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Synaptics Reports Record Revenue and Profits in Second Quarter of Fiscal 2008

SANTA CLARA, Calif., Jan. 24 /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 quarter ended December 31, 2007. The Company's GAAP results reflect the expensing of non-cash share-based compensation for all periods presented.

Net revenue for the second quarter of fiscal 2008 was a record $98.7 million, an increase of approximately 30% over $76.1 million for the second quarter of fiscal 2007. Net income for the second quarter of fiscal 2008 was a record $14.2 million, or $0.50 per diluted share, compared with net income of $9.3 million, or $0.32 per diluted share, for the second quarter of fiscal 2007, which included a non-recurring restructuring charge of $915,000. Net income, excluding share-based compensation, was $17.0 million, or $0.60 per diluted share, for the second quarter of fiscal 2008, compared with $13.0 million, or $0.44 per diluted share, for the second quarter of fiscal 2007, which excludes the non-recurring restructuring charge.

'We are pleased to have delivered record revenue and profits in the second quarter and first half of fiscal 2008 as we experienced strong year-over-year growth across all of our target markets. Synaptics has helped lead the way as touch interfaces have been adopted across a wide variety of consumer electronics devices, and our results demonstrate solid execution and the success of our diversification strategy,' stated Francis Lee, President and Chief Executive Officer of Synaptics. 'Despite concerns regarding the current outlook for consumer spending, we believe that we are well positioned to take advantage of the positive long-term trends for emerging digital life style products focused on mobility, connectivity, feature-rich applications, and ease of use.'

Russ Knittel, Synaptics' Chief Financial Officer, added, 'It is clear that issues concerning the economy are impacting the general business outlook and the behavior of our customers. Given the 34% decline in our backlog exiting the December quarter to $37.5 million and recent reductions in customers' forecasts, our current revenue outlook for the March quarter is in the range of $76 to $82 million, representing an 18% to 27% increase over the comparable period last year. Looking out to the June quarter, we currently anticipate sequential revenue growth in the range of 11% to 19% relative to the mid-point of our March quarter outlook. Despite uncertainty in the market, Synaptics is on track to exceed the 25-30% revenue growth outlook for fiscal 2008 that we provided entering the fiscal year, along with record profitability.'

Earnings Call Information

The Synaptics second quarter teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, January 24, 2008, during which the Company will provide forward-looking information. To participate on the live call, analysts and investors should dial 800-218-0530 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, TouchPad, and the Synaptics logo are trademarks of Synaptics in the United States and/or other countries.

Use of Non-GAAP Financial Information

In evaluating our business, we consider and use net income per share excluding share-based compensation and non-recurring items as a supplemental measure of operating performance. Net income excluding share-based compensation and non-recurring items is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income. We present net income excluding share-based compensation and non-recurring items because we consider it an important supplemental measure of our performance. We believe 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 and non-recurring items. Net income excluding share-based compensation and non-recurring items has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for our GAAP net income. The principal limitations of this measure are that it does not reflect our actual expenses and may thus have the effect of inflating our 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 Synaptics' anticipated revenue, revenue growth rates and anticipated customer orders in the third and fourth quarters of fiscal 2008; its beliefs regarding the markets it serves; its position and opportunities in those markets; its assessment of market demands and trends in target markets; and its assessment of consumer demands for various applications. 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, and (d) other risks as identified from time to time in Synaptics' SEC reports, including Quarterly Reports on Form 10-Q and the Annual Report on Form 10-K for the fiscal year ended June 30, 2007. All forward-looking statements are based on information available to Synaptics on the date hereof, and Synaptics assumes no obligation to update such statements.



SYNAPTICS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)


December 31, June 30,
2007 2007

Assets
Current assets:
Cash and cash equivalents $130,000 $45,915
Short term investments 156,315 219,102
Total cash, cash equivalents,
and short-term investments 286,315 265,017
Receivables, net of allowances of
$364 and $419, respectively 66,914 56,721
Inventories 20,147 12,034
Prepaid expenses and other
current assets 13,518 4,245
Total current assets 386,894 338,017

Property and equipment, net 20,837 19,400
Goodwill 1,927 1,927
Other assets 6,353 13,968
Total assets $416,011 $373,312

Liabilities and stockholders' equity
Current liabilities:
Accounts payable $19,384 $21,552
Accrued compensation 5,262 5,372
Income taxes payable 4,274 3,400
Other accrued liabilities 8,032 6,272
Note payable -- 1,500
Total current liabilities 36,952 38,096

