Synaptics
Annual Report 2021

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(cid:1006)(cid:1004)(cid:1006)(cid:1005)(cid:3)(cid:62)(cid:286)(cid:410)(cid:410)(cid:286)(cid:396)(cid:3)(cid:410)(cid:381)(cid:3)(cid:94)(cid:346)(cid:258)(cid:396)(cid:286)(cid:346)(cid:381)(cid:367)(cid:282)(cid:286)(cid:396)(cid:400)(cid:3)

(cid:3)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

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

For the Fiscal Year Ended June 26, 2021

Or

For the transition period from                to

Commission File Number 000-49602

SYNAPTICS INCORPORATED
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of 
incorporation or organization)

1251 McKay Drive
San Jose, California
(Address of principal executive offices)

77-0118518
(I.R.S. Employer 
Identification No.)

95131
(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
Common Stock, par value $.001 per share

Trading Symbol
SYNA

Name of each exchange on which registered
The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  ☒    No  ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ☐    No  ☒
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, 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
Non-accelerated filer

☒
☐

Accelerated filer
Smaller reporting company
Emerging growth company

☐
☐
☐

If an emerging growth company, indicate by checkmark 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal 
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared 
or issued its audit report.  ☒

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

The  aggregate  market  value  of  Common  Stock  held  by  nonaffiliates  of  the  registrant  (22,303,576  shares),  based  on  the  closing  price  of  the 
registrant’s Common Stock as reported on the Nasdaq Global Select Market on December 24, 2020 of $86.15, was $1,921,453,072.  For purposes of this 
computation, all officers, directors, and 10% beneficial owners of the registrant are deemed to be affiliates.  Such determination should not be deemed to be 
an admission that such officers, directors, or 10% beneficial owners are, in fact, affiliates of the registrant.

As of August 13, 2021, there were outstanding 38,854,107 shares of the registrant's Common Stock, par value $.001 per share.

Documents Incorporated by Reference

Portions of the registrant's definitive Proxy Statement for the 2021 Annual Meeting of Stockholders are incorporated by reference into Part III of this 

Form 10-K.

SYNAPTICS INCORPORATED
ANNUAL REPORT ON FORM 10-K
FISCAL 2021

TABLE OF CONTENTS

PART I

ITEM 1. BUSINESS.........................................................................................................................................................
ITEM 1A.RISK FACTORS ...............................................................................................................................................
ITEM 1B.UNRESOLVED STAFF COMMENTS ............................................................................................................
ITEM 2. PROPERTIES ....................................................................................................................................................
ITEM 3. LEGAL PROCEEDINGS..................................................................................................................................
ITEM 4. MINE SAFETY DISCLOSURES .....................................................................................................................

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND 
ISSUER PURCHASES OF EQUITY SECURITIES ...................................................................................
ITEM 6. RESERVED.......................................................................................................................................................
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 

OF OPERATIONS........................................................................................................................................
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..................................
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ..................................................................
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 

FINANCIAL DISCLOSURE .......................................................................................................................
ITEM 9A.CONTROLS AND PROCEDURES..................................................................................................................
ITEM 9B.OTHER INFORMATION .................................................................................................................................

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ..........................................
ITEM 11. EXECUTIVE COMPENSATION.....................................................................................................................
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND 

RELATED STOCKHOLDER MATTERS ..................................................................................................

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR 

INDEPENDENCE.............................................................................................................................................
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES ..................................................................................

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES ........................................................................
ITEM 16. FORM 10-K SUMMARY .................................................................................................................................

SIGNATURES ...................................................................................................................................................................

1
17
29
29
30
30

31
33

33
47
47

47
47
48

49
49

49

49
49

50
53

54

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ........................................................................................

F-1

Statement Regarding Forward-Looking Statements

This report on Form 10-K for the year ended June 26, 2021 contains forward-looking statements that are subject to the safe harbors created under the 
Securities Act of 1933, as amended (the “Securities Act”), and the Securities Act of 1934, as amended (the “Exchange Act”).  Forward-looking statements 
give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business, 
including our expectations regarding the potential impacts on our business of the COVID-19 pandemic,  and can be identified by the fact that they do not 
relate  strictly  to  historical  or  current  facts.  Such  forward-looking  statements  may  include  words  such  as  “expect,”  “anticipate,”  “intend,”  “believe,” 
“estimate,”  “plan,”  “target,”  “strategy,”  “continue,”  “may,”  “will,”  “should,”  variations  of  such  words,  or  other  words  and  terms  of  similar  meaning.  All 
forward-looking statements reflect our best judgment and are based on several factors relating to our operations and business environment, all of which are 
difficult  to  predict  and  many  of  which  are  beyond  our  control.  Such  factors  include,  but  are  not  limited  to,  the  risks  as  identified  in  the  “Risk  Factors,” 
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections in this report on Form 10-K, and other 
risks as identified from time to time in our Securities and Exchange Commission reports. Forward-looking statements are based on information available to 
us on the date hereof, and we do not have, and expressly disclaim, any obligation to publicly release any updates or any changes in our expectations, or any 
change in events, conditions, or circumstances on which any forward-looking statement is based.  Our actual results and the timing of certain events could 
differ materially from the forward-looking statements. These forward-looking statements do not reflect the potential impact of any mergers, acquisitions, or 
other business combinations that had not been completed as of the date of this filing.

Statements made in this report, unless the context otherwise requires, include the use of the terms “us,” “we,” “our,” the “company” and “Synaptics” 

to refer to Synaptics Incorporated and its consolidated subsidiaries.

ITEM 1.

BUSINESS

Impact of COVID-19

PART I

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. In response 
to  the  outbreak,  governmental  authorities  implemented  numerous  containment  measures,  including  travel  bans  and 
restrictions,  quarantines,  shelter-in-place  orders,  and  business  restrictions  and  shutdowns,  resulting  in  rapidly  changing 
market and economic conditions. In certain countries in which we operate, governments took swift and effective measures to 
stem  the  spread,  while  in  other  countries  in  which  we  operate  governments  were  slow  to  react  or  missed  opportunities  to 
effectively contain the spread. Although some of these restrictions and other containment measures have since been lifted or 
scaled back, ongoing surges of COVID-19 have resulted in the re-imposition of certain restrictions and containment measures 
and  may  lead  to  other  restrictions  being  re-implemented  in  the  future  in  response  to  efforts  to  reduce  the  rapid  spread  of 
COVID-19 and its variants.

The health and wellbeing of our workforce is our highest priority.  Many of our employees have worked from home 
since the COVID-19 outbreak was declared a pandemic in order to minimize the potential risk of spread of COVID-19 in our 
office environment.  As the broad roll out of vaccines continues in various countries in which we operate, many employees 
have  returned  to  the  office  environment  on  a  part-  or  full-time  basis.    As  more  employees  return  to  the  office,  we  will 
continue to adhere to return to work protocols, based on guidance from local and global health organizations and applicable 
laws and regulations.

While the severity and duration of business disruption to our customers and suppliers due to the COVID-19 pandemic 
continues to remain uncertain, we expect that the ongoing global vaccination programs will moderate the overall severity and 
duration  and  remain  cautiously  optimistic  the  most  significant  impact  has  passed.    If  more  infectious  COVID-19  variants 
become resistant to the existing vaccines, however, we could experience renewed and sustained business disruption.  To date, 
we have not incurred significant disruptions to our business or a materially negative impact on our condensed consolidated 
results of operations and financial condition from the COVID-19 outbreak, and continue to believe our business will not be 
severely impacted as steps continue to be taken globally to mitigate the spread, vaccinate large portions of the population and 
achieve herd immunity.

We will continue to evaluate the nature and scope of the impact to our business, consolidated results of operations, and 
financial condition and may take further actions altering our business operations and managing our costs and liquidity that we 
deem  necessary  or  appropriate  to  respond  to  this  fast  moving  and  uncertain  global  health  crisis  and  the  resulting  global 
economic consequences.

Overview

We are a leading worldwide developer and supplier of custom-designed semiconductor solutions that is changing the 
way humans engage with connected devices and data, engineering exceptional experiences throughout the home, at work, in 
the car and on the go.  Our current served markets include Internet of Things, or IoT, personal computer, or PC, and Mobile.  
We  deliver  complete  chip,  firmware  and  software  semiconductor  solutions  that  include  connectivity  products,  audio  input 
and output System-On-Chips, or SoCs, high-definition video and vision SoCs, SoCs with artificial intelligence capabilities, 
touch controllers, touchpads, display drivers and fingerprint biometric sensors. 

We are a market leader in providing premium mixed signal semiconductor solutions to our target markets. Our original 
equipment manufacturer, or OEM, customers include many of the world’s largest OEMs for smart home devices, automotive 
solutions,  notebook  computers  and  peripherals,  smartphones  and  tablets,    and  many  large  OEMs  for  audio  and  video 
products.  We generally supply our product solutions to our OEM customers through their contract manufacturers, which take 
delivery of our products and pay us directly for such products.

Our  website  is  located  at  www.synaptics.com.    Through  our  website,  we  make  available,  free  of  charge,  all  our 
Securities and Exchange Commission, or SEC, filings, including our annual reports on Form 10-K, our proxy statements, our 
quarterly reports on Form 10-Q, and our current reports on Form 8-K, as well as Form 3, Form 4, and Form 5 Reports for our 
directors,  officers,  and  principal  stockholders,  together  with  amendments  to  those  reports  filed  or  furnished  pursuant  to 
Sections 13(a), 15(d), or 16 under the Securities Exchange Act of 1934, as amended, or the Exchange Act.  These reports are 
available on our website promptly after their electronic filing with the SEC.  You can also read these SEC filings and reports 
over  the  Internet  at  the  SEC’s  website  at  www.sec.gov.    Our  website  also  includes  corporate  governance  information, 
including our Code of Conduct, our Code of Ethics for the Chief Executive Officer and Senior Financial Officers, and our 
Board Committee Charters.  The contents of our website are not incorporated into or deemed to be a part of this report.

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We were initially incorporated in California in 1986 and were re-incorporated in Delaware in 2002.  Our fiscal year is 
the 52- or 53-week period ending on the last Saturday in June.  The fiscal years presented in this report were the 52-week 
periods ended June 26, 2021, and June 27, 2020, and the 53-week period ended June 29, 2019.   

