Synaptics Reports Results for Fourth Quarter and Fiscal 2014

         Synaptics Reports Results for Fourth Quarter and Fiscal 2014  -- Record fiscal 2014 revenue of $948 million up 43%  -- Record June quarter revenue of $315 million up 37% year-over-year and 54% sequentially  -- Record fourth quarter and fiscal 2014 non-GAAP EPS of $1.46 and $4.25, respectively  -- Increases stock repurchase authorization to $200 million  PR Newswire  SAN JOSE, Calif., July 31, 2014  SAN JOSE, Calif., July 31, 2014 /PRNewswire/ -- Synaptics (NASDAQ: SYNA), a leading developer of human interface solutions, today reported financial results for its fourth quarter and year ended June 30, 2014.  "Synaptics posted a stellar fourth quarter and a phenomenal fiscal year. We greatly outpaced our growth objectives by extending our leadership in touch and generating significant contributions from our fingerprint ID business," stated Rick Bergman, President and CEO. "We are clearly executing on our key growth levers with the adoption of our fingerprint authentication platform, expanding penetration within large touchscreens, growing traction for our display integrated solutions and continued expansion in China. Our acquisition of Renesas SP Drivers is progressing as anticipated, and we are excited to broaden our expertise in mobile display, which we believe will enhance our ability to continue to deliver and sustain strong, profitable growth."  Net revenue for fiscal 2014 reached a record $947.5 million, an increase of 43% over fiscal 2013. Net income for fiscal 2014 was $46.7 million, or $1.26 per diluted share, and includes an expense for change to contingent consideration liability of $69.9 million primarily related to the acquisition of the company's fingerprint ID business, which is performing significantly above expectations.  Non-GAAP net income for fiscal 2014 increased 48% from the prior year to a record $157.6 million, or $4.25 per diluted share. (See attached table for a reconciliation of GAAP to non-GAAP results.)  Net revenue for the fourth quarter of fiscal 2014 grew 37% over the comparable quarter last year to a record $314.9 million. Net income for the fourth quarter of fiscal 2014 was $34.5 million, or $0.89 per diluted share, and includes an expense for change to contingent consideration liability of $13.1 million.  Non-GAAP net income for the fourth quarter of fiscal 2014 grew 16% over the prior year period to a record $56.8 million, or $1.46 per diluted share. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)  Fourth Quarter 2014 Business Metrics    oRevenue mix from mobile and PC products was approximately 77% and 23%,     respectively. Fingerprint ID products have been classified according to     type of device.   oRevenue from mobile products of$242.9 millionwas up 40% year-over-year.     Mobile products revenue includes all touchscreen, video display, and     applicable fingerprint ID products.   oRevenue from PC products totaled$72.0 million, an increase of 26%     year-over-year, and includes applicable fingerprint ID products.   oCash atJune 30, 2014was$447.2 million.  Kathy Bayless, CFO, added, "Our outperformance in the June quarter reflected a steep initial ramp of new designs. Considering our backlog of $132 million entering the typically back-end loaded September quarter, customer forecasts and product sell-in and sell-through timing patterns, and the resulting expected product mix, we anticipate a record September quarter with revenue in the range of$275 to $295 million, an increase of 24% to 33% over the prior year period. We expect the revenue mix from mobile and PC to be similar to the preceding quarter."  Mr. Bergman added, "As we look ahead to fiscal 2015, we see signs of stability in the PC market, coupled with strong but moderating growth rates for smartphones. With continued strength in our core focus areas and fingerprint ID solutions now successfully incorporated into our platform, we feel confident that we can achieve another year of very strong annual revenue growth in the mid-20% range, excluding revenue from our impending acquisition of Renesas SP Drivers."  During fiscal 2014, Synaptics repurchased approximately 5% of its outstanding shares, similar to levels repurchased during each of the past several years. The company also announced that in July, its board of directors increased and extended the authorization for stock repurchases by $110 million, for a total current authorization of $200 million available through July 2016.  Earnings Call Information The Synaptics fourth quarter fiscal 2014 teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, July 31, 2014, during which the company will provide forward-looking information. To participate on the live call, analysts and investors should dial 1- 888-280-4443 (conference ID: 8116033) 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 liability, 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 first fiscal quarter of 2015 and full 2015 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)                                                         June 30,     June 30,                                                         2014         2013 Assets Current assets:  Cash and cash equivalents                              $ 447,205    $ 355,303  Accounts receivables, net of allowances of $883        195,057      148,454  Inventories                                            82,311       49,948  Prepaid expenses and other current assets              17,858       6,715 Total current assets                                    742,431      560,420 Property and equipment at cost, net                     80,849       58,035 Goodwill                                                61,030       20,695 Purchased intangibles                                   82,111       13,110 Non-current auction rate securities                     19,785       16,969 Other assets                                            34,127       22,037 Total assets                                            $ 1,020,333  $ 691,266 Liabilities and stockholders' equity Current liabilities:  Accounts payable                                       $ 97,109     $ 83,710  Accrued compensation                                   30,682       23,728  Income taxes payable                                   12,538       10,751  Current portion of contingent consideration            57,388       196  Other accrued liabilities                              56,691       31,241 Total current liabilities                               254,408      149,626 Notes payable                                           -            2,305 Other liabilities                                       