-- Net revenue of $133.3 million, up 11% sequentially -- Non-PC
revenue grew 33% sequentially -- Continued innovation with
Scrybe(TM) and Fuse(TM) introductions -- Retired $63 million of
debt; repurchased 783,000 shares of stock SANTA CLARA, Calif., Jan.
21 /PRNewswire-FirstCall/ -- Synaptics (NASDAQ: SYNA), a leading
developer of human interface solutions for mobile computing,
communications, and entertainment devices, today reported financial
results for the second fiscal quarter ended December 31, 2009. Net
revenue for the second quarter of fiscal 2010 was $133.3 million,
an increase of approximately 11% over net revenue of $119.6 million
for the previous quarter and a decrease of approximately 6% from
net revenue of $141.5 million for the second quarter of fiscal
2009. GAAP net income for the second quarter of fiscal 2010 was
$12.2 million, or $0.35 per diluted share, compared with net income
of $9.8 million, or $0.27 per diluted share, for the previous
quarter and $17.6 million, or $0.50 per diluted share, for the
second quarter of fiscal 2009. Non-GAAP net income for the second
quarter of fiscal 2010, which excludes non-cash charges for
interest expense and share-based compensation, was $21.7 million,
or $0.62 per diluted share, compared with net income of $17.2
million, or $0.48 per diluted share, for the previous quarter and
net income of $29.5 million, or $0.84 per diluted share, for the
second quarter of fiscal 2009. (See attached table for a
reconciliation of GAAP to non-GAAP results.) "Robust demand for
Synaptics' touch solutions drove solid results for the December
quarter," stated Tom Tiernan, CEO. "Synaptics continues its
leadership in innovation, and our design activity remains strong.
At the recent CES show, we experienced strong interest in our new
Scrybe gesture workflow solution and the Fuse concept phone,
demonstrating new usage models made possible with our technology.
As a market leader in capacitive touch solutions, Synaptics is well
positioned to capitalize on expanding market opportunities by
delivering advanced designs that generate compelling value to
leading OEMs and their customers." PC revenue of $73.6 million
represented 55% of total revenue for the quarter. Synaptics
continued to drive increasing penetration of its multi-finger
gesture enabled TouchPads(TM) and innovative product offerings,
such as ClickPad(TM). Non-PC revenue of $59.7 million comprised 45%
of total revenue for the quarter and grew 33% sequentially. Non-PC
revenue growth was driven by increasing adoption of Synaptics'
capacitive touchscreen solutions by major mobile handset
manufacturers and strong demand for personal entertainment devices.
Cash and short-term investments at December 31, 2009 totaled $140.0
million. Cash flow from operations for the quarter was $25.7
million. The Company used $63.0 million to retire all but $2.3
million of its 0.75% convertible notes and used $19.1 million to
buy back approximately 783,000 shares of its common stock under its
stock repurchase program. Kathy Bayless, CFO, added, "Considering
backlog of approximately $58 million entering the quarter, expected
product mix, customer order patterns, and customer forecasts, we
anticipate revenue in the March quarter to be between $110 million
and $115 million, an increase of 9% to 14% over the comparable
quarter last year. Taking into account first half results, design
wins, customer forecasts, and visibility into our pipeline of new
business opportunities, we anticipate fiscal 2010 revenue to be in
the range of $495 million to $505 million." In the December
quarter, the Company identified a calculation error in the
third-party equity accounting software commonly used in industry,
resulting in an understatement of previously reported non-cash
share-based compensation. The cumulative error to GAAP net income
since the adoption in fiscal 2006 of FAS123R was $3.1 million and
was determined to be immaterial to previously reported financial
results. In accordance with current accounting guidance, the
December quarter GAAP results reflect the cumulative impact of
correcting the calculation error. The correction did not impact
non-GAAP results. Earnings Call Information The Synaptics second
quarter fiscal 2010 teleconference and webcast is scheduled to
begin at 2:00 p.m., Pacific Time, on Thursday, January 21, 2010,
during which the Company will provide forward-looking information.
To participate on the live call, analysts and investors should dial
877-941-2068 at least ten minutes prior to the call. Synaptics will
also offer a live and archived webcast of the conference call,
accessible from the "Investor Relations" section of the Company's
Web site at http://www.synaptics.com/. About Synaptics Incorporated
Synaptics is a leading developer of human interface solutions for
mobile computing, communications, and entertainment devices. The
Company creates interface solutions for a variety of devices
including notebook PCs, PC peripherals, digital music players, and
mobile phones. The TouchPad(TM), Synaptics' flagship product, is
integrated into a majority of today's notebook computers. Consumer
electronics and computing manufacturers use Synaptics' solutions to
enrich the interaction between humans and intelligent devices
through improved usability, functionality, and industrial design.
