Synaptics Reports Third Quarter Fiscal 2014 Results

             Synaptics Reports Third Quarter Fiscal 2014 Results  - Record March quarter revenue, up 25% year-over-year  - Non-GAAP EPS of $0.63 at high end of guidance range  - Fingerprint ID business accretive to Non-GAAP results ahead of schedule  - Up to 40% annual revenue growth expected in fiscal 2014  PR Newswire  SAN JOSE, Calif., April 24, 2014  SAN JOSE, Calif., April 24, 2014 /PRNewswire/ --Synaptics (NASDAQ: SYNA), a leading developer of human interface solutions, today reported financial results for its third quarter ended March 31, 2014.  "Our strong performance in the third quarter reflects Synaptics' continued leadership across our entire product portfolio, from touchpads to touchscreens to our new fingerprint ID products, and we were pleased to see the fingerprint ID business become accretive to our non-GAAP earnings a quarter ahead of schedule," stated Rick Bergman, President and CEO. "We expect to close the fiscal year with another exceptional quarter. While at the start of the year we had forecast annual revenue growth to be similar to the 21% achieved last year, with the strength of the fingerprint ID business augmenting the growth of our core touch solutions, we now expect to achieve top-line growth of 37% to 40% for fiscal 2014."  Net revenue for the third quarter of fiscal 2014 was $204.3 million, an increase of 25% compared with $163.3 million for the comparable quarter last year. Third quarter revenue reflects the first full quarter of the fingerprint ID business.  Further, the company substantially increased its outlook for the fingerprint ID business, resulting in an increase to contingent consideration on expected future earn-out payments. Including the charge for change to contingent consideration of $53.0 million, GAAP net loss for the third quarter of fiscal 2014 was $(40.1) million, or $(1.12) per diluted share. Net income for the comparable quarter last year of $36.4 million, or $1.07 per diluted share, included the benefit of a non-recurring, non-cash tax item of $15.8 million.  Non-GAAP net income for the third quarter of fiscal 2014 was $23.7 million, or $0.63 per diluted share, compared with non-GAAP net income of $27.0 million, or $0.79 per diluted share, for the third quarter of fiscal 2013. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)  Third Quarter 2014 Business Metrics    oRevenue mix from mobile and PC products was approximately 74% and 26%,     respectively. Fingerprint ID products have been classified according to     type of device.   oRevenue from mobile products of$150.7 millionwas up 44% year-over-year.     Mobile products revenue includes all touchscreen, video display, and     applicable fingerprint ID products.   oRevenue from PC products totaled$53.5 million, a decrease of 9%     year-over-year.   oCash atMarch 31, 2014was$391.5 million.  Kathy Bayless, CFO, added, "Considering our backlog of $145 million, customer forecasts, and the resulting expected product mix, we anticipate revenue to be in the range of$275 millionto$295 millionfor the June quarter, an increase of 20% to 28% over the prior year quarter's record revenue. The June quarter outlook reflects strong sequential growth across our product portfolio."  Earnings Call Information  The Synaptics third quarter fiscal 2014 teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, April 24, 2014, during which the company will provide forward-looking information. To participate on the live call, analysts and investors should dial 1-877-941-4774 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 www.synaptics.com.  About Synaptics Incorporated  The leading developer of human interface solutions which enhance the user experience,Synapticsprovides 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, change in contingent consideration, and certain non-cash or non-recurring items as a supplemental measure of operating performance. Net income excluding share-based compensation, change in contingent consideration, 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, change in contingent consideration, 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, change in contingent consideration, and certain non-cash or non-recurring items. Net income excluding share-based compensation, change in contingent consideration, 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 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 future operating and financial performance, including revenue and gross margin for the Company's fourth fiscal quarter of 2014 and full 2014 fiscal year. Synaptics cautions that these statements are not guarantees of future performance and are qualified by important factors that could cause actual results to differ materially from our current expectations. 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 Synaptics serves, (d) the success of Synaptics' customers' products that utilize Synaptics' product solutions, (e) the development and launch cycles of Synaptics' customers' products, (f) market pressures on selling prices, (g) changes in product mix, (h) the market acceptance of Synaptics' 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' SEC reports, including Synaptics' Annual Report on Form 10-K for the fiscal year ended June 29, 2013, and subsequent quarterly and periodic reports, registration statements, amendments and other reports that we may file from time to time with the SEC and/or make available on our website. All forward-looking statements are based on information available to Synaptics on the date hereof, and Synaptics assumes no obligation to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.  For more information contact:  Jennifer Jarman  The Blueshirt Group  415-217-5866  jennifer@blueshirtgroup.com  (Tables to Follow)    SYNAPTICS INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)                                                                                               March 31,  June 30,                                                                                               2014       2013 Assets Current assets:     Cash and cash                                                                             $391,481   $355,303     equivalents     Accounts receivables, net of allowances of $887 and $883                     at March 31, 2014 and June 30, 2013, respectively                         149,687    148,454     Inventories 70,188     49,948     Prepaid expenses and other current                                                        23,012     6,715     assets Total current assets      634,368    560,420 Property and equipment at cost,                                                               76,993     58,035 net Goodwill         61,030     20,695 Purchased intangibles                                                                         84,751     13,110 Non-current auction rate securities                                                           18,566     16,969 Other assets 19,098     22,037 Total assets    $894,806   $691,266 Liabilities