IoT Applications Market 

Our IoT market solutions broadly consist of wireless connectivity (Wi-Fi, Bluetooth and global positioning system, or 
GPS)  products,  SoC  products,  display  and  touch  integrated  circuits  for  use  in  automobiles,  and  a  wide  range  of  audio  and 
video  products  and  solutions.  Our  SoC  products  are  used  in  human  experience  solutions  for  enabling  smart  devices  at  the 
edge.    We  enable  products  that  power  smart  assistant  speakers,  over-the-top  multimedia  devices,  wireless  speakers,  voice 
driven intelligent devices including those integrating far-field technology, personal voice and audio products, set top boxes, 
video  interface  solutions  for  docking  stations,  high-speed  connectivity  for  virtual  reality  devices,  video  surveillance,  SoCs 
and imaging solutions for use in printers and fax/modems.  In addition, our automotive solutions include over a decade of 
mass  production  experience  in  mature  touch  solutions  and  display  drivers  adapted  from  our  mobile  consumer  business  to 
meet automotive-grade quality standards. Net revenue for our IoT product solutions accounted for approximately 43%, 24%, 
and 21% of our net revenue for fiscal 2021, 2020 and 2019, respectively.

Within  the  fast-growing  consumer  IoT  market,  we  continue  to  expand  our  footprint  in  various  devices  by  bringing 
converged  video,  vision,  audio,  and  voice  technologies  coupled  with  artificial  intelligence  and  wireless  connectivity 
capabilities. Our deep investment in far-field voice technology, our intellectual property portfolio for video, vision, audio and 
security, and our significant experience enabling Android-based platforms for service providers, coupled with our focus on 
enabling high performance, low power, and highly secure SoC solutions enable us to effectively serve our existing customers 
and position us to grow within the addressable market of consumer IoT devices.   

PC Product Applications Market

We  provide  custom  product  solutions  for  navigation,  cursor  control,  and  access  to  devices  or  applications  through 
fingerprint authentication, for many of the world’s premier PC OEMs.  These functions are offered as both stand-alone and 
integrated  touch  pads  plus  fingerprint  recognition  solutions.    In  addition  to  notebook  applications,  other  PC  product 
applications for our technology include peripherals, such as high-end keyboards and accessory touchpads.  Net revenue for 
our product solutions for PC product applications accounted for approximately 27%, 24%, and 18% of our net revenue for 
fiscal 2021, 2020, and 2019, respectively.

We  continue  to  expand  our  available  product  offerings  through  technology  development  enabling  us  to  increase  our 
product  content  within  each  notebook  unit.    We  are  also  applying  our  technologies  to  enable  adoption  of  fingerprint 
recognition solutions to broaden our market opportunities. Based on the strength of our technology and engineering know-
how, we believe we are well positioned to continue to take advantage of opportunities in the PC product applications market.

Mobile Product Applications Markets

We believe our intellectual property portfolio, engineering know-how, systems engineering experience, technological 
expertise, and experience in providing human experience product solutions to major OEMs of electronic devices position us 
to be a key technological enabler for multiple consumer electronic devices targeted to meet the mobile product applications 
markets.    Mobile  product  applications  include  smartphones,  augmented  reality  and  virtual  reality  devices,  tablets,  large 
touchscreen applications, as well as a variety of mobile, handheld, and entertainment devices.  Our array of product solutions 
for mobile product applications are designed to enrich the interface on smartphones, tablets, and peripherals, and enable the 
owner to view the screen on these devices and to more seamlessly interact with the content on these devices.  We believe our 
existing technologies, our range of product solutions, and our emphasis on ease of use, advanced functionality, small size, 
low  power  consumption,  durability,  and  reliability  enable  us  to  serve  multiple  aspects  of  the  markets  for  mobile  product 
applications and other electronic devices.

Net revenue for our mobile product applications accounted for approximately 30%, 52%, and 61% of our net revenue 
for fiscal 2021, 2020, and 2019, respectively.  Our ongoing success in serving these markets will depend upon our ability to 
demonstrate to OEMs the advantages of our product solutions in terms of performance, usability, size, simplified security, 
durability,  power  consumption,  integration,  and  industrial  design  possibilities;  and  the  success  of  products  utilizing  our 
product solutions.  

The virtual reality, or VR, augmented reality, or AR, and mixed reality markets represent growth opportunities for our 
differentiated  display  driver  products.    The  AR/VR  market  is  expected  to  continue  to  grow,  with  many  large  OEMs 

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developing new products and applications.  Our high-performance, low power display driver technology is well-suited to the 
demands of the AR/VR market.

Acquisitions

DisplayLink

On  July  17,  2020,  we  entered  into  a  definitive  agreement  to  acquire  all  of  the  equity  interests  in  DisplayLink 
Corporation, or DisplayLink, a leader in high-performance video compression technology. The acquisition closed on July 31, 
2020. As of March 27, 2021, our purchase consideration was $444.0 million. The results of DisplayLink are included in our 
consolidated financial statements for the period from August 1, 2020 through June 26, 2021.  For further discussion of the 
DisplayLink  acquisition,  see  Note  4  Acquisitions,  Divestiture  and  Investment  included  in  the  consolidated  financial 
statements contained elsewhere in this report.

Broadcom

On  July  2,  2020,  we  entered  into  definitive  agreements  with  Broadcom  to  acquire  certain  assets  and  assume  certain 
liabilities of, and obtain non-exclusive licenses relating to, Broadcom’s existing Wi-Fi, Bluetooth and GPS/global navigation 
satellite system, or GNSS, products and business in the IoT market, or the Broadcom Business Acquisition, for an aggregate 
consideration of $250.0 million in cash that closed on July 23, 2020.  We also entered into certain transition agreements with 
Broadcom  for  a  period  of  three  years.  The  results  of  the  Broadcom  Business  Acquisition  are  included  in  our  condensed 
consolidated  financial  statements  for  the  period  from  July  24,  2020  through  June  26,  2021.    For  further  discussion  of  the 
Broadcom Business Acquisition, see Note 4 Acquisitions, Divestiture and Investment included in the consolidated financial 
statements contained elsewhere in this report. 

Divestitures

In  December  2020,  we  completed  the  sale  of  limited  audio  technology  intangible  assets,  received  a  fully-paid  up 
perpetual license back from the buyer and, as an element of the transaction, licensed other audio technology intangible assets 
to the buyer under a fully-paid up perpetual license arrangement.  Under the asset purchase agreement and the intellectual 
property license agreement, we received $35.0 million in cash.  The gain on the sale of the audio technology assets was $34.2 
million.

In December 2019, we entered into an asset purchase agreement with a third-party to sell the assets of our liquid-crystal 
display,  or  LCD,  Touch  Controller  and  Display  Driver  Integration,  or  TDDI,  product  line  for  LCD  mobile  displays.  We 
retained our automotive TDDI product line and our discrete touch and discrete display driver product lines supporting LCD 
and organic light-emitting diode, or OLED, for the mobile market. The assets sold under the asset purchase agreement for 
cash consideration of $138.7 million and had a carrying value of approximately $33.6 million as of the closing date of the 
transaction in April 2020.  The gain on sale of this portion of a product line was $105.1 million.

Investment

In  December  2020,  we  invested  $5.0  million  in  Eta  Compute  in  exchange  for  preferred  stock.    This  investment 
provides  us  with  a  partnership  that  enables  us  to  better  address  expanded  industry  opportunities  for  artificial  intelligence 
applications.  The investment is accounted for under the cost method.

Our Strategy

Our objective is to continue to enhance our position as a leading supplier of premium semiconductor product solutions 
for  each  of  the  target  markets  in  which  we  operate,  including  the  IoT  applications  market,  the  PC  product  applications 
market, and the mobile product applications markets, with a key focus on expanding our market share.  Key aspects of our 
strategy to achieve this objective include those set forth below.

Extend Our Technological Leadership

We plan to utilize our extensive intellectual property portfolio, engineering know-how, and technological expertise to 
extend the functionality of our current product solutions and offer new and innovative product solutions to customers across 
multiple  markets.    We  intend  to  continue  utilizing  our  technological  expertise  to  reduce  the  overall  size,  cost,  and  power 

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consumption of our product solutions while increasing their applications, capabilities, and performance.  We plan to continue 
enhancing  the  ease  of  use  and  functionality  of  our  solutions.    We  plan  to  invest  in  our  research  and  development  efforts 
through our engineering activities, including advancement of existing technologies, the hiring of key engineering personnel, 
and  strategic  acquisitions  and  alliances.    We  believe  that  these  efforts  will  enable  us  to  meet  customer  expectations  and 
achieve our goal of supplying, on a timely and cost-effective basis, easy to use, functional human experience semiconductor 
product solutions to our target markets.

Focus on and Grow in the IoT Market 

We  intend  to  capitalize  on  the  growth  of  the  IoT  market  including  solutions  for  smart  home  and  home  automation, 
video delivery over wired and wireless, voice enabled assistants, virtual reality, video interface docking, and wearables.  We 
intend  to  build  upon  our  existing  innovative  and  intuitive  and  intelligent  semiconductor  product  solutions  portfolio  and 
continue to address the evolving portability, connectivity, security, and functionality requirements of these new markets.  We 
will  offer  our  solutions  to  existing  and  potential  customers  to  enable  increased  functionality,  reduced  size,  lower  cost, 
simplified security, enhanced industrial design features, and to enhance the user experience of our OEMs’ products.  We plan 
to utilize our existing technologies as well as aggressively pursue new technologies as new markets evolve that demand new 
solutions.

Enhance Our Position in the PC Product, Smartphone, and Tablet Application Markets

We intend to continue introducing market-leading human experience product solutions in terms of performance, power 
consumption, functionality, size, and ease of use for the PC product, smartphone, and tablet applications markets.  We plan to 
continue  enhancing  our  customers’  industrial  design  options  and  device  functionality  through  innovative  product 
development, in order to enhance and grow our position within our target markets. As the high-end market for smartphones 
continues the shift to OLED solutions, we intend to deliver further enhancements to our products to support that market. 