The Company is headquartered in Santa Clara, California.
http://www.synaptics.com/ NOTE: Synaptics, Scrybe, Fuse, TouchPad,
ClickPad, and the Synaptics logo are trademarks of Synaptics in the
United States and/or other countries. Use of Non-GAAP Financial
Information In evaluating its business, Synaptics considers and
uses net income per share excluding share-based compensation,
non-cash interest charges, and unusual or non-recurring items as a
supplemental measure of operating performance. Net income excluding
share-based compensation, non cash interest charges, and unusual or
non-recurring items is not a measurement of the Company's financial
performance under GAAP and should not be considered as an
alternative to GAAP net income. The Company presents net income
excluding share-based compensation, non-cash interest charges, and
unusual or non-recurring items because it considers it an important
supplemental measure of its performance. The Company believes this
measure facilitates operating performance comparisons from period
to period by eliminating potential differences in net income caused
by the existence and timing of non-cash compensation charges,
non-cash interest charges, and unusual or non-recurring items. Net
income excluding share-based compensation, non-cash interest
charges, and unusual or non-recurring items has limitations as an
analytical tool and should not be considered in isolation or as a
substitute for the Company's GAAP net income. The principal
limitations of this measure are that it does not reflect the
Company's actual expenses and may thus have the effect of inflating
its net income and net income per share. Forward-Looking Statements
This press release contains "forward-looking" statements about
Synaptics, as that term is defined under the federal securities
laws. Synaptics intends such forward-looking statements to be
subject to the safe harbor created by those laws. Such
forward-looking statements include, but are not limited to,
statements regarding the rapid expansion of interest in the
Company's leadership in innovation and its strong design activity,
the potential for success of the Company's Scrybe gesture solution
and Fuse concept phone, the Company's positioning to capitalize on
current and future market opportunities by delivering advanced
designs that generate compelling value to leading OEMs and their
customers, the Company's penetration of its multi-finger gesture
enabled touchpads in consumer laptops as well as the adoption of
new product offerings, Synaptics' anticipated revenue for the March
quarter of fiscal 2010, and Synaptics' anticipated revenue for
fiscal 2010. Synaptics cautions that these statements are qualified
by important factors that could cause actual results to differ
materially from those reflected by the forward-looking statements
contained herein. Such factors include, but are not limited to, (a)
demand for Synaptics' products, (b) market demand for OEMs'
products using Synaptics' solutions, (c) changing market demand
trends in the markets it serves, (d) the success of our customers'
products that utilize our product solutions, (e) the development
and launch cycles of our customers' products, (f) market pressures
on selling prices, (g) changes in product mix, (h) the market
acceptance of our product solutions compared with competitors
solutions, (i) general economic conditions, including consumer
confidence and demand, and (j) other risks as identified from time
to time in Synaptics' reports filed with the Securities and
Exchange Commission, including Quarterly Reports on Form 10-Q and
the Annual Report on Form 10-K for the fiscal year ended June 30,
2009. All forward-looking statements are based on information
available to Synaptics on the date hereof, and Synaptics assumes no
obligation to update such statements. (Tables to Follow) SYNAPTICS
INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands, except
share data) (Unaudited) December 31, June 30, 2009 2009 * ----
------ Assets Current assets: Cash and cash equivalents $140,033
$169,036 Short term investments - 22,934 --- ------ Total cash,
cash equivalents, and short-term investments 140,033 191,970
Receivables, net of allowances of $513 and $513, respectively
100,302 84,739 Inventories 15,837 14,950 Prepaid expenses and other
current assets 4,171 3,094 ----- ----- Total current assets 260,343
294,753 Property and equipment, net 25,425 25,431 Goodwill 1,927
1,927 Non-current auction rate securities 28,952 28,767 Other
assets 18,110 25,272 ------ ------ Total assets $334,757 $376,150
======== ======== Liabilities and stockholders' equity Current
liabilities: Accounts payable $52,909 $32,210 Accrued compensation
8,069 8,450 Income taxes payable 12,806 9,128 Current deferred tax
liability - 10,225 Other accrued liabilities 15,464 11,813 Note
payable - 63,234 --- ------ Total current liabilities 89,248
135,060 Convertible senior subordinated notes 2,305 - Other
liabilities 19,238 18,484 Commitments and contingencies
Stockholders' equity: Preferred stock; $.001 par value; 10,000,000
shares authorized; no shares issued and outstanding - - Common
stock; $.001 par value; 60,000,000 shares authorized; 44,166,949
and 43,779,011 shares issued, and 33,295,636 and 34,690,911 shares
outstanding, respectively 44 44 Additional paid in capital 315,954
293,666 Less: 10,871,313 and 9,088,100 treasury shares,
respectively, at cost (281,932) (237,387) Retained earnings 188,185
166,154 Accumulated other comprehensive income 1,715 129 ----- ---
Total stockholders' equity 223,966 222,606 ------- ------- Total
liabilities and stockholders' equity $334,757 $376,150 ========
======== *Adjusted for retrospective application of ASC 470-20.
