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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 24, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to .

Commission file number 000-49602

 

SYNAPTICS INCORPORATED

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

77-0118518

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

1109 McKay Drive

San Jose, California 95131

(Address of principal executive offices) (Zip code)

(408) 904-1100

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $.001 per share

SYNA

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of October 27, 2022, the Company had 39,870,971 shares of Common Stock outstanding.

 

 


 

SYNAPTICS INCORPORATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 24, 2022

TABLE OF CONTENTS

 

 

 

 

 

 

 

Page

Part I. Financial Information

 

 

 

 

 

 

 

 

Item 1.

 

Condensed Consolidated Financial Statements (Unaudited):

 

3

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets—September 24, 2022 and June 25, 2022

 

3

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations—Three Months Ended September 24, 2022 and September 25, 2021

 

4

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity—Three Months Ended September 24, 2022 and September 25, 2021

 

5

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows—Three Months Ended September 24, 2022 and September 25, 2021

 

7

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

8

 

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

25

 

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

34

 

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

34

 

 

Part II. Other Information

 

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

35

 

 

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

35

 

 

 

 

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

 

 

 

 

 

 

Item 6.

 

Exhibits

 

36

 

 

 

 

 

 

 

Signatures

 

37

 

 

 

 


 

PART I—FINANCIAL INFORMATION

 

 

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except par value and share amounts)

(unaudited)

 

 

 

September

 

 

June

 

 

 

2022

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

867.8

 

 

$

824.0

 

Short-term investments

 

 

44.0

 

 

 

52.0

 

Accounts receivable, net of allowances of $6.2 and $6.0 at September 2022 and June 2022, respectively

 

 

284.1

 

 

 

322.1

 

Inventories, net

 

 

179.4

 

 

 

169.7

 

Prepaid expenses and other current assets

 

 

36.5

 

 

 

35.6

 

Total current assets

 

 

1,411.8

 

 

 

1,403.4

 

Property and equipment at cost, net of accumulated depreciation of $127.7 and $122.8 at
September 2022 and June 2022, respectively

 

 

63.4

 

 

 

62.9

 

Goodwill

 

 

806.6

 

 

 

806.6

 

Acquired intangibles, net

 

 

357.0

 

 

 

390.0

 

Right-of-use assets

 

 

58.0

 

 

 

61.2

 

Non-current other assets

 

 

128.0

 

 

 

134.0

 

 

 

$

2,824.8

 

 

$

2,858.1

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

125.0

 

 

$

141.8

 

Accrued compensation

 

 

51.9

 

 

 

90.6

 

Income taxes payable

 

 

54.2

 

 

 

79.7

 

Other accrued liabilities

 

 

128.2

 

 

 

145.3

 

Current portion of long-term debt

 

 

6.0

 

 

 

6.0

 

Total current liabilities

 

 

365.3

 

 

 

463.4

 

Long-term debt

 

 

974.8

 

 

 

975.7

 

Other long-term liabilities

 

 

159.6

 

 

 

152.6

 

Total liabilities

 

 

1,499.7

 

 

 

1,591.7

 

Stockholders' Equity:

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

$0.001 par value; 120,000,000 shares authorized, 68,229,513 and 67,745,800 shares issued,
and
39,985,261 and 39,621,179 shares outstanding, at September 2022 and June 2022, respectively

 

 

0.1

 

 

 

0.1

 

Additional paid-in capital

 

 

931.7

 

 

 

924.1

 

Treasury stock: 28,244,252 and 28,124,621 common shares
at September 2022 and June 2022, respectively, at cost

 

 

(707.9

)

 

 

(694.5

)

Accumulated other comprehensive loss

 

 

(1.9

)

 

 

(1.8

)

Retained earnings

 

 

1,103.1

 

 

 

1,038.5

 

Total stockholders' equity

 

 

1,325.1

 

 

 

1,266.4

 

 

 

$

2,824.8

 

 

$

2,858.1

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

3


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

 

 

Three Months Ended

 

 

 

September

 

 

 

2022

 

 

2021

 

Net revenue

 

$

448.1

 

 

$

372.7

 

Cost of revenue

 

 

192.4

 

 

 

174.6

 

Gross margin

 

 

255.7

 

 

 

198.1

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

89.5

 

 

 

86.1

 

Selling, general, and administrative

 

 

44.7

 

 

 

41.6

 

Acquired intangibles amortization

 

 

9.5

 

 

 

8.4

 

Restructuring costs

 

 

-

 

 

 

1.4

 

Total operating expenses

 

 

143.7

 

 

 

137.5

 

Operating income

 

 

112.0

 

 

 

60.6

 

Interest and other expense, net

 

 

(8.3

)

 

 

(5.9

)

Loss on redemption of convertible notes

 

 

-

 

 

 

(8.1

)

Income before provision for income taxes and equity investment loss

 

 

103.7

 

 

 

46.6

 

Provision for income taxes

 

 

39.1

 

 

 

5.9

 

Equity investment loss

 