Emphasize and Expand Customer Relationships

We  intend  to  emphasize  and  expand  our  strong  and  long-standing  customer  relationships  and  seek  to  build  and 
establish  successful  relationships  with  new  customers.    In  each  market  we  serve,  we  plan  to  provide  the  most  advanced 
human experience product solutions for our customers.  We believe that our human experience product solutions enable our 
customers  to  deliver  a  positive  user  experience  and  to  differentiate  their  products  from  those  of  their  competitors.    We 
continually strive to enhance the competitive position of our customers by providing them with innovative, distinctive, and 
high-quality  solutions  on  a  timely  and  cost-effective  basis.    To  do  so,  we  work  continually  to  improve  our  productivity, 
reduce costs, and increase the speed of delivery of our product solutions.  We focus on providing timely pre- and post-sales 
support to our customers, assisting with their efforts to develop, integrate, and manufacture their products with our solutions.

We  plan  to  offer  IoT  voice,  audio,  and  video  solutions,  wireless  connectivity  solutions,  touch  and  display  driver 
solutions,  and  fingerprint  sensor  solutions,  as  well  as  design  tools,  technical  support  and  documentation  to  assist  in  the 
development  of  human  experience  designs  in  products  such  as  PC  peripherals,  digital  entertainment  devices,  smartphones, 
notebooks, and other applications.  We offer our customers a choice of our chip solutions or our custom module solutions.  
Our chip solution consists of our proprietary integrated circuit, firmware, and software, including customer-specific firmware 
and software, while our custom module solution enables customers to utilize our proprietary integrated circuit together with 
third-party components and assembly.  

Pursue Strategic Relationships and Acquisitions

We intend to develop and expand our strategic relationships to enhance our ability to offer value-added semiconductor 
product  solutions  to  our  customers,  penetrate  new  markets,  and  strengthen  the  technological  leadership  of  our  product 
solutions.  We also intend to evaluate the potential acquisitions of companies and assets in order to expand our technological 
expertise and to establish or strengthen our presence in selected target markets.  

Fabless Semiconductor Manufacturing

We  plan  to  selectively  partner  with  foundries  and  backend  processors  to  solidify  our  longstanding  key  supply  chain 
relationships.    This  strategy  results  in  a  scalable  business  model,  enables  us  to  concentrate  on  our  core  competencies  of 
research  and  development  and  product  design  and  engineering,  and  reduces  our  capital  expenditures  and  working  capital 
requirements.  Our fabless semiconductor manufacturing strategy allows us to maintain a variable cost model, in which we do 
not incur most of our manufacturing costs until our product solutions have been shipped and invoiced to our customers.

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Competitive Advantages

We  develop  advanced  human  experience  technologies  that  enrich  the  users’  experience  in  interacting  and  engaging 
with  their  computing,  communications,  and  entertainment  devices.    We  engage  with  our  customers  in  the  design  of  their 
custom  products  and  offer  product  solutions  ranging  from  chips,  which  may  include  customer-specific  firmware,  to  full 
module solutions. Our innovative and intuitive human experience product solutions are engineered to accommodate diverse 
platforms, and our expertise in device interfaces and usability help improve the features and functionality of our solutions.  
Our  extensive  array  of  technologies  includes  chips,  firmware,  software,  mechanical  and  electrical  designs,  artificial 
intelligence,  or  AI,  and  algorithm-based  pattern  recognition,  multi-finger  touch-sensing  technologies,  advanced  noise 
mitigation technologies, display driver technologies, image, voice, and multimedia processing.

Our  products  are  custom-engineered,  total  solutions  including  sensor  design,  module  layout,  application  specific 
integrated  circuits,  or  ASICs,  firmware,  and  software  features  for  which  we  provide  design,  manufacturing,  and  testing 
support. This allows us to be a one-stop supplier for complete human experience design from concept prototyping, to product 
development,  manufacturing,  testing  and  support.    Through  our  engineering  know-how  and  technological  expertise,  we 
provide  our  customers  with  solutions  that  address  their  individual  design  requirements  and  result  in  high-performance, 
feature-rich, and reliable interface solutions.  We believe our solutions offer the following characteristics:

•

•

•

•

•

•

•

Advanced  Functionality.    Our  solutions  offer  advanced  features,  such  as  voice  barge-in,  ambient  noise 
cancellation,  and  video  noise  reduction  to  enhance  the  user  experience,  high-performance  multimedia 
encode/decode  for  high  resolution  video  processing  and  transport,  security  and  AI  algorithms  embedded,  face 
detect, force sensing, 240Hz touch report rate, and 144Hz display refresh technology for mobile applications.

Low Power Consumption.  The low power consumption of our solutions enables our customers to offer products 
with longer battery life and/or smaller battery capacity.

Small  Size.    The  small,  thin  size  of  our  solutions  and  reduced  number  of  external  components  enables  our 
customers  to  reduce  the  overall  size  and  weight  of  their  products  in  order  to  satisfy  consumer  demand  for 
portability.

Ease of Use.  Our solutions offer the ease of use and intuitive interaction that users demand.

Reliability.  The reliability of our solutions satisfies consumer requirements for dependability, which is a major 
component of consumer satisfaction.

Durability.  Our solutions withstand repeated use, harsh physical treatment, and temperature fluctuations while 
providing an enduring, superior level of performance.

Simplified  Security.    Our  fingerprint  authentication  solutions  protect  the  user’s  identity,  while  simplifying  the 
user experience for electronic devices.

We believe these characteristics will enable us to continue enhancing our position as a technological enabler within our 

target markets.

Products 

Our  family  of  product  solutions  allows  our  customers  to  solve  their  interface  needs  and  differentiate  their  products 

from those of their competitors.

Ultra-Low Power Edge AI

Our ultra-low power edge AI platform includes a highly integrated edge AI SOC designed for battery powered wireless 
devices  equipped  with  audio  or  camera  capabilities  for  consumer  and  industrial  IoT  applications.    These  solutions  are 
designed  for  a  wide  range  of  power  constrained  IoT  applications  used  in  office  buildings,  retail,  factories,  warehouses, 
robotics, and smart homes and cities. 

Wireless Connectivity 

Our  wireless  connectivity  solutions  include  state-of-the-art  Wi-Fi,  Bluetooth,  GPS,  and  GNSS,  to  address  broad  IoT 
market applications including home automation, multimedia streamers, security cameras, wireless speakers, games, drones, 
printers, wearable and fitness devices, in addition to numerous other applications which require a wireless connection. 

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AudioSmart® 

AudioSmart products bring forward optimum analog, mixed-signal and digital signal processor, or DSP, technologies 
for  high-fidelity  voice  and  audio  processing.  Our  AudioSmart  products  include  far-field  voice  technologies  that  enable 
accurate  voice  command  recognition  from  a  distance  while  disregarding  other  sounds,  such  as  music,  in  order  to  activate 
smart  devices  such  as  smart  speakers.  AudioSmart  also  includes  personal  voice  and  audio  solutions  for  high-performance 
headsets that enable active noise cancellation. 

ConnectSmart™ 

Our ConnectSmart video interface IC portfolio offers a full range of high-speed video/audio/data connectivity solutions 
that are designed for linking CPUs/GPUs and various endpoints for applications including PC docking stations, travel docks, 
dongles, protocol converters and virtual reality head mounted displays. 

DisplayLink®

Our  DisplayLink  products  utilize  highly  efficient  video  encode/decode  algorithms  to  deliver  a  semiconductor-based 
solution  which  transmits  compressed  video  frames  across  low  bandwidth  connections.  These  solutions  are  used  in  PC 
docking applications, conference room video display systems, and video casting applications.

VideoSmart™ 

Our VideoSmart series SoCs include CPUs running at up to 40K Dhrystone Million Instructions per Second, gaming-grade 
Graphics Processing Unit, or GPUs, voice, and neural network processing units, or NPU.  These powerful solutions combine 
a  central  processing  unit,  or  CPU,  NPU,  and  GPU,  into  a  single  software-enriched  SoC.  They  enable  smart  multimedia 
devices including set-top boxes, or STB, over-the-top, or OTT, streaming devices, soundbars, surveillance cameras and smart 
displays.

ImagingSmart™ 

Our ImagingSmart solutions include a product portfolio that spans four distinct product areas including document and 
photo  imaging  controllers,  digital  video,  fax,  and  modem  solutions.  ImagingSmart  products  leverage  image  processing  IP, 
JPEG  encoders  and  DSP  technology  to  deliver  a  wide  range  of  fax,  modem,  digital  video  and  printer  solutions  for  home, 
mobile and imaging applications.

Natural ID®

Our Natural ID family of capacitive-based fingerprint ID products is designed for use in automobiles, notebook PCs, 
PC  peripherals,  and  other  applications.    Thin  form  factors  provide  industrial  design  flexibility,  while  robust  matching 
algorithms and anti-spoofing technology provide strong security.  Our Natural ID family of products spans a range of form 
factors, colors, and materials suitable for design on the front, back or side of a device.  

Natural ID products are designed to be compatible with Fast IDentity Online, or FIDO, protocols, enhancing security 
and interoperability with a broad range of solutions.  FIDO was formed to enhance online authentication by developing open, 
scalable technical standards to help facilitate the adoption of robust, easy to use authentication that reduces the reliance on 
passwords.  Natural ID products increase the security of automobile and PC products while maintaining ease of use for the 
customer.

TouchPadTM

Our TouchPad family of products, which can take the place of, and exceed the functionality of a mouse, consists of a 
touch-sensitive pad that senses the position and movement of one or more fingers on its surface through the measurement of 
capacitance.  Our TouchPad provides an accurate, comfortable, and reliable method for screen navigation, cursor movement, 
and  gestures,  and  provides  a  platform  for  interactive  input  for  both  the  consumer  and  corporate  markets.    Our  TouchPad 
solutions  allow  our  OEMs  to  provide  stylish,  simple,  user-friendly,  and  intuitive  solutions  to  consumers.    Our  TouchPad 
solutions  also  offer  various  advanced  features,  including  scrolling,  customizable  tap  zones,  tapping  and  dragging  of  icons, 
and device interaction.

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SecurePadTM

Our SecurePad integrates our Natural ID fingerprint sensor directly into the TouchPad area, improving usability and 

simplifying the supply chain for notebook PC manufacturers.

