10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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.

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)

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)

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)

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)

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			(4.7	)
Cash flows from financing activities
Payment for redemption of convertible notes		—			(505.6	)
Proceeds from issuance of shares		8.5			7.8
Payroll taxes for deferred stock and market stock units		(31.4	)		(27.7	)