and stockholders' equity Current liabilities:     Accounts                                                                                  $ 76,692   $ 83,710     payable     Accrued                                                                                   22,819     23,728     compensation     Income taxes payable                                                                      4,978      10,751     Current portion of contingent consideration                                               41,620     -     Other accrued                                                                             44,786     31,437     liabilities Total current liabilities   190,895    149,626 Notes payable                                                                                 -          2,305 Other liabilities 75,314     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;                                    55,033,057 and 50,673,758 shares issued, and 35,985,346                                    and                                    33,289,826 shares outstanding, respectively                55         51     Additional paid in capital                                                                703,107    539,170     Less: 19,047,711 and 17,383,932 treasury shares, respectively, at cost                   (530,422)  (460,160)     Accumulated other comprehensive income                                                    7,648      6,802     Retained earnings                                                                         448,209    435,992 Total stockholders' equity    628,597    521,855 Total liabilities and stockholders' equity      $894,806   $691,266      SYNAPTICS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited)                                                                        Three Months Ended  Nine Months                                                                                            Ended                                                                        March 31,           March 31,                                                                        2014      2013      2014     2013 Net revenue           $        $        $       $                                                                         204,271   163,324   632,641  433,405 Acquisition related costs                                              2,378     -         4,548    - Cost of revenue                           109,463   82,241    331,839  222,722 Gross margin         92,430    81,083    296,254  210,683 Operating expenses        Research and development                         49,412    36,740    135,785  103,799        Selling, general, and administrative                            25,803    20,183    69,703   58,099        Acquisition related costs                                       53,358    499       57,638   1,863 Total operating expenses        128,573   57,422    263,126  163,761 Operating (loss)/income             (36,143)  23,661    33,128   46,922 Interest income                                                        238       197       671      640 Non-cash interest income                                               278       -         751      - Interest expense       -         (4)       (9)      (13) Income before provision/(benefit) for income taxes    (35,627)  23,854    34,541   47,549 Provision/(benefit) for income taxes                      4,429     (12,592)  22,324   (6,064) Net (loss)/income             $        $        $       $                                                                         (40,056)  36,446   12,217  53,613 Net (loss)/income per share:        Basic     $       $       $      $                                                                          (1.12)    1.13     0.36    1.65        Diluted    $       $       $      $                                                                          (1.12)    1.07     0.33    1.58 Shares used in computing net (loss)/income per share:        Basic 35,685    32,234    34,212   32,552        Diluted   35,685    34,135    36,532   33,843    SYNAPTICS INCORPORATED Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (In thousands, except per share data) (Unaudited)                                    Three Months Ended     Nine Months Ended                                    March 31,              March 31,                                    2014        2013       2014       2013 GAAP gross margin                  $ 92,430   $ 81,083  $ 296,254  $ 210,683    Acquisition related costs       2,378       -          4,548      -    Share-based compensation        328         249        844        690 Non-GAAP gross margin              $ 95,136   $ 81,332  $ 301,646  $ 211,373 GAAP gross margin - percentage of  45.2%       49.6%      46.8%      48.6% revenue    Share-based compensation -      1.3%        0.2%       0.9%       0.2%    percentage of revenue Non-GAAP gross margin -            46.6%       49.8%      47.7%      48.8% percentage of revenue GAAP research and development      $ 49,412   $ 36,740  $ 135,785  $ 103,799 expense    Share-based compensation        (4,951)     (3,993)    (13,119)   (11,783) Non-GAAP research and development  $ 44,461   $ 32,747  $ 122,666  $ 92,016 expense GAAP selling, general, and         $ 25,803   $ 20,183  $ 69,703  $ 58,099 administrative expense    Share-based compensation        (3,496)     (3,991)    (9,476)    (12,233)    Transaction costs               -           -          (2,000)    - Non-GAAP selling, general, and     $ 22,307   $ 16,192  $ 58,227  $ 45,866 administrative expense GAAP operating (loss)/income       $ (36,143)  $ 23,661  $ 33,128  $ 46,922    Acquisition related costs       55,736      499        62,186     1,863    Share-based compensation        8,775       8,233      23,439     24,706    Transaction costs               -           -          2,000      - Non-GAAP operating income          $ 28,368   $ 32,393  $ 120,753  $ 73,491 GAAP net (loss)/income             $ (40,056)  $ 36,446  $ 12,217  $ 53,613    Acquisition related costs       55,736      499        62,186     1,863    Share-based compensation        8,775       8,233      23,439     24,706    Non-cash interest income        (278)       -          (751)      -    Tax adjustments                 (434)       (18,168)   3,683      (22,745) Non-GAAP net income                $ 23,743   $ 27,010  $ 100,774  $ 57,437 GAAP net (loss)/income per share   $  (1.12)  $  1.07  $  0.33  $  1.58 - diluted    Acquisition related costs       1.56        0.01       1.76       0.06    Share-based compensation        0.25        0.24       0.64       0.73    Non-cash interest income        (0.01)      -          (0.02)     -    Tax adjustments                 (0.01)      (0.53)     0.05       (0.67)    Non-GAAP share adjustment       (0.04)      -          -          - Non-GAAP net income per share -    $  0.63   0.79       2.76       $  1.70 diluted    SOURCE Synaptics  Website: http://www.synaptics.com  
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