ClickPadTM

Our  ClickPad  introduces  a  clickable  mechanical  design  to  the  TouchPad  solution,  eliminating  the  need  for  physical 
buttons.  The  button-less  design  of  our  ClickPad  allows  for  unique,  intuitive  industrial  design  and  makes  an  excellent 
alternative  to  conventional  input  and  navigation  devices.    Our  ClickPad  is  activated  by  pressing  down  on  the  internal  tact 
switch to perform left-button or right-button clicks and provides tactile feedback similar to pressing a physical button.  The 
latest  version  of  ClickPad  features  ClickEQTM,  a  mechanical  solution  that  provides  uniform  click  depth  to  maximize  the 
surface area available for gestures and improves click performance over hinged designs.

ForcePad®

Our ForcePad is a thinner version of our ClickPad, which introduces a new dimension in control through the addition 
of variable force sensitivity.  ForcePad is designed to provide consistent performance across OEM models through its design 
intelligence and self-calibration features.  By detecting the amount of force applied, ForcePad is engineered to enable more 
intuitive and precise user interactions in operating system controls and applications.  Designed with thin and light notebooks 
in mind, ForcePad is 40% thinner than a conventional touch pad.  

ClearPad®

Our  ClearPad  family  of  products  enables  the  user  to  interact  directly  with  the  display  on  electronic  devices,  such  as 
mobile smartphones, tablets, and automobiles.  Our ClearPad has distinct advantages, including low-profile form factor; high 
reliability, durability, and accuracy; and low power consumption.  We typically sell our ClearPad solution as a chip, together 
with  customer-specific  firmware,  to  sensor  manufacturers,  OLED  manufacturers  or  LCD  manufacturers,  to  integrate  into 
their touch-enabled products.  

ClearViewTM

Our  ClearView  display  driver  products  offer  advanced  image  processing  and  low  power  technology  for  displays  on 
electronic devices, including smartphones and tablets. ClearView products include adaptive image processing that works in 
concert  with  proprietary  customization  options  to  enable  development  of  efficient  and  cost-effective  high-performance 
solutions  and  faster  time  to  market.    Our  display  driver  products  offer  automatic  regional  control  of  color  balance  that 
optimizes light and dark areas of an image simultaneously, and sunlight readability enhancement capabilities that optimize 
image quality under various lighting conditions.  Our virtual reality bridge and virtual reality display driver integrated circuit, 
or  DDIC,  chips  enable  our  customers  to  move  to  higher  resolution  displays  that  solve  the  “screen  door”  effect  caused  by 
lower resolution displays.

TouchViewTM

Our TouchView solutions include our TDDI products that combine two chips, a touch controller, and a display driver, 
into  a  single  chip  that  incorporates  all  the  features  of  our  ClearView  and  ClearPad  products.    TouchView  products  enable 
thinner  form  factors  to  help  customers  minimize  component  count  and  add  flexibility  to  their  industrial  designs.    These 
products  are  used  in  large  screen  devices,  including  notebooks  and  tablets,  and  are  also  certified  for  automotive  display 
applications.

Other Products

Other product solutions we offer include Dual Pointing Solutions, and TouchStykTM.  Our dual pointing solutions offer 
TouchPad with a pointing stick in a single notebook computer, enabling users to select their interface of choice.  TouchStyk 
is a self-contained pointing stick module that uses capacitive technology similar to that used in our TouchPad.   

Technologies 

We have developed and own an extensive array of technologies, encompassing ASICs, firmware, software, mechanical 
and  electrical  designs,  display  systems,  pattern  recognition,  touch-sensing  technologies,  fingerprint  sensing,  voice,  audio, 

7

imaging,  modem,  and  multimedia  technologies.    We  continue  to  develop  technology  in  these  areas.    We  believe  these 
technologies  and  the  related  intellectual  property  rights  create  barriers  for  competitors  and  allow  us  to  provide  high-value 
human experience semiconductor product solutions in a variety of high-growth markets.

Our broad line of semiconductor product solutions is currently based upon the following key technologies:

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Proprietary microcontroller technology; 

Proprietary vector co-processor technology;

Multimedia processing technology; 

Voice and audio technology;

Pattern recognition technology;

Deep learning and neural network inferencing technology.

Mixed-signal integrated circuit technology;

Wireless connectivity technology;

Video interface and compression technology;

Imaging and modem technology;

Capacitive position and force sensing technology;

Capacitive active pen technology;

Multi-touch technology; and

Display systems and circuit technology.

In  addition  to  these  technologies,  we  develop  firmware  and  device  driver  software  that  we  incorporate  into  our 
products, which provide unique and advanced features.  In addition, our ability to integrate all our products to interface with 
major operating systems provides us with a competitive advantage.

Proprietary  Microcontroller  Technology.    One  example  of  our  microcontroller  technology  is  our  proprietary  16-bit 
microcontroller core that is embedded in the digital portion of our capacitive touch mixed signal ASICs, which is allowing us 
to optimize our ASICs for position sensing tasks.  Our embedded microcontroller provides great flexibility in customizing 
our products via firmware, which eliminates the need to design new circuitry for each new application.

Proprietary Vector Co-Processor Technology.  Our vector co-processor technology is designed for use in our ASICs, 
accompanying either one of our own proprietary microcontroller cores or a commercially available one.  The co-processor 
boosts  an  ASIC’s  computational  performance  by  efficiently  processing  vectors  of  data  for  a  range  of  mathematical 
operations.  This allows us to implement more computationally intensive algorithms within our firmware.

Multimedia Processing Technology.  This technology allows us to create multimedia SoC products for set-top boxes, 
soundbars,  digital  personal  assistants,  smart  displays,  virtual  reality,  OTT,  audio,  and  video.    Our  video  processing 
technology  includes  hardware  and  algorithms  to  reduce  analog  and  digital  noise,  convert  to  different  video  formats,  and 
enhance color and contrast.  Our products include security and secure encrypt/decrypt technology, including secure boot and 
hardware root of trust.

Voice and Audio Technology.  This technology allows us to develop human experience and communication products 
based on voice and audio interaction.  The technology embodies a broad range of analog and mixed signal circuits expertise 
and audio signal processing algorithms, including:

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Noise suppression;

Acoustic echo cancellation;

Active noise cancellation;

Trigger word detection;

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Mid-field and far-field voice processing;

Audio digital signal processor architecture;

Audio codecs;

Audio post processing;

High performance audio analog-to-digital converters, or ADCs, and digital-to-analog converters, or DACs;

Audio amplifiers;

Low power audio processing; 

Speaker protection; and

Product acoustic design.

Pattern Recognition Technology.  This technology is a set of software algorithms and techniques for converting real 
world data, such as gestures and handwriting, into a digital form that can be recognized and manipulated within a computer.  
Our technology provides reliable gesture decoding and handwriting recognition and can be used in other applications such as 
signature verification for a richer user experience.

Deep Learning and Neural Network Inferencing Technology.  This technology allows us to create and train deep neural 
networks  for  audio,  image  processing,  video  processing  and  computer  vision  functions.    Some  of  our  products  contain 
hardware designed to evaluate deep neural networks securely and with low latency.  We also have technology that allows us 
to compress our trained neural networks for more efficient AI-at-the-edge on our hardware.  These neural network algorithms 
improve  the  quality  of  the  sensed  data  (for  example,  reduce  the  noise,  or  increase  the  resolution)  as  well  as  interpret  the 
sensed data.

Mixed-Signal  Integrated  Circuit  Technology.    This  hybrid  analog-digital  integrated  circuit  technology  combines  the 
power of digital computation with the ability to interface with non-digital, real-world signals, such as the position of a finger 
or stylus on a surface.  Our patented design techniques permit us to utilize this technology to optimize our core ASIC engine 
for  all  our  products.    Our  mixed-signal  technology  consists  of  a  broad  portfolio  of  circuit  expertise  in  areas  such  as  the 
following:

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High-speed serial interfaces;

Analog-to-digital and digital-to-analog converters;

Electromagnetic emissions suppression and susceptibility hardening;

Very Large Scale Integrated, or VLSI, digital circuits with multiple clock and power domains; 

Communications and signal processing circuits;

Power management (switching converters, charge pumps, and LDOs);

Precision capacitance measurement;

Display timing controllers, or TCONs.

Wireless  Technology.    Our  wireless  connectivity  solutions  include  discrete  and  integrated  Wi-Fi  and  Bluetooth 
solutions,  and  satellite-based  GPS/GNSS  mobile  navigation  receivers.  Wi-Fi  allows  devices  on  a  local  area  network  to 
communicate wirelessly, adding the convenience of mobility to the utility of high-speed data networks. We offer a family of 
high  performance,  low  power  Wi-Fi  chipsets.  We  offer  products  which  incorporate  the  latest  Wi-Fi  standards  such  as 
802.11AX, which is known as Wifi-6. Bluetooth is a low power technology that enables direct connectivity between devices. 
We  offer  a  family  of  Bluetooth  silicon  and  software  solutions  that  enable  customers  to  easily  and  cost-effectively  add 
Bluetooth  functionality  to  virtually  any  device.  These  solutions  include  combination  chips  that  offer  integrated  Wi-Fi  and 
Bluetooth functionality, which provides significant performance advantages over discrete solutions.  

We also offer a family of GPS and GNSS semiconductor products, software, and data services. These products are part 
of  a  broad  location  platform  that  enable  customer  devices  to  wirelessly  communicate  and  receive  precise  location  and 
navigational data from satellite constellations for use in various location services applications.

9

Video Compression Technology.  Our video interface solutions include our ConnectSmart and DisplayLink portfolios, 
offering a full range of interface solutions that connect devices to external displays and support the latest versions of the most 
widely used protocols, connectors, and operating systems. Our flexible product lines for connecting devices combine high-
performance interface with low power consumption and are designed for both commercial and consumer end-products. Our 
solutions  have  been  broadly  adopted  by  the  top  OEMs  and  original  device  manufacturers,  or  ODMs,  to  enable  video 
expansion  and  protocol  conversion,  leverage  high-end  features,  and  deliver  the  bandwidth  needed  to  drive  multiple  high-
resolution external displays simultaneously.

Imaging and Modem Technology.  This technology allows us to create a family of SoC integrated circuits and software 

for printers, video cameras, fax machines and modems.  Key functional blocks include:

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Image processing hardware accelerators;

Printer imaging pipeline;

Inkjet, laser, and thermal print engine and motor control;

Scan/camera and peripheral control; and

Data and fax modem hardware and firmware.

