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Synaptics Reports Second Quarter Fiscal 2014 Results

Revenue up 44% and GAAP EPS up 45% Year-over-Year; Financial Results Reflect Partial Quarter Impact on Operations from new Fingerprint ID Business

SAN JOSE, Calif., Jan. 23, 2014 /PRNewswire/ -- Synaptics Inc. (NASDAQ: SYNA), a leading developer of human interface solutions, today reported financial results for its second quarter ended December 31, 2013. 

Net revenue for the second quarter of fiscal 2014 was $205.8 million, an increase of 44% compared with $143.0 million for the comparable quarter last year. Net income for the second quarter of fiscal 2014 was $17.3 million, compared with net income of $11.1 million for the comparable quarter last year. Diluted earnings per share for the second quarter of fiscal 2014 was  $0.48, an increase of 45% compared with $0.33 for the comparable quarter last year. 

Non-GAAP net income for the second quarter of fiscal 2014 was $31.1 million, compared with non-GAAP net income of $17.7 million for the comparable quarter last year.  Diluted earnings per share for the second quarter of fiscal 2014 was $0.86, an increase of 62% compared with $0.53 for the second quarter of fiscal 2013. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.) 

"Excluding the impact of the acquisition of Validity, which closed in early November, our financial performance for the December quarter was above the mid-point of our guidance as we experienced strong year-over-year revenue growth in touchscreen and touchpad products," stated Rick Bergman, President and CEO.  "As we enter the second half of fiscal 2014, we expect to benefit from continued strong organic growth, further augmented by growing contributions from our acquisitions and new product innovations.  In addition, we are very excited with the progress of our new Fingerprint ID business and expect the acquisition to be accretive by the end of the fiscal year, earlier than previously anticipated."

Second Quarter 2014 Business Metrics

  • Revenue mix from mobile and PC products was approximately 65% and 35%, respectively. Fingerprint ID products have been classified according to type of device.
  • Revenue from mobile products of $133.6 million was up 64% year-over-year. Mobile products revenue includes all touchscreen, video display, and applicable fingerprint ID products.
  • Revenue from PC products totaled $72.2 million, an increase of 17% year-over-year.
  • GAAP earnings per share reflects the impact of additional operating expenses, including acquisition related costs and shares issued in connection with the company's recent acquisition of Validity Sensors, Inc., which closed on November 7, 2013.

Cash at December 31, 2013 was $369.4 million. In the first half of fiscal 2014, cash flow from operations was $85.8 million, and the company used $70.3 million to repurchase of approximately 1.7 million shares of common stock.

Kathy Bayless, CFO, added, "Considering our backlog, customer forecasts, and the resulting expected product mix, we anticipate revenue to be in the range of $180 million to $200 million for the March quarter.  The March quarter outlook reflects seasonality, with incremental revenue from our new Fingerprint ID products."

Earnings Call Information
The Synaptics second quarter fiscal 2014 teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, January 23, 2014, during which the company will provide forward-looking information. Analysts and investors should dial 1-877-941-1427 at least ten minutes prior to the call to participate.  Synaptics will also offer a live and archived webcast of the conference call, accessible from the "Investor Relations" section of the company's website at www.synaptics.com.

About Synaptics Incorporated
As a leading developer of human interface solutions which enhance the user experience, Synaptics provides the broadest solutions portfolio in the industry. The ClearPad® family supports touchscreen solutions for devices ranging from entry-level mobile phones to flagship premium smartphones, tablets and notebook PCs. The TouchPad™ family, including ClickPad™ and ForcePad®, is integrated into the majority of today's notebook PCs. LiveFlex® fingerprint sensor technology enables authentication, mobile payments, and touch-based navigation for smartphones, tablets, and notebook computers. Synaptics' wide portfolio also includes ThinTouch® supporting thin and light keyboard solutions, as well as key technologies for next generation touch-enabled video and display applications. (NASDAQ: SYNA) www.synaptics.com.

Use of Non-GAAP Financial Information

In evaluating its business, Synaptics considers and uses net income excluding share-based compensation and certain non-cash or non-recurring items as a supplemental measure of operating performance.  Net income excluding share-based compensation and certain non-cash 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 and certain non-cash 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 share-based compensation charges and certain non-cash or non-recurring items. Net income excluding share-based compensation and certain non-cash 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 that involve risks and uncertainties. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify these statements by the fact that they do not relate strictly to historical or current facts and may include words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" and other words and terms of similar meaning. All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements which reflect estimates and assumptions made by our management, all of which are difficult to predict and many of which are beyond our control, including statements related to our target business model, future performance, and revenue growth. Although we believe our estimates and assumptions to be reasonable, they are subject to a number of risks and uncertainties beyond our control and may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this press release are not guarantees of future performance, and actual results may differ materially from those anticipated or implied in the forward-looking statements due to various factors, including those factors identified from time to time in our Form 10-K for the fiscal year ended June 30, 2013, and our other current and periodic reports filed with the SEC.  All forward-looking statements speak only as of the date of this press release. We do not intend to publicly update or revise any forward-looking statements as a result of new information or future events or otherwise, except as required by law. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

For more information contact:

Jennifer Jarman
The Blueshirt Group
415-217-5866
[email protected] 

(Tables to Follow)

SYNAPTICS INCORPORATED

 CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)






December 31,


June 30,


2013


2013





Assets




Current assets:





