Synaptics (SYNA) 8-K Synaptics Reports Fourth Quarter and Fiscal 2003 Financial Results

Exhibit 99.1

	For more information contact:
	Russ Knittel Synaptics Incorporated 408-434-0110x140 russk@synaptics.com	Jennifer Jarman the blueshirt group 415-217-7722 jennifer@blueshirtgroup.com

Synaptics Reports Fourth Quarter and Fiscal 2003 Financial Results

July 31, 2003 – San Jose, CA– Synaptics (Nasdaq: SYNA), a leader in touch pads and other human interface solutions for mobile computing and communications devices, today reported financial results for the fourth quarter and fiscal year ended June 30, 2003.

Net revenue for the fourth quarter of fiscal 2003 was $28.2 million, a 9% increase compared to $25.8 million for the fourth quarter of the prior fiscal year. Actual (GAAP) net income for the fourth quarter of fiscal 2003 was $2.6 million, or $0.10 per diluted share, unchanged from the comparable quarter last year.

Pro forma net income for the fourth fiscal quarter, excluding non-cash charges related to the amortization of intangibles and deferred stock-based compensation, was $2.7 million, or $0.11 per diluted share. This compares to pro forma net income of $2.7 million, or $0.10 per diluted share, for the fourth quarter of the prior fiscal year.

Net revenue for the year ended June 30, 2003 was $100.7 million compared to net revenue of $100.2 million for the prior fiscal year. GAAP net income for the year ended June 30, 2003 was $7.7 million, or $0.31 per diluted share. This compares to GAAP net income of $9.4 million, or $0.42 per diluted share, for the prior fiscal year.

Pro forma net income, excluding non-cash charges related to the amortization of intangibles and deferred stock-based compensation, was $8.3 million, or $0.33 per diluted share, for fiscal year 2003 compared to pro forma net income of $10.0 million, or $0.44 per diluted share, for the prior fiscal year.

“We are pleased with the Company’s performance in fiscal 2003, posting solid revenues and profitability during a period of challenging market conditions,” stated Francis Lee, President and Chief Executive Officer of Synaptics. “We maintained our market leadership within the notebook segment and saw our new market initiatives begin to pay off as we grew non-notebook revenue to nearly 7% of total revenue from less than 2% in the prior year. Design activity remains strong in both areas, and as we enter fiscal 2004 we look forward to continued progress in diversifying our business.”

Russ Knittel, Synaptics’ Chief Financial Officer, added, “Our fourth quarter revenue grew 8% sequentially, ahead of our expectations, driven by higher revenue from our new market areas. While our backlog remains strong, we continue to see a product mix shift in our notebook business towards single pointing solutions, reflecting a highly competitive environment for dual pointing applications and softness in corporate IT spending. This, in addition to coming off a stronger than expected June

quarter, leads us to forecast a nominal revenue increase of up to 1% in the September quarter. We believe these trends will continue over the near-term and therefore anticipate similar results in the December quarter. We continue to proactively manage our business with an eye towards balancing market share and profitability as we respond to market dynamics.”

About Synaptics Incorporated

Synaptics develops advanced interface solutions for products as diverse as notebook and desktop computers, mobile computing and communications devices, automotive applications, and security solutions. Synaptics’ products include TouchPad™, the industry standard notebook pointing device; ClearPad™, a capacitive touch screen solution; TouchStyk™, a modular and capacitive pointing stick solution; Spiral®, an inductive, proximity sensing pen input system; and QuickStroke®, a proprietary Chinese handwriting recognition software. More information about Synaptics can be found on the World Wide Web at www.synaptics.com.