Capacitive Fingerprint Sensing Technology.  Our fingerprint sensing technology simplifies the system or application 
authentication  process  by  substituting  the  user’s  fingerprint  for  the  login  name  and  password.  Our  capacitive  fingerprint 
sensing technology provides for fingerprint authentication by scanning and matching an image of a user’s fingerprint, as well 
as  initial  fingerprint  enrollment.    Our  sensing  technology  also  incorporates  spoof  detection  and  includes  many 
implementation choices including the back of the phone or PC, button integration, touchpad integration, and under glass.

Capacitive Position and Force Sensing Technology.  Our Position Sensing technology provides a method for sensing 
the presence, position, and contact area of one or more fingers or a stylus on a flat or curved surface.  Our technology works 
with very light touch, supports full multi-touch capabilities, and provides highly responsive cursor navigation, scrolling, and 
selection.  It uses no moving parts, can be implemented under plastic or glass, and is extremely durable.  Our technology can 
also  track  one  or  more  fingers  in  proximity  to  the  touch  surface.  Our  Force  Sensing  technology  senses  the  direction  and 
magnitude of a force applied to an object.  The object can either move when force is applied, like a typical joystick used for 
gaming  applications,  or  it  can  be  isometric,  with  no  perceptible  motion  during  use,  like  our  TouchStyk,  ForcePad,  or 
ClearForce.    The  primary  competition  for  this  technology  is  resistive  strain  gauge  technology.    Our  electronic  circuitry 
determines the magnitude and direction of an applied force, permits very accurate sensing of tiny changes in capacitance, and 
minimizes  electrical  interference  from  other  sources.    Our  capacitive  force  sensing  technology  can  be  integrated  with  our 
position sensing technology.

Capacitive  Active  Pen  Technology.    This  technology  allows  us  to  develop  a  pen  that  can  be  used  for  input  on  a 
capacitive touchscreen.  As well as generating a signal that allows the touchscreen to track the pen, additional data, such as 
the  pen  applied  force  and  pen  button  states,  are  also  communicated  to  the  touchscreen  device.    Information  can  also  be 
communicated from the touchscreen to the pen.

Multi-touch Technology.  This technology allows us to create capacitive touch products that simultaneously track the 
presence, position, and other characteristics of multiple objects in contact with or in close proximity to a flat or curved touch 
surface.  It enables, for example, the recognition of multi-finger gestures, the tracking of a stylus position while the user’s 
palm is also in contact with the touch surface, and the simultaneous interaction of multiple users with the same touch surface.

Display  Systems  and  Circuit  Technology.    This  technology  enables  us  to  develop  optimized  human  experience 
semiconductor product solutions with improved compatibility with their application environments. This technology consists 
of mobile and large format display semiconductor expertise, including the following functional blocks:

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TCONs;

Thin-Film-Transistor, or TFT, gamma references;

Smooth dimming and content adaptive brightness control;

Contrast enhancement;

Color enhancement;

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Gamma curve control;

Force, touch, and display synchronization;

Local area active contrast optimization;

Adaptive image compression and decompression;

Sub-pixel rendering;

Demura compensation;

Rounded corner processing;

Frame rate control;

High-speed  serial  interfaces  such  as  mobile  industry  processor  interface  display  serial  interface,  or  MIPI  DSI, 
and Qualcomm mobile display digital interface, or MDDI; and

Display power circuits such as inductive switchers, charge pumps, and LDOs.

This  technology  also  enables  us  to  develop  advanced  products  that  combine  the  functions  of  the  display  and  touch 
sensing systems to enable highly integrated display and touch functionality with improved performance, thinner form factors, 
and lower system cost.

Our  latest  addition  to  our  automotive  portfolio  is  an  automotive-grade  TDDI  for  indium  gallium  zinc  oxide  and 

amorphous silicon gate-in-panel displays and low-temperature polycrystalline panels up to 4K resolution. 

Research and Development

We conduct ongoing research and development programs that focus on advancing our existing interface technologies, 
improving  our  current  product  solutions,  developing  new  products,  improving  design  and  manufacturing  processes, 
enhancing the quality and performance of our product solutions, and expanding our technologies to serve new markets.  Our 
goal is to provide our customers with innovative solutions that address their needs and improve their competitive positions.  

Our  research  and  development  programs  focus  on  the  development  of  accurate,  easy  to  use,  reliable,  and  intuitive 
human experiences for electronic devices.  We believe our innovative interface technologies can be applied to many diverse 
products, and we believe the interface is a key factor in the differentiation of these products.  AI-at-the-edge is a focus area 
for us in enabling better performance and enhancing user experience in many of these products.  We believe that our interface 
technologies  enable  us  to  provide  customers  with  product  solutions  that  have  significant  advantages  over  alternative 
technologies in terms of functionality, size, power consumption, durability, and reliability.  We also intend to pursue strategic 
relationships and acquisitions to enhance our research and development capabilities, leverage our technology, and shorten our 
time to market with new technological applications.

Our research, design, and engineering teams frequently work directly with our customers to design custom solutions for 
specific applications.  We focus on enabling our customers to overcome their technical barriers and enhance the performance 
of their products.  We believe our engineering know-how and electronic systems expertise provide significant benefits to our 
customers by enabling them to concentrate on their core competencies of production and marketing.

As of the end of fiscal 2021, we employed 1,085 people in our technology, engineering, and product design functions 
in the United States, or the U.S., China, Taiwan, Japan, the United Kingdom, or the U.K., India, Poland, Korea, and Hong 
Kong.    Our  research  and  development  expenses  were  $313.4  million,  $302.5  million,  and  $342.7  million  for  fiscal  2021, 
2020, and 2019, respectively.

Intellectual Property Rights

Our success and ability to compete depend in part on our ability to maintain the proprietary aspects of our technologies 
and  products.    We  rely  on  a  combination  of  patents,  trademarks,  trade  secrets,  copyrights,  confidentiality  agreements,  and 
other statutory and contractual provisions to protect our intellectual property, but these measures may provide only limited 
protection.  

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As of June 26, 2021, we held 2,095 active patents and 708 pending patent applications worldwide that expire between 
2021 and 2042.  Collectively, these patents and patent applications cover various aspects of our key technologies, including 
those  for  touch  sensing,  voice  processing,  secure  biometrics,  display  drivers,  touch  and  display  integration,  docks  and 
adapters,  video  interfaces,  WiFi,  Bluetooth,  GPS,  audio  processing,  video  processing,  edge  computing,  open  AI  tools,  and 
computer vision.  Our proprietary firmware and software, including source code, are also protected by copyright laws and 
applicable trade secret laws.  

Our extensive array of technologies include those related to ICs, firmware, software, and mechanical hardware.  Our 
products  rely  on  a  combination  of  these  technologies,  making  it  difficult  to  use  any  single  technology  as  the  basis  for 
replicating our products.  Furthermore, the lengths of our customers’ design cycles and the customizations required within the 
products we provide to our customers also serve to protect our intellectual property rights.

Customers

Our customers include many of the world’s largest mobile and PC OEMs, based on unit shipments, as well as many 
large  IoT  OEMs,  automotive  manufacturers  and  a  variety  of  consumer  electronics  manufacturers.    Our  demonstrated  track 
record of technological leadership, design innovation, product performance, cost-effectiveness, and on-time deliveries have 
resulted in our leadership position in providing human experience semiconductor product solutions.  We believe our strong 
relationship with our OEM customers, many of which are also currently developing product solutions which are focused in 
several of our target markets, will continue to position us as a source of supply for their product offerings.

Our leading OEM customers in fiscal 2021 included the following:

Bouygues Telecom

• Acer
• Ampak
•
• Dell
•
Ford
•
Fujitsu
• Google
• Goodway
• Hewlett-Packard
• Honor
• Huawei
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Lenovo
•
Logitech

• Microsoft
• Oculus
• Oppo Mobile
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•
• Vivo
• Winstar
• Xiaomi

Poly
Samsung
Sony
Targus
Technicolor
Toshiba
Toyota Motor

We  generally  supply  custom-designed  products  to  OEMs  through  their  contract  manufacturers,  supply  chain  or 

distributors.  

We consider both the OEMs and their contract manufacturers or supply chain partners to be our customers, as well as 
in some cases, our distributors.  Both the OEMs and their partners may determine the design and pricing requirements and 
make the overall decision regarding the use of our human experience semiconductor product solutions in their products.  The 
contract  manufacturers  and  distributors  place  orders  with  us  for  the  purchase  of  our  products,  take  title  to  the  products 
purchased upon delivery by us, and pay us directly for those purchases.  The majority of these customers do not have return 
rights except for warranty provisions.

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Sales and Marketing

We sell our product solutions for incorporation into the products of our OEM customers.  We generate sales through 
direct sales employees as well as outside sales representatives, distributors and value-added resellers.  Our sales personnel 
receive substantial technical assistance and support from our internal technical marketing and engineering resources because 
of  the  highly  technical  nature  of  our  product  solutions.    Sales  frequently  result  from  multi-level  sales  efforts  that  involve 
senior management, design engineers, and our sales personnel interacting with our customers' decision makers throughout the 
product development and order process.

As  of  the  end  of  fiscal  2021,  we  employed  189  sales  and  marketing  professionals.    We  maintain  customer  support 
offices domestically and internationally, which are located in the U.S., Taiwan, China, India, Korea, Japan, and Europe.  In 
addition,  we  utilize  value-added  resellers  and  sales  distributors  that  are  primarily  located  in  the  U.S.,  China,  Korea  and 
Taiwan.

International sales constituted over 98% of our revenue for each of fiscal 2021, 2020, and 2019. Approximately 68%, 
78%, and 78% of our sales in fiscal 2021, 2020, and 2019, respectively, were made to companies located in China, Japan, and 
South Korea that provide design and manufacturing services for major notebook computer and mobile product applications 
OEMs.  Our sales are almost exclusively denominated in U.S. dollars.  This information should be read in conjunction with 
Note 12 Segment, Customers, and Geographic Information to the consolidated financial statements contained elsewhere in 
this report.