Refer to our earnings release dated October 23, 2009 for the impact
of the retrospective application of ASC 470-20. SYNAPTICS
INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In
thousands, except per share data) (Unaudited) Three Months Ended
December 31, ------------ 2009 2008 * ---- ------ Net revenue
$133,323 $141,523 Cost of revenue (1) 79,492 83,717 ------ ------
Gross margin 53,831 57,806 Operating expenses Research and
development (1) 22,442 15,940 Selling, general, and administrative
(1) 16,575 13,714 ------ ------ Total operating expenses 39,017
29,654 ------ ------ Operating income 14,814 28,152 Interest income
241 974 Interest expense (968) (1,739) Loss on early retirement of
debt - (1,053) Net loss on investments - (6,509) --- ------ Income
before income taxes 14,087 19,825 Provision for income taxes (2)
1,860 2,250 ----- ----- Net income $12,227 $17,575 ======= =======
Net income per share: Basic $0.36 $0.52 ===== ===== Diluted $0.35
$0.50 ===== ===== Shares used in computing net income per share:
Basic 33,611 33,833 ====== ====== Diluted 34,936 35,057 ======
====== (1) Includes share-based compensation charges of: Cost of
revenue $815 $402 Research and development 4,646 1,962 Selling,
general, and administrative 6,635 3,292 ----- ----- $12,096 $5,656
======= ====== (2) Includes tax benefit for share-based
compensation charges of: $3,106 $1,769 ====== ====== Non-GAAP net
income per share: Basic $0.65 $0.87 ===== ===== Diluted $0.62 $0.84
===== ===== Six Months Ended December 31, ------------ 2009 2008 *
---- ------ Net revenue $252,915 $257,380 Cost of revenue (1)
150,762 152,981 ------- ------- Gross margin 102,153 104,399
Operating expenses Research and development (1) 42,417 31,745
Selling, general, and administrative (1) 30,339 28,284 ------
------ Total operating expenses 72,756 60,029 ------ ------
Operating income 29,397 44,370 Interest income 572 2,232 Interest
expense (2,391) (4,280) Loss on early retirement of debt - (1,053)
Net loss on investments (443) (6,509) ---- ------ Income before
income taxes 27,135 34,760 Provision for income taxes (2) 5,104
4,474 ----- ----- Net income $22,031 $30,286 ======= ======= Net
income per share: Basic $0.65 $0.90 ===== ===== Diluted $0.62 $0.86
===== ===== Shares used in computing net income per share: Basic
33,976 33,736 ====== ====== Diluted 35,477 35,311 ====== ====== (1)
Includes share-based compensation charges of: Cost of revenue
$1,263 $813 Research and development 7,444 3,978 Selling, general,
and administrative 10,437 6,746 ------ ----- $19,144 $11,537
======= ======= (2) Includes tax benefit for share-based
compensation charges of: $5,307 $3,737 ====== ====== Non-GAAP net
income per share: Basic $1.15 $1.40 ===== ===== Diluted $1.10 $1.34
===== ===== *Adjusted for retrospective application of ASC 470-20.
Refer to our earnings release dated October 23, 2009 for the impact
of the retrospective application of ASC 470-20. SYNAPTICS
INCORPORATED Computation of Basic and Diluted Net Income Per Share
(in thousands, except per share data) (Unaudited) Three Months
Ended December 31, ------------ 2009 2008 * ---- ------ Numerator:
Basic and diluted net income $12,227 $17,575 Denominator: Shares,
basic 33,611 33,833 Effect of dilutive share-based awards 1,325
1,224 ----- ----- Shares, diluted 34,936 35,057 Net income per
share: Basic $0.36 $0.52 ===== ===== Diluted $0.35 $0.50 =====
===== Computation of non-GAAP basic and diluted net income per
share (unaudited): Numerator: Reported net income $12,227 $17,575
Non-GAAP adjustments (net of tax): Loss on early retirement of debt
- 643 Net loss on investments - 6,509 Non cash interest expense 483
846 One-time tax charge Share-based compensation 8,990 3,887
Non-GAAP basic and diluted net income $21,700 $29,460 -------
------- Non-GAAP net income per share: Basic $0.65 $0.87 =====
===== Diluted $0.62 $0.84 ===== ===== Six Months Ended December 31,
------------ 2009 2008 * ---- ------ Numerator: Basic and diluted
net income $22,031 $30,286 Denominator: Shares, basic 33,976 33,736
Effect of dilutive share-based awards 1,501 1,575 ----- -----
Shares, diluted 35,477 35,311 Net income per share: Basic $0.65
$0.90 ===== ===== Diluted $0.62 $0.86 ===== ===== Computation of
non-GAAP basic and diluted net income per share (unaudited):
Numerator: Reported net income $22,031 $30,286 Non-GAAP adjustments
(net of tax): Loss on early retirement of debt - 643 Net loss on
investments 443 6,509 Non cash interest expense 1,192 2,094
One-time tax charge 1,445 Share-based compensation 13,837 7,800
Non-GAAP basic and diluted net income $38,948 $47,332 -------
------- Non-GAAP net income per share: Basic $1.15 $1.40 =====
===== Diluted $1.10 $1.34 ===== ===== *Adjusted for retrospective
application of ASC 470-20. Refer to our earnings release dated
October 23, 2009 for the impact of the retrospective application of
ASC 470-20 For more information contact: Alex Wellins The Blueshirt
Group 415-217-5861 DATASOURCE: Synaptics CONTACT: Alex Wellins of
The Blueshirt Group, +1-415-217-5861, , for Synaptics Web Site:
http://www.synaptics.com/
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