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’ revenue expectations, earnings expectations, cash flow expectations, and competitive position in both notebook computers and new market initiatives. 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) market demand for Synaptics’ products, (b) market demand for OEMs’ products using Synaptics’ products, (c) the failure of Synaptics’ products and OEMs’ products to deliver commercially acceptable performance, and (d) other risks as identified from time to time in Synaptics’ SEC reports, including Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and the Company’s 10-K for the fiscal year ended June 30, 2002. 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 discloses pro forma or non-GAAP measures of net income and earnings per share. Synaptics believes that this pro forma information provides greater comparability regarding its ongoing operating performance. These measures should not be considered an alternative to measurements required by accounting principles generally accepted in the United States (“U.S. GAAP”), such as net income and earnings per share. These pro forma measures are unlikely to be comparable to pro forma information provided by other companies. In accordance with SEC regulations, reconciliation of the Synaptics U.S. GAAP information to the pro forma information is provided in the table attached. We will also make available on the investor relations page of our web site at www.synaptics.com this press release, a replay of the Webcast, and a reconciliation of the difference between the GAAP and non-GAAP financial measures.

(Tables to Follow)

- 30 -

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

			June 30,			June 30,
			2003			2002
Assets
Current assets:
	Cash and cash equivalents		$	41,697		$	45,491
	Restricted cash			240			—
	Short term investments			35,589			19,689
	Accounts receivable, net of allowances of $160 and $200 at June 30, 2003 and June 30, 2002, respectively			13,181			13,242
	Inventories			6,428			5,867
	Prepaid expenses and other current assets			3,379			2,964
Total current assets				100,514			87,253
Property and equipment, net				1,934			2,043
Goodwill				1,968			765
Other acquired intangible assets, net				—			40
Other assets				92			280
Total assets			$	104,508		$	90,381
Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable		$	6,893		$	5,867
	Accrued compensation			2,808			2,161
	Accrued warranty			1,002			1,002
	Income taxes payable			1,661			2,646
	Other accrued liabilities			3,362			1,814
	Capital leases and equipment financing obligations			231			445
Total current liabilities				15,957			13,935
Capital leases and equipment financing obligations, net of current portion				28			259
Note payable to a related party				1,500			1,500
Other liabilities				759			684
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; 23,835,877 and 23,182,757 shares issued and outstanding, respectively		24			23
	Additional paid in capital			78,761			75,013
	Deferred stock compensation			(1,184	)		(1,085	)
	Notes receivable from stockholders			(20	)		(876	)
	Retained earnings			8,583			865
	Accumulated other comprehensive income			100			63
Total stockholders’ equity				86,264			74,003
Total liabilities and stockholders’ equity			$	104,508		$	90,381

SYNAPTICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

			Three Months Ended						Twelve Months Ended
			June 30,						June 30,
			2003			2002			2003			2002
Net revenue			$	28,222		$	25,809		$	100,701		$	100,201
Cost of revenue				16,672			14,836			58,417			59,016
Gross margin				11,550			10,973			42,284			41,185
Operating expenses
	Research and development			4,760			4,714			19,837			16,594
	Selling, general, and administrative			2,793			2,422			10,750			9,873
	Amortization of intangible assets			—			30			40			134
	Amortization of deferred stock compensation			136			90			499			453
Total operating expenses				7,689			7,256			31,126			27,054
Operating income				3,861			3,717			11,158			14,131
Interest income				244			290			1,059			522
Interest expense				(34	)		(41	)		(155	)		(197	)
Income before income taxes				4,071			3,966			12,062			14,456
Provision for income taxes				1,467			1,393			4,344			5,056
Net income			$	2,604		$	2,573		$	7,718		$	9,400
Net income per share:
	Basic		$	0.11		$	0.11		$	0.33		$	0.70
	Diluted		$	0.10		$	0.10		$	0.31		$	0.42
Shares used in computing net income per share:
	Basic			23,668			23,179			23,472			13,523
	Diluted			25,902			25,957			25,131			22,544
Pro forma results (unaudited)
	Reported net income		$	2,604		$	2,573		$	7,718		$	9,400
	Pro forma adjustments:
		Amortization of goodwill and other acquired intangible assets		—			30			40			134
		Amortization of deferred stock compensation		136			90			499			453
Pro forma net income			$	2,740		$	2,693		$	8,257		$	9,987
Pro forma earnings per share
		Basic	$	0.12		$	0.12		$	0.35		$	0.74
		Diluted	$	0.11		$	0.10		$	0.33		$	0.44