Manufacturing

We  employ  a  fabless  semiconductor  manufacturing  platform  through  third-party  relationships.    We  currently  utilize 
third-party  semiconductor  wafer  manufacturers  to  supply  us  with  silicon  wafers  integrating  our  proprietary  design 
specifications.  The completed silicon wafers are forwarded to third-party package and test processors for further processing 
into  die  and  packaged  ASICs,  as  applicable,  which  are  then  utilized  in  our  custom  interface  products  or  processed  as  our 
ASIC-based solution.

After processing and testing, the die and ASICs are consigned to various contract manufacturers for assembly or are 
shipped directly to our customers.  During the assembly process, our die or ASIC is either combined with other components 
to complete the module for our custom human experience solution or the ASIC is maintained as a standalone finished good.  
The finished assembled product is subsequently shipped directly to our customers or by our contract manufacturers directly 
to our customers for integration into their products.

We believe our third-party manufacturing strategy provides a scalable business model, enables us to concentrate on our 
core competencies of research and development, technological advances, and product design and engineering, and reduces 
our capital investment.  

Our third-party contract manufacturers and semiconductor fabricators are predominately Asia-based organizations. We 
generally provide our contract manufacturers with six-month rolling forecasts of our production requirements.  As a result of 
recent supply constraints and capacity shortages affecting the global semiconductor industry, we have entered into long-term 
capacity and pricing agreements with some suppliers.  Our reliance on these parties exposes us to vulnerability owing to our 
dependence on a few sources of supply.  We believe, however, that other sources of supply are available.  In some cases, we 
have  alternative  sources  of  suppliers  to  mitigate  supplier  risk;  however,  in  the  current  environment,  all  of  them  could  be 
constrained.  We may establish relationships with other contract manufacturers in order to reduce our dependence on any one 
source of supply.

Periodically, we purchase inventory from our contract manufacturers when a customer delays its delivery schedule or 
cancels its order.  In those circumstances in which our customer has cancelled its order and we purchase inventory from our 
contract manufacturers, we consider a write-down to reduce the carrying value of the inventory purchased to its net realizable 
value.  We  charge  write-downs  to  reduce  the  carrying  value  of  obsolete,  slow  moving,  and  non-usable  inventory  to  its  net 
realizable value and charge such write-downs to cost of revenue.  We also record a liability and charge to cost of revenue for 
estimated  losses  on  inventory  we  are  obligated  to  purchase  from  our  contract  manufacturers  when  such  losses  become 
probable from customer delays or order cancellations.  In addition, the impact of entering into long-term capacity agreements 
could create significant inventory write-down if the end customer demand declines.

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Competition

IoT

Our  SoC  solutions  enable  new  forms  of  media  consumption  and  integrate  video  processing,  far-field  voice  and 
linguistics  processing  products  are  sold  into  market  segments  that  offer  significant  potential  growth,  ranging  from  home 
automation applications, smart assistant platforms, surveillance cameras, to STB/OTT platforms. The markets for STB/OTT 
products,  surveillance  cameras,  home  automation,  and  smart  assistant  solutions  require  strong  technology  innovation  and 
deep systems and systems engineering expertise. Our principal competition in these markets include Broadcom, MediaTek, 
AmLogic, and Ambarella, among others.  

We  provide  voice  processing  silicon  and  software  solutions  for  voice-enabled  devices,  consumer  and  commercial 
imaging,  and  next-generation  audio  applications.  In  addition  to  our  voice  solutions,  we  support  the  audio  headphone  and 
virtual reality/mixed reality head mounted display industry with universal serial bus-c, or USB-C, audio codec solutions for 
next generation wireless audio devices and wearables. Our competitors in the sale of audio products include Cirrus Logic, 
DSP Group, BES Technic, and Realtek. 

Our  wireless  products  for  use  in  IoT  application  markets  include  our  technologies  such  as  Wi-Fi,  Bluetooth,  Wi-Fi-
Bluetooth  combinations,  and  GPS/GNSS  support  our  customers’  need  to  develop  products  which  can  wirelessly 
communicate to networks, remote control of edge-devices, machine-to-machine communication, among other purposes.  Our 
principal competition includes Infineon, Qualcomm, MediaTek, NXP, and Silicon Labs, among others.

Our automotive products include touch, display driver, and TDDI solutions for major automotive OEMs.  Our principal 
competitors for these products include Focaltech, Himax, and Microchip.  Our IoT video interface products are sold into PC 
and  smartphone  docks  and  wireless  adapter  market  applications.  Our  principal  competitors  in  the  sale  of  IoT  interface 
products are Parade, Megachips, and Realtek.  

We also provide fax, modem and print silicon and software solutions for printers, fax machines, point of sale terminals, 

and medical applications. Our principal competitors in these markets are Marvell and Qbit.

PC and Mobile

Our  touch,  display  and  fingerprint-based  semiconductor  products  are  sold  into  markets  for  PC  product  applications, 
mobile product applications, and other electronic devices.  The markets for touchscreen products are characterized by rapidly 
changing  technology  and  intense  competition.    Our  principal  competition  in  the  sale  of  touchscreen  products  includes 
Samsung  LSI,  Broadcom,  Goodix  and  various  other  companies  involved  in  human  experience  semiconductor  product 
solutions.  Our principal competitors in the sale of notebook touch pads are Cirque Corporation, Elan Microelectronics and 
Goodix.  Our principal competitors in the sale of display driver products for the PC and mobile product applications markets 
include  Focaltech,  Novatek  Microelectronics,  Samsung  LSI  and  SiliconWorks.    Our  principal  competitors  in  the  sale  of 
fingerprint  authentication  solutions  for  PC  product  applications  markets  are  Egis  Technology,  Elan  Microelectronics,  and 
Goodix.  

Corporate Social Responsibility

Synaptics strives to be a leading corporate citizen.  We uphold the most ethical standards in our business practices and 
policies, and we believe that sustainable corporate practices and consistent attention to social and governance priorities will 
help enhance long-term value for our stockholders.  Our Board of Directors is responsible for overseeing our environmental, 
social, and governance policies and practices.  With guidance from the Board of Directors, our management team applies an 
integrated  methodology  to  financial  matters,  corporate  governance,  and  corporate  responsibility,  leading  to  increased 
accountability, better decision making and ultimately creating better long-term value. This focus on environmental, social and 
governance factors influences everything we do.

Environmental

We  have  implemented  internal  green  programs  and  initiatives  to  reinforce  our  commitment  to  minimizing  natural 
resource  consumption,  improving  sustainability,  disposing  of  end-of-life  products  in  an  environmentally  safe  manner, 
reducing  waste,  and  increasing  reuse  and  recycling  programs  company-wide.    For  example,  our  headquarters  uses  100% 
renewable energy sources, and we follow the European Union’s rules regarding the Restriction of Hazardous Substances in 
Electrical and Electronic Equipment in the design and manufacture of all our products.  

Social

Our employees and communities are the heart of our company, and we take pride in our social responsibility to them as 
well becoming better global citizens. We support our local communities through charitable causes and events, and we have 

14

numerous  programs  in  place  around  the  world  that  promote  our  commitments  to  diversity,  equality  of  opportunity,  non-
discrimination,  and  the  highest  standards  of  human  rights.   We  are  committed  to  the  use  of  a  socially  responsible  supply 
chain.  Our efforts include maintaining a supplier policy that bars the use of forced or child labor and governs the use and 
distribution of conflict minerals.  

Governance

We  are  dedicated  to  supporting  leading  corporate  governance  and  board  practices  to  ensure  oversight  accountability 
and transparency in our business practices. We place a high value on ethical actions, individual integrity, and fair dealing in 
every aspect of what we do.

Accountability

Our  Board  of  Directors  and  management  are  strongly  committed  to  our  corporate  responsibility  policies  and  will 
continue to regularly evaluate these policies to ensure an effective outcome and strict adherence by our employees, suppliers, 
vendors, and partners.  We actively monitor and audit our internal compliance with our Code of Conduct and other corporate 
social responsibility policies and programs.

Human Capital

Our  company  has  been  built  on  the  collective  contributions  from  people  of  many  countries,  religions,  and  ethnic 
backgrounds. People are our most critical asset and our success depends on them. We want to attract, develop, and retain the 
world’s best talent.

Competition for talent in our industry is extremely intense. Our human resource strategy and programs are focused on 

attracting, engaging, and retaining this talent.

Our  Board  of  Directors  and  Board  committees  provide  oversight  on  certain  human  capital  matters.  The  Audit 
Committee  provides  oversight  of  business  risks  and  our  company’s  Code  of  Business  Conduct  and  Ethics,  both  of  which 
have  relevance  for  human  capital.  The  Nominations  and  Corporate  Governance  Committee  has  oversight  for  environment, 
social, and governance strategy, which includes talent attraction and retention and inclusion and diversity. The Compensation 
Committee  provides  oversight  of  our  overall  compensation  philosophy,  policies,  and  programs,  and  assesses  whether  our 
compensation establishes appropriate incentives for executive officers and employees

As of June 26, 2021, we employed 1,463 employees. We have employees in North America, Asia/Pacific and Europe 

which represent approximately 27%, 62% and 11%, respectively, of our employee population as of June 26, 2021. 

Competitive Compensation and Benefits

We  provide  competitive  compensation,  benefits,  and  wellness  offerings  to  our  employees.  We  have  a  strong  pay  for 
performance philosophy. We align executive compensation with our corporate strategies, business objectives and the creation 
of long-term value for our stockholders without encouraging unnecessary or excessive risk-taking.

Engagement and Development

We strive to create exceptional employee experiences. Our focus is on creating a space for employees to do their best 
work and feel valued and engaged. We also provide opportunities for employees to connect and use their time, talent, and 
resources  to  enhance  the  communities  where  we  live  and  work.  We  have  created  multiple  channels  of  communication 
between our Chief Executive Officer, or CEO, and our employees. We gather insights into successes, challenges, solutions to 
problems and what is top of mind for employees across the business through formal and informal channels. 

Employees have various opportunities to learn though technical, compliance and other professional trainings.  We offer 

career advancement opportunities to employees at Synaptics and are focused on leadership development.

Inclusion & Diversity

We believe that diverse teams are more innovative and productive. Our goal is to cultivate an environment that not only 

allows for, but also encourages, everyone to collaborate and participate equally to foster individual and company growth.  