Convertible senior subordinated
notes 125,000 125,000
Other liabilities 14,620 2,129

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; 31,109,034
and 29,666,660 shares
issued, respectively 31 30
Additional paid in capital 209,408 180,746
Less: 4,088,100 and 3,588,100
treasury shares, respectively,
at cost (91,296) (72,345)
Retained earnings 125,253 99,795
Accumulated other comprehensive
loss (3,957) (139)
Total stockholders' equity 239,439 208,087
Total liabilities and stockholders'
equity $416,011 $373,312



SYNAPTICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)


Three Months Ended Six Months Ended
December 31, December 31,
2007 2006 2007 2006


Net revenue $ $98,650 $76,087 $185,342 $130,902
Cost of revenue (1) 57,605 45,696 108,833 78,116
Gross margin 41,045 30,391 76,509 52,786
Operating expenses
Research and development (1) 11,693 9,958 22,095 19,146
Selling, general, and
administrative (1) 11,415 8,927 22,165 16,728
Restructuring costs -- 915 -- 915
Total operating expenses 23,108 19,800 44,260 36,789

Operating income 17,937 10,591 32,249 15,997
Interest income 3,013 2,978 6,008 5,517
Interest expense (449) (488) (924) (975)
Gain on settlement of debt -- -- 2,689 --
Impairment of investment -- -- (4,000) --
Income before income taxes 20,501 13,081 36,022 20,539
Provision for income taxes (2) 6,305 3,740 10,564 7,071
Net income $14,196 $9,341 $25,458 $13,468

Net income per share:
Basic $0.53 $0.37 $0.96 $0.53
Diluted $0.50 $0.32 $0.91 $0.48

Shares used in computing net
income per share:
Basic 26,827 25,568 26,519 25,359
Diluted 28,320 29,692 28,020 29,468


(1) Includes share-based
compensation charges of:

Cost of revenue $350 $185 $589 $332
Research and development 1,588 1,439 2,759 2,474
Selling, general, and
administrative 2,547 2,284 4,466 4,203
$4,485 $3,908 $7,814 $7,009

(2) Includes tax benefit for
share-based compensation charges
of:

$1,676 $1,098 $3,373 $1,879



Non-GAAP net income per share
Basic $0.63 $0.51 $1.20 $0.77
Diluted $0.60 $0.44 $1.14 $0.67



SYNAPTICS INCORPORATED
Computation of Basic and Diluted Net Income Per Share
(in thousands except per share data)
(Unaudited)


Three Months Ended Six Months Ended
December 31, December 31,
2007 2006 2007 2006

Numerator:
Basic net income $14,196 $9,341 $25,458 $13,468
Interest expense and amortization of
debt issuance costs on convertible
notes (net of tax) -- 266 -- 532
Diluted net income $14,196 $9,607 $25,458 $14,000

Denominator:
Shares, basic 26,827 25,568 26,519 25,359
Effect of dilutive share-based
awards 1,432 1,650 1,501 1,635
Effect of convertible notes 61 2,474 -- 2,474
Shares, diluted 28,320 29,692 28,020 29,468

Net income per share:
Basic $0.53 $0.37 $0.96 $0.53
Diluted $0.50 $0.32 $0.91 $0.48


Computation of non-GAAP basic and diluted net income per share
(unaudited):

Numerator:
Reported net income $14,196 $9,341 $25,458 $13,468
Non-GAAP adjustments:
Gain on settlement of debt, net
of tax -- -- (2,078) --
Impairment of investment, net of
tax -- -- 4,000 --
Restructuring costs (net of tax) -- 890 -- 890
Share-based compensation (net of
tax) 2,809 2,810 4,441 5,130
Non-GAAP basic net income 17,005 13,041 31,821 19,488
Interest expense and amortization of
debt issuance costs on convertible
notes (net of tax) -- 266 -- 532
Non-GAAP diluted net income $17,005 $13,307 $31,821 $20,020

Denominator:
Shares, basic 26,827 25,568 26,519 25,359
Effect of dilutive share-based
awards 1,432 1,973 1,501 1,892
Effect of convertible notes 61 2,474 -- 2,474
Shares, diluted 28,320 30,015 28,020 29,725

Non-GAAP net income per share:
Basic $0.63 $0.51 $1.20 $0.77
Diluted $0.60 $0.44 $1.14 $0.67


For more information contact:

Molly Plyler
The Blueshirt Group
415-217-7722
[e-mail]

SOURCE Synaptics



Source: PR Newswire (January 24, 2008 - 4:15 PM EST)

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