 

-

 

 

 

0.5

 

Net income

 

$

64.6

 

 

$

40.2

 

Net income per share:

 

 

 

 

 

 

Basic

 

$

1.62

 

 

$

1.07

 

Diluted

 

$

1.59

 

 

$

0.99

 

Shares used in computing net income:

 

 

 

 

 

 

Basic

 

 

39.8

 

 

 

37.5

 

Diluted

 

 

40.7

 

 

 

40.6

 

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

4


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury

 

 

Accumulated Other

 

 

Retained

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Comprehensive loss

 

 

Earnings

 

 

Equity

 

Balance at June 2022

 

 

67,745,800

 

 

$

0.1

 

 

$

924.1

 

 

$

(694.5

)

 

$

(1.8

)

 

$

1,038.5

 

 

$

1,266.4

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64.6

 

 

 

64.6

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

 

 

 

(0.1

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64.5

 

Issuance of common stock for share-based award compensation plans

 

 

483,713

 

 

 

 

 

 

8.5

 

 

 

 

 

 

 

 

 

 

 

 

8.5

 

Payroll taxes for deferred stock units

 

 

 

 

 

 

 

 

(31.4

)

 

 

 

 

 

 

 

 

 

 

 

(31.4

)

Common stock repurchased

 

 

 

 

 

 

 

 

 

 

 

(13.4

)

 

 

 

 

 

 

 

 

(13.4

)

Share-based compensation

 

 

 

 

 

 

 

 

30.5

 

 

 

 

 

 

 

 

 

 

 

 

30.5

 

Balance at September 2022

 

 

68,229,513

 

 

$

0.1

 

 

$

931.7

 

 

$

(707.9

)

 

$

(1.9

)

 

$

1,103.1

 

 

$

1,325.1

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 

5


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury

 

 

Accumulated Other

 

 

Retained

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Comprehensive loss

 

 

Earnings

 

 

Equity

 

Balance at June 2021

 

 

66,963,006

 

 

$

0.1

 

 

$

1,391.5

 

 

$

(1,205.4

)

 

$

 

 

$

781.0

 

 

$

967.2

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40.2

 

 

 

40.2

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40.2

 

Issuance of common stock for share-based award compensation plans

 

 

384,866

 

 

 

 

 

 

7.8

 

 

 

 

 

 

 

 

 

 

 

 

7.8

 

Payroll taxes for deferred stock units

 

 

 

 

 

 

 

 

(27.7

)

 

 

 

 

 

 

 

 

 

 

 

(27.7

)

Redemption of convertible debt

 

 

 

 

 

 

 

 

(518.2

)

 

 

510.9

 

 

 

 

 

 

 

 

 

(7.3

)

Share-based compensation

 

 

 

 

 

 

 

 

21.2

 

 

 

 

 

 

 

 

 

 

 

 

21.2

 

Balance at September 2021

 

 

67,347,872

 

 

$

0.1

 

 

$

874.6

 

 

$

(694.5

)

 

$

 

 

$

821.2

 

 

$

1,001.4

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

6


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

 

 

 

 

Three Months Ended

 

 

 

September

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

64.6

 

 

$

40.2

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Share-based compensation costs

 

 

30.5

 

 

 

21.2

 

Depreciation and amortization

 

 

6.2

 

 

 

5.2

 

Acquired intangibles amortization

 

 

33.0

 

 

 

25.2

 

Loss on redemption of convertible notes

 

 

 

 

 

8.1

 

Deferred taxes

 

 

5.9

 

 

 

(1.4

)

Amortization of right-of-use assets

 

 

2.7

 

 

 

2.4

 

Amortization of debt discount and issuance costs

 

 

0.7

 

 

 

1.8

 

Amortization of cost of development services

 

 

2.5

 

 

 

2.5

 

Provision for inventory excess and obsolescence

 

 

 

 

 

(4.5

)

Other

 

 

0.5

 

 

 

 

Equity investment loss

 

 

 

 

 

0.5

 

Foreign currency remeasurement gain

 

 

(1.3

)

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable, net

 

 

37.7

 

 

 

(41.4

)

Inventories

 

 

(9.7

)

 

 

(2.2

)

Prepaid expenses and other current assets

 

 

(3.2

)

 

 

(5.0

)

Other assets

 

 

3.1

 

 

 

(9.8

)

Accounts payable

 

 

(17.6

)

 

 

10.7

 

Accrued compensation

 

 

(38.2

)

 

 

(12.3

)

Income taxes payable

 

 

(18.9

)

 

 

(6.9

)

Other accrued liabilities

 

 

(20.0

)

 

 

24.0

 

Net cash provided by operating activities

 

 

78.5

 

 

 

58.3

 

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from maturities of investments

 

 

7.7

 

 

 

 

Receipt of liquidation payment on equity investment

 

 

0.8

 

 

 

 

Purchases of property and equipment

 

 

(6.2

)

 

 

(4.7

)

Net cash provided by (used in) investing activities

 

 

2.3