15

Information about our Executive Officers 

The following table sets forth certain information regarding our executive officers as of August 13, 2021:

Name
Michael Hurlston
Dean Butler
Saleel Awsare
John McFarland
Craig Stein

Age
54
39
56
54
54

Position
President and Chief Executive Officer
Chief Financial Officer
Senior Vice President and General Manager, PC & Peripherals Division
Senior Vice President, General Counsel and Secretary
Senior Vice President and General Manager, Mobile and IoT Divisions

Michael Hurlston has been the President and Chief Executive Officer of our company since August 19, 2019. Prior to 
joining our company, Mr. Hurlston served as the Chief Executive Officer and a member of the Board of Directors of Finisar 
Corporation (“Finisar”) from January 2018 to August 2019. Prior to joining Finisar, he served as Senior Vice President and 
General Manager of the Mobile Connectivity Products/Wireless Communications and Connectivity Division and held senior 
leadership  positions  in  sales,  marketing,  and  general  management  at  Broadcom  Limited  (“Broadcom”)  and  its  predecessor 
corporation  from  November  2001  through  October  2017.  Prior  to  joining  Broadcom  in  2001,  Mr.  Hurlston  held  senior 
marketing  and  engineering  positions  at  Oren  Semiconductor,  Inc.,  Avasem,  Integrated  Circuit  Systems,  Micro  Power 
Systems, Exar and IC Works from 1991 until 2001. Mr. Hurlston is a member of the board of directors of Flex Ltd.  Mr. 
Hurlston serves on the Board of Executive Trustees of the UC Davis Foundation and on the Dean’s Executive Committee for 
the College of Engineering and the Dean’s Advisory Counsel for the Graduate School of Management at the University of 
California, Davis.  Mr. Hurlston holds Bachelor of Science and Master of Science degrees in Electrical Engineering and a 
Master of Business Administration degree from the University of California, Davis. 

Dean  Butler  has  been  the  Chief  Financial  Officer  of  our  company  since  October  21,  2019.  Prior  to  joining  our 
company, Mr. Butler served as Vice President of Finance at Marvell Technology Group Ltd. (“Marvell”) from July 2016 to 
October 2019. Prior to joining Marvell, he served as Controller of the Ethernet Switching Division at Broadcom from January 
2015 through July 2016. Prior to joining Broadcom, Mr. Butler held senior finance positions at Maxim Integrated from May 
2007 to December 2014. Mr. Butler holds a Bachelor of Business Administration degree in Finance from the University of 
Minnesota Duluth.

Saleel Awsare has been the Senior Vice President and General Manager of our PC and Peripherals unit since July 2020. 
Previously, Saleel was the Senior Vice President and General Manager of our IoT Division from April 2019 to July 2020 and 
the  Senior  Vice  President  of  Corporate  Marketing  &  Investor  Relations  from  December  2018  until  April  2019.  Prior  to 
joining our company as Corporate Vice President and General Manager of Audio & Imaging Products in July 2017, he was 
President  of  Conexant  Systems,  LLC  (“Conexant”)  from  March  2016  to  July  2017,  and  Senior  Vice  President  &  General 
Manager of Audio & Imaging from April 2012 to March 2016. Synaptics acquired Conexant in July 2017. Prior to joining 
Conexant, Mr. Awsare served as President of Nuvoton Technology Corporation's (“Nuvoton”) U.S. operations and General 
Manager of Nuvoton’s audio and voice divisions from December 2008 to March 2012. Prior to joining Nuvoton, Mr. Awsare 
was  the  Executive  Vice  President  and  General  Manager  of  mixed  signal  products  for  Winbond  Electronics  Corporation 
America (“Winbond”). Prior to joining Winbond, Mr. Awsare was a director of engineering for Information Storage Devices. 
Mr.  Awsare  is  a  member  of  the  Board  of  Trustees  of  Stevens  Institute  of  Technology.  Mr.  Awsare  holds  a  Bachelor  of 
Science degree in Electrical Engineering from Stevens Institute of Technology and a Master of Science degree in Engineering 
Management from Santa Clara University.

John McFarland has been the Senior Vice President, General Counsel and Secretary of our company since November 
2013. Prior to joining our company, Mr. McFarland served for nine years as the Executive Vice President, General Counsel 
and Secretary of Magnachip Semiconductor. Mr. McFarland spent his early career at law firms in Palo Alto, California, and 
Seoul, Korea. Mr. McFarland holds a Bachelor of Arts degree in Asian Studies, conferred with highest distinction from the 
University of Michigan, and a Juris Doctor degree from the University of California, Los Angeles, School of Law.

Craig  Stein  has  been  the  Senior  Vice  President  and  General  Manager,  Mobile  &  IoT  Division  since  March  2021. 
Previously, Mr. Stein was the Senior Vice President of Product Development from September 2020 to March 2021. Prior to 
joining  our  company,  Mr.  Stein  was  Vice  President  &  General  Manager  in  the  Data  Center  Products  Group  at  Intel 
Corporation  (“Intel”)  and  Head  of  Engineering  &  General  Manager,  Data  Center  Group  from  May  2016  to  August  2018. 
Prior  to  joining  Intel,  Mr.  Stein  held  key  leadership  positions  at  other  semiconductor,  technology,  and  transportation 
companies,  including  Chief  Operating  Officer  and  General  Manager  at  Polara  Engineering,  Vice  President  of  Research  & 
Development  at  Knowles  Corp.,  Director  of  Engineering  at  Broadcom,  and  Research  &  Development  Manager  at  Hewlett 
Packard. Mr. Stein has five issued patents and five others pending. Mr. Stein holds a Bachelor of Science degree in Electrical 

16

Engineering from the University of California, Berkeley, and a Master of Science degree in Electrical Engineering from San 
Jose State University.

ITEM 1A. RISK FACTORS

You should carefully consider the following factors, together with all the other information included in this report, in 

evaluating our company and our business.

Risks Related to Our Markets and Customers

We currently depend on our solutions for the Internet of Things (IoT), PC, and mobile product applications markets 
for  a  substantial  portion  of  our  revenue,  and  any  downturn  in  sales  of  these  products  would  adversely  affect  our 
business, revenue, operating results, and financial condition.

We currently depend on our solutions for the IoT, PC, and mobile product applications markets for a substantial portion 
of  our  revenue.  Any  downturn  in  sales  of  our  products  into  any  of  these  markets  would  adversely  affect  our  business, 
revenue, operating results, and financial condition.  Similarly, a softening of demand in any of these markets, or a slowdown 
of growth in any of these markets because of changes in customer preferences, the emergence of applications not including 
our solutions, or other factors would cause our business, operating results, and financial position to suffer.

A significant portion of our sales comes from one or more large customers, the loss of which could harm our business, 
financial condition, and operating results.

Historically, we have relied on a limited number of customers for a substantial portion of our total revenue. If we lost 
key  customers,  or  if  key  customers  reduced  or  stopped  placing  orders  for  our  high-volume  products,  our  financial  results 
could  be  adversely  affected.  Sales  to  three  direct  customers  each  accounted  for  10%  or  more  of  our  net  revenue  in  fiscal 
2021.    During  fiscal  2021,  we  had  three  OEM  customers  that  integrated  our  products  into  their  products  representing 
approximately  22%,  17%  and  11%  of  our  revenue;  we  sold  to  these  customers  primarily  indirectly  through  multiple 
distributors. Significant reductions in sales to our largest customers, the loss of other major customers, or a general decrease 
in  demand  for  our  products  within  a  short  period  of  time  could  adversely  affect  our  revenue,  financial  condition,  and 
business.

We  sell  to  contract  manufacturers  that  serve  our  OEM  customers.    Any  material  delay,  cancellation,  or  reduction  of 
orders  from  any  one  or  more  of  these  contract  manufacturers  or  the  OEMs  they  serve  could  harm  our  business,  financial 
condition, and operating results.  The adverse effect could be more substantial if our other customers do not increase their 
orders  or  if  we  are  unsuccessful  in  generating  orders  for  our  solutions  with  new  customers.    Many  of  these  contract 
manufacturers  sell  to  the  same  OEMs,  and  therefore  our  concentration  with  certain  OEMs  may  be  higher  than  with  any 
individual contract manufacturer.  Concentration in our customer base may make fluctuations in revenue and earnings more 
severe and make business planning more difficult.

We  are  exposed  to  industry  downturns  and  cyclicality  in  our  target  markets  that  may  result  in  fluctuations  in  our 
operating results.

The consumer electronics industry has experienced significant economic downturns at various times.  These downturns 
are characterized by diminished product demand, accelerated erosion of average selling prices, and production overcapacity.  
In addition, the consumer electronics industry is cyclical in nature.  We seek to reduce our exposure to industry downturns 
and cyclicality by providing design and production services for leading companies in rapidly expanding industry segments.  
We may, however, experience substantial period-to-period fluctuations in future operating results because of general industry 
conditions or events occurring in the general economy.

17

We cannot assure you that our product solutions for new markets will be successful or that we will be able to continue 
to generate significant revenue from these markets.

Our product solutions may not be successful in new markets. Various target markets for our product solutions, such as 
IoT, may develop slower than anticipated or could utilize competing technologies.  The markets for certain of these products 
depend in part upon the continued development and deployment of wireless and other technologies, which may or may not 
address the needs of the users of these products.

Our ability to generate significant revenue from new markets will depend on various factors, including the following:

•

•

•

the development and growth of these markets;

the  ability  of  our  technologies  and  product  solutions  to  address  the  needs  of  these  markets,  the  price  and 
performance requirements of OEMs, and the preferences of end users; and

our  ability  to  provide  OEMs  with  solutions  that  provide  advantages  in  terms  of  size,  power  consumption, 
reliability, durability, performance, and value-added features compared with alternative solutions.

Many  manufacturers  of  these  products  have  well-established  relationships  with  competitive  suppliers.    Our  ongoing 
success in these markets will require us to offer better performance alternatives to other solutions at competitive costs.  The 
failure of any of these target markets to develop as we expect, or our failure to serve these markets to a significant extent, will 
impede our sales growth and could result in substantially reduced earnings and a restructuring of our operations.  We cannot 
predict the size or growth rate of these markets or the market share we will achieve or maintain in these markets in the future.