Cash and cash equivalents                                                                 

$ 369,424


$ 355,303


Accounts receivables, net of allowances of $883

133,022


148,454


Inventories                                                                              

51,746


49,948


Prepaid expenses and other current assets                                                     

18,885


6,715

Total current assets                                                                    

573,077


560,420





Property and equipment at cost, net                                                               

64,666


58,035

Goodwill                                                                             

59,670


20,695

Purchased intangibles

87,391


13,110

Non-current auction rate securities

18,260


16,969

Other assets                                                                                 

19,632


22,037

Total assets

$ 822,696


$ 691,266





Liabilities and stockholders' equity




Current liabilities:





Accounts payable                                                                          

$  68,578


$  83,710


Accrued compensation                                                                      

22,833


23,728


Income taxes payable

9,057


10,751


Notes payable

2,305


-


Current portion of contingent consideration

13,099


-


Other accrued liabilities                                                                    

34,565


31,437

Total current liabilities                                                                  

150,437


149,626





Notes payable

-


2,305

Other liabilities                                                                            

47,260


17,480





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; 120,000,000 shares authorized;  







54,019,279 and 50,673,758 shares issued, and 34,971,568 and 







33,289,826 shares outstanding, respectively

54


51


Additional paid in capital

659,482


539,170


Less:  19,047,711 and 17,383,932 treasury shares, respectively, at cost

(530,422)


(460,160)


Accumulated other comprehensive income

7,620


6,802


Retained earnings

488,265


435,992

Total stockholders' equity                                                                

624,999


521,855

Total liabilities and stockholders' equity

$ 822,696


$ 691,266

 

SYNAPTICS INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)
















Three Months Ended


Six Months Ended





December 31,


December 31,





2013


2012


2013


2012












Net revenue                                                 


$ 205,763


$ 143,040


$ 428,370


$ 270,081

Acquisition related costs


2,170


-


2,170


-

Cost of revenue                             


109,048


74,010


222,376


140,481

Gross margin                                                  


94,545


69,030


203,824


129,600

Operating expenses










Research and development               


45,931


34,257


86,373


67,059


Selling, general, and administrative


21,807


19,008


41,900


37,916


Acquisition related costs


4,729


837


6,280


1,364

Total operating expenses                                       

72,467


54,102


134,553


106,339












Operating income                                   


22,078


14,928


69,271


23,261

Interest income


222


225


433


443

Non-cash interest income


254


-


473


-

Interest expense                                                

(5)


(5)


(9)


(9)

Income before provision for income taxes                 


22,549


15,148


70,168


23,695

Provision for income taxes             


5,215


4,034


17,895


6,528

Net income                                         


$  17,334


$  11,114


$  52,273


$  17,167












Net income per share:










Basic                                                      

$    0.51


$    0.34


$    1.56


$    0.52


Diluted                                                     

$    0.48


$    0.33


$    1.47


$    0.51












Shares used in computing net income per share:










Basic                                                          

33,990


32,478


33,475


32,710


Diluted                                                      

36,059


33,313


35,586


33,739

 

SYNAPTICS INCORPORATED

Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures

(In thousands, except per share data)

(Unaudited)
















Three Months Ended


Six Months Ended





December 31,


December 31,





2013


2012


2013


2012












GAAP gross margin


$94,545


$69,030


$203,824


$129,600


Acquisition related costs


2,170


-


2,170


-


Share-based compensation


262


198


516


441

Non-GAAP gross margin


$96,977


$69,228


$206,510


$130,041























GAAP gross margin - percentage of revenue


45.9%


48.3%


47.6%


48.0%


Share-based compensation - percentage of revenue


1.2%


0.1%


0.6%


0.1%

Non-GAAP gross margin - percentage of revenue


47.1%


48.4%


48.2%


48.1%























GAAP research and development expense


$45,931


$34,257


$ 86,373


$ 67,059


Share-based compensation


(4,241)


(3,879)


(8,168)


(7,790)

Non-GAAP research and development expense


$41,690


$30,378


$ 78,205


$ 59,269























GAAP selling, general, and administrative expense


$21,807


$19,008


$ 41,900


$ 37,916


Share-based compensation


(3,119)


(3,929)


(5,980)


(8,242)

Non-GAAP selling, general, and administrative expense


$18,688


$15,079


$ 35,920


$ 29,674























GAAP operating income


$22,078


$14,928


$ 69,271


$ 23,261


Acquisition related costs


6,899


837


8,450


1,364


Share-based compensation


7,622


8,006


14,664


16,473

Non-GAAP operating income


$36,599


$23,771


$ 92,385


$ 41,098























GAAP net income


$17,334


$11,114


$ 52,273


$ 17,167


Acquisition related costs


6,899


837


8,450


1,364


Share-based compensation


7,622


8,006


14,664


16,473


Non-cash interest income


(254)


-


(473)


-


Tax adjustments


(484)


(2,273)


2,117


(4,577)

Non-GAAP net income


$31,117


$17,684


$ 77,031


$ 30,427























GAAP net income per share - diluted


$  0.48


$  0.33


$   1.47


$   0.51


Acquisition related costs


0.19


0.03


0.23


0.04


Share-based compensation


0.21


0.24


0.41


0.49


Non-cash interest income


(0.01)


-


(0.01)


-


Tax adjustments


(0.01)


(0.07)


0.06


(0.14)

Non-GAAP net income per share - diluted


$  0.86


$  0.53


$   2.16


$   0.90

 

 

SOURCE Synaptics Inc.

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