64,768       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;      55,911,513 and 50,673,758 shares issued, and      36,863,802 and      33,289,826 shares outstanding, respectively        56           51  Additional paid in capital                             740,282      539,170  Less: 19,047,711 and 17,383,932 treasury shares,       (530,422)    (460,160)  respectively, at cost  Accumulated other comprehensive income                 8,560        6,802  Retained earnings                                      482,681      435,992 Total stockholders' equity                              701,157      521,855 Total liabilities and stockholders' equity              $ 1,020,333  $ 691,266    SYNAPTICS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited)                                                                        Three Months      Twelve Months                                                                        Ended             Ended                                                                        June 30,          June 30,                                                                        2014     2013     2014     2013 Net revenue           $        $        $        $                                                                        314,898  230,183  947,539  663,588 Acquisition related costs (1)                                          2,378    -        6,926    - Cost of revenue                           172,694  115,062  504,533  337,784 Gross margin         139,826  115,121  436,080  325,804 Operating expenses        Research and development                         56,896   40,900   192,681  144,699        Selling, general, and administrative                            26,541   21,521   94,244   79,620        Acquisition related costs (2)                                   17,031   509      76,669   2,372        Gain on sale of building                                        -        (1,578)  -        (1,578) Total operating expenses        100,468  61,352   363,594  225,113 Operating income                    39,358   53,769   72,486   100,691 Interest income                                                        253      225      924      865 Non-cash interest income                                               307      194      1,058    194 Interest expense       -        (4)      (9)      (17) Income before provision for income taxes              39,918   54,184   74,459   101,733 Provision for income taxes                                5,446    8,864    27,770   2,800 Net income                    $        $        $        $                                                                        34,472  45,320  46,689  98,933 Net income per share:        Basic     $       $       $       $                                                                         0.95    1.37    1.34    3.03        Diluted    $       $       $       $                                                                         0.89    1.29    1.26    2.89 Shares used in computing net income per share:        Basic 36,411   32,979   34,761   32,658        Diluted   38,817   35,150   37,105   34,239    (1) These acquisition related costs consist primarily of amortization     associated with certain acquired intangible assets.     These acquisition related costs consist primarily of changes in contingent (2) consideration, non-recurring legal and consulting costs associated with     acquisitions, and amortization associated with certain acquired intangible     assets.    SYNAPTICS INCORPORATED Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (In thousands, except per share data) (Unaudited)                                        Three Months Ended  Twelve Months Ended                                        June 30,            June 30,                                        2014      2013      2014       2013 GAAP gross margin                      $139,826  $115,121  $436,080   $325,804     Acquisition related costs          2,378     -         6,926      -     Share-based compensation           298       221       1,142      911 Non-GAAP gross margin                  $142,502  $115,342  $444,148   $326,715 GAAP gross margin - percentage of      44.4%     50.0%     46.0%      49.1% revenue     Acquisition related costs -        0.8%      0.0%      0.8%       0.0%     percentage of revenue     Share-based compensation -         0.1%      0.1%      0.1%       0.1%     percentage of revenue Non-GAAP gross margin - percentage of  45.3%     50.1%     46.9%      49.2% revenue GAAP research and development expense  $ 56,896  $ 40,900  $192,681   $144,699     Share-based compensation           (5,336)   (3,992)   (18,455)   (15,775) Non-GAAP research and development      $ 51,560  $ 36,908  $174,226   $128,924 expense GAAP selling, general, and             $ 26,541  $ 21,521  $ 94,244   $ 79,620 administrative expense     Share-based compensation           (3,788)   (3,291)   (13,264)   (15,524) Non-GAAP selling, general, and         $ 22,753  $ 18,230  $ 80,980   $ 64,096 administrative expense GAAP operating income                  $ 39,358  $ 53,769  $ 72,486   $100,691     Acquisition related costs          19,409    509       83,595     2,372     Share-based compensation           9,422     7,504     32,861     32,210     Gain on sale of building           -         (1,578)   -          (1,578) Non-GAAP operating income              $ 68,189  $ 60,204  $188,942   $133,695 GAAP net income                        $ 34,472  $ 45,320  $ 46,689   $ 98,933     Acquisition related costs          19,409    509       83,595     2,372     Share-based compensation           9,422     7,504     32,861     32,210     Non-cash interest income           (307)     (194)     (1,058)    (194)     Gain on sale of building           -         (1,578)   -          (1,578)     Tax adjustments                    (6,189)   (2,620)   (4,506)    (25,365) Non-GAAP net income                    $ 56,807  $ 48,941  $157,581   $106,378 GAAP net income per share - diluted    $  0.89  $  1.29  $  1.26   $  2.89     Acquisition related costs          0.50      0.02      2.25       0.07     Share-based compensation           0.24      0.21      0.89       0.94     Non-cash interest income           (0.01)    (0.01)    (0.03)     (0.01)     Gain on sale of building           -         (0.05)    -          (0.05)     Tax adjustments                    (0.16)    (0.07)    (0.12)     (0.73) Non-GAAP net income per share -        $  1.46  $  1.39  $  4.25   $  3.11 diluted    SOURCE Synaptics Inc.  Website: http://www.synaptics.com  
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