001 par value; 120,000,000 shares authorized, 67,643,668 and 66,963,006 shares
   issued, and
39,519,047 and 35,331,903 shares outstanding, at December 2021
   and June 2021, respectively

 

 

0.1

 

 

 

0.1

 

Additional paid-in capital

 

 

867.7

 

 

 

1,391.5

 

Treasury stock: 28,124,621 and 31,631,103 common treasury shares at December
   2021 and June 2021, respectively, at cost

 

 

(694.5

)

 

 

(1,205.4

)

Accumulated other comprehensive income

 

 

(0.1

)

 

 

-

 

Retained earnings

 

 

890.7

 

 

 

781.0

 

Total stockholders' equity

 

 

1,063.9

 

 

 

967.2

 

 

 

$

2,567.4

 

 

$

2,226.8

 

 

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

 

 

Six Months Ended

 

 

 

December

 

 

December

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net revenue

 

$

420.5

 

 

$

357.6

 

 

$

793.2

 

 

$

686.0

 

Cost of revenue

 

 

195.4

 

 

 

207.2

 

 

 

370.0

 

 

 

401.1

 

Gross margin

 

 

225.1

 

 

 

150.4

 

 

 

423.2

 

 

 

284.9

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

88.9

 

 

 

77.3

 

 

 

175.0

 

 

 

158.2

 

Selling, general, and administrative

 

 

44.3

 

 

 

39.5

 

 

 

85.9

 

 

 

74.8

 

Acquired intangibles amortization

 

 

9.2

 

 

 

8.7

 

 

 

17.6

 

 

 

15.4

 

Restructuring costs

 

 

5.1

 

 

 

0.6

 

 

 

6.5

 

 

 

6.2

 

Gain on sale of audio technology assets

 

 

-

 

 

 

(34.2

)

 

 

-

 

 

 

(34.2

)

Total operating expenses

 

 

147.5

 

 

 

91.9

 

 

 

285.0

 

 

 

220.4

 

Operating income

 

 

77.6

 

 

 

58.5

 

 

 

138.2

 

 

 

64.5

 

Interest and other expense, net

 

 

(5.7

)

 

 

(6.0

)

 

 

(11.6

)

 

 

(10.7

)

Loss on redemption of convertible notes

 

 

-

 

 

 

-

 

 

 

(8.1

)

 

 

-

 

Income before provision for income taxes
   and equity investment loss

 

 

71.9

 

 

 

52.5

 

 

 

118.5

 

 

 

53.8

 

Provision for income taxes

 

 

2.0

 

 

 

2.4

 

 

 

7.9

 

 

 

6.0

 

Equity investment loss

 

 

(0.4

)

 

 

(0.5

)

 

 

(0.9

)

 

 

(1.0

)

Net income

 

$

69.5

 

 

$

49.6

 

 

$

109.7

 

 

$

46.8

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.76

 

 

$

1.43

 

 

$

2.85

 

 

$

1.36

 

Diluted

 

$

1.71

 

 

$

1.36

 

 

$

2.70

 

 

$

1.29

 

Shares used in computing net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

39.4

 

 

 

34.8

 

 

 

38.5

 

 

 

34.5

 

Diluted

 

 

40.7

 

 

 

36.5

 

 

 

40.7

 

 

 

36.4

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Treasury Stock

 

 

Accumulated Other
 Comprehensive Income

 

 

Retained Earnings

 

 

Total Stockholders' Equity

 

Balance at June 2021

 

 

66,963,006

 

 

$

0.1

 

 

$

1,391.5

 

 

$

(1,205.4

)

 

 

-

 

 

$

781.0

 

 

$

967.2

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

40.2

 

 

 

40.2

 

Issuance of common stock for share-based award compensation plans

 

 

384,866

 

 

 

-

 

 

 

7.8

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7.8

 

Payroll taxes for deferred stock units

 

 

-

 

 

 

-

 

 

 

(27.7

)

 

 

 

 

 

-

 

 

 

-

 

 

 

(27.7

)

Redemption of convertible debt

 

 

 

 

 

 

 

 

(518.2

)

 

 

510.9

 

 

 

-

 

 

 

 

 

 

(7.3

)

Share-based compensation

 

 

-

 

 

 

-

 

 

 

21.2

 

 

 

 

 

 

-

 

 

 

-

 

 

 

21.2

 

Balance at September 2021

 

 

67,347,872

 

 

 

0.1

 

 

 

874.6

 

 

 

(694.5

)

 

 

-

 

 

 

821.2

 

 

 

1,001.4

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

69.5

 

 

 

69.5

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(0.1

)

 

 

-

 

 

 

(0.1

)

Total comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

69.4

 

Issuance of common stock for share-based award compensation plans

 

 

295,796

 

 

 

-

 

 

 

0.8

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.8

 

Payroll taxes for deferred stock units

 

 

-

 

 

 

-

 

 

 

(35.8

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(35.8

)

Share-based compensation attributable to acquisition

 

 

-

 

 

 

-

 

 

 

1.7

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1.7

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

26.4

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

26.4

 

Balance at December 2021

 

 

67,643,668

 

 

$

0.1

 

 

$

867.7

 

 

$

(694.5

)

 

$

(0.1

)

 

$

890.7

 

 

$

1,063.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Treasury Stock

 

 

Retained Earnings

 

 

Total Stockholders' 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

 

 

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

 

 

6


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

 

 

 

Six Months Ended

 

 

 

December

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

109.7

 

 

$

46.8

 

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

 

 

 

 

 

 

Share-based compensation costs

 

 

47.6

 

 

 

33.5

 

Depreciation and amortization

 

 

11.6

 

 

 

10.2

 

Acquired intangibles amortization

 

 

54.4

 

 

 

57.0

 

Gain on sale of audio technology assets

 

 

-

 

 

 

(34.2

)

Loss on redemption of convertible notes

 

 

8.1

 

 

 

-

 

Deferred taxes

 

 

(6.2

)

 

 

(5.8

)

Amortization of convertible debt discount and issuance costs

 

 

1.6

 

 

 

9.5

 

Amortization of debt issuance costs

 

 

0.5

 

 

 

0.4

 

Amortization of cost of development services

 

 

5.0

 

 

 

4.2

 

Equity investment loss

 

 

0.9

 

 

 

1.0

 

Foreign currency remeasurement loss

 

 

0.4

 

 

 

(0.6

)

Other

 

 

(0.1

)

 

 

-

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable, net

 

 

(70.9

)