If we fail to maintain and build relationships with our customers, or our customers’ products that utilize our solutions 
do not gain widespread market acceptance, our revenue may stagnate or decline.

We do not sell any products to end users and we do not control or influence the manufacture, promotion, distribution, 
or  pricing  of  the  products  that  incorporate  our  solutions.    Instead,  we  design  various  solutions  that  our  OEM  customers 
incorporate into their products, and we depend on such OEM customers to successfully manufacture and distribute products 
incorporating our solutions and to generate consumer demand through marketing and promotional activities.  As a result of 
this,  our  success  depends  almost  entirely  upon  the  widespread  market  acceptance  of  our  OEM  customers’  products  that 
incorporate our solutions.  Even if our technologies successfully meet our customers' price and performance goals, our sales 
could decline or fail to develop if our customers do not achieve commercial success in selling their products that incorporate 
our solutions.

We  must  maintain  our  relationships  with  our  existing  customers  and  expand  our  relationships  with  OEMs  in  new 
markets. Our customers generally do not provide us with firm, long-term volume purchase commitments, opting instead to 
issue purchase orders that they can cancel, reduce, or delay, subject to certain limitations.  In order to meet the expectations 
of our customers, we must provide innovative solutions on a timely and cost-effective basis. This requires us to match our 
design and production capacity with customer demand, maintain satisfactory delivery schedules, and meet performance goals.  
If  we  are  unable  to  achieve  these  goals  for  any  reason,  our  sales  may  decline  or  fail  to  develop,  which  would  result  in 
decreasing revenue.

In addition to maintaining and expanding our customer relationships, we must also identify areas of significant growth 
potential in other markets, establish relationships with OEMs in those markets, and assist those OEMs in developing products 
that  incorporate  our  solutions.    Our  failure  to  identify  potential  growth  opportunities  in  the  markets  in  which  we  operate, 
particularly  in  the  IoT  market,  or  our  failure  to  establish  and  maintain  relationships  with  OEMs  in  those  markets,  would 
prevent our business from growing in those markets.

Risks Related to Our Supply Chain

We depend on third parties to maintain satisfactory manufacturing yields and delivery schedules, and their inability 
to do so could increase our costs, disrupt our supply chain, and result in our inability to deliver our products, which 
would adversely affect our operating results.

We depend on our contract manufacturers and semiconductor fabricators to maintain high levels of productivity and 
satisfactory delivery schedules at manufacturing and assembly facilities located primarily in Asia.  We provide our contract 
manufacturers with six-month rolling forecasts of our production requirements.  We generally do not, however, have long-

18

term  agreements  with  our  contract  manufacturers  that  guarantee  production  capacity,  prices,  lead  times,  or  delivery 
schedules.    In  our  fiscal  year  2021,  we  faced  manufacturing  capacity  constraints  as  a  result  of  the  supply  constraints  and 
capacity  shortages  affecting  the  global  semiconductor  industry  that  materially  limited  our  ability  to  meet  our  customers’ 
demand forecasts, thereby limiting our potential revenue growth during the fiscal year. As a result of the supply shortages, we 
have entered into long-term capacity and pricing agreements with certain of our suppliers.  If end customer demand declines, 
these  long-term  capacity  agreements  could  result  in  significant  write-downs  of  inventory.    On  occasion,  customers  require 
rapid increases in production, which can strain our resources and reduce our margins.  Although we have been able to obtain 
increased production capacity from our third-party contract manufacturers in the past, there is no guarantee that our contract 
manufacturers  will  be  able  to  increase  production  capacity  to  enable  us  to  meet  our  customer  demands  in  the  future.    Our 
contract manufacturers also serve other customers, a number of which have greater production requirements than we do.  As 
a  result,  our  contract  manufacturers  could  determine  to  prioritize  production  capacity  for  other  customers  or  reduce  or 
eliminate deliveries to us on short notice. 

Qualifying new contract manufacturers, and specifically semiconductor foundries, is time consuming and might result 
in  unforeseen  manufacturing  and  operations  problems.  We  may  also  encounter  lower  manufacturing  yields  and  longer 
delivery schedules in commencing volume production of new products that we introduce, which could increase our costs or 
disrupt  our  supply  of  such  products.    The  loss  of  relationships  with  our  contract  manufacturers  or  assemblers,  or  their 
inability to conduct their manufacturing and assembly services for us as anticipated in terms of capacity, cost, quality, and 
timeliness  could  adversely  affect  our  ability  to  fill  customer  orders  in  accordance  with  required  delivery,  quality,  and 
performance requirements, and adversely affect our operating results.

Shortages of components and materials may delay or reduce our sales and increase our costs, thereby harming our 
operating results.

The  inability  to  obtain  sufficient  quantities  of  components  and  other  materials  necessary  for  the  production  of  our 
products could result in reduced or delayed sales or lost orders.  Many of the materials used in the production of our products 
are available only from a limited number of foreign suppliers, particularly suppliers located in Asia.  In most cases, neither 
we  nor  our  contract  manufacturers  have  long-term  supply  contracts  with  these  suppliers.    As  a  result,  we  are  subject  to 
increased costs, supply interruptions, and difficulties in obtaining materials.  Our customers also may encounter difficulties or 
increased  costs  in  obtaining  the  materials  necessary  to  produce  their  products  into  which  our  product  solutions  are 
incorporated. Supply shortages in our fiscal year 2021 have resulted in increased product costs, not all of which we passed on 
to our customers. Future shortages of materials and components, including potential supply constraints of silicon, could cause 
delayed shipments and customer dissatisfaction, which may result in lower revenue.  

Risks Related to Product Development

We are subject to lengthy development periods and product acceptance cycles, which can result in development and 
engineering costs without any future revenue.

We provide solutions that are incorporated by OEMs into the products they sell.  OEMs make the determination during 
their product development programs whether to incorporate our solutions or pursue other alternatives.  This process requires 
us to make significant investments of time and resources in the design of solutions for our OEMs’ products well before our 
customers introduce their products incorporating our interface solutions into the market, and before we can be sure that we 
will  generate  any  significant  sales  to  our  customers  or  even  recover  our  investment.    During  a  customer’s  entire  product 
development  process,  we  face  the  risk  that  our  interfaces  will  fail  to  meet  our  customer’s  technical,  performance,  or  cost 
requirements, or that our products will be replaced by competitive products or alternative technological solutions.  Even if we 
complete  our  design  process  in  a  manner  satisfactory  to  our  customer,  the  customer  may  delay  or  terminate  its  product 
development efforts.  The occurrence of any of these events could cause sales to not materialize, be deferred, or be cancelled, 
which could adversely affect our operating results.

We  face  intense  competition  that  could  result  in  our  losing  or  failing  to  gain  market  share  and  suffering  reduced 
revenue.

We  serve  intensely  competitive  markets  that  are  characterized  by  price  erosion,  rapid  technological  change,  and 
competition  from  major  domestic  and  international  companies.    This  intense  competition  could  result  in  pricing  pressures, 
lower sales, reduced margins, and lower market share.  Depressed economic conditions, a slowdown in the markets in which 
we operate, the emergence of new products not including our product solutions, rapid changes in the markets in which we 
operate, and competitive pressures may result in lower demand for our product solutions and reduced unit margins.

19

Some  of  our  competitors  have  greater  market  recognition,  larger  customer  bases,  and  substantially  greater  financial, 
technical, marketing, distribution, and other resources than we possess and that afford them greater competitive advantages.  
As a result, they may be able to devote greater resources to the promotion and sale of products, negotiate lower prices for raw 
materials and components, deliver competitive products at lower prices, and introduce new product solutions and respond to 
customer  requirements  more  quickly  than  we  can.    Our  competitive  position  could  suffer  if  one  or  more  of  our  customers 
determine not to utilize our custom engineered, total solutions approach and instead, decide to design and manufacture their 
own interfaces, contract with our competitors, or use alternative technologies.

If we do not keep pace with technological innovations, our products may not remain competitive and our revenue and 
operating results may suffer.

We  operate  in  rapidly  changing,  highly  competitive  markets.    Technological  advances,  the  introduction  of  new 
products and new design techniques could adversely affect our business unless we are able to adapt to changing conditions.  
Technological  advances  could  render  our  solutions  less  competitive  or  obsolete,  and  we  may  not  be  able  to  respond 
effectively to the technological requirements of evolving markets.  Therefore, we may be required to expend substantial funds 
for and commit significant resources to enhancing and developing new technology, which may include purchasing advanced 
design tools and test equipment, hiring additional highly qualified engineering and other technical personnel, and continuing 
and expanding research and development activities on existing and potential solutions.

Our  research  and  development  efforts  with  respect  to  new  technologies  may  not  result  in  customer  or  market 
acceptance.  Some or all of those technologies may not successfully make the transition from the research and development 
stage  to  cost-effective  production  as  a  result  of  technology  problems,  competitive  cost  issues,  yield  problems,  and  other 
factors.    Even  if  we  successfully  complete  a  research  and  development  effort  with  respect  to  a  particular  technology,  our 
customers may decide not to introduce or may terminate products utilizing the technology for a variety of reasons, including 
difficulties  with  other  suppliers  of  components  for  the  products,  superior  technologies  developed  by  our  competitors  and 
unfavorable  comparisons  of  our  solutions  with  these  technologies,  price  considerations  and  lack  of  anticipated  or  actual 
market demand for the products.

Our business could be harmed if we are unable to develop and utilize new technologies that address the needs of our 
customers, or our competitors or customers develop and utilize new technologies more effectively or more quickly than we 
can.  Any investments made to enhance or develop new technologies that are not successful could have an adverse effect on 
our net revenue and operating results.

We may not be able to enhance our existing product solutions and develop new product solutions in a timely manner.

Our future operating results will depend to a significant extent on our ability to continue to provide new solutions that 
compare  favorably  with  alternative  solutions  on  the  basis  of  time  to  introduction,  cost,  performance,  and  end  user 
preferences.  Our success in maintaining existing customers, attracting new customers, and developing new business depends 
on various factors, including the following:

•

•

•

•

•

•

innovative development of new solutions for customer products;

utilization of advances in technology;

maintenance of quality standards;

performance advantages;

efficient and cost-effective solutions; and

timely completion of the design and introduction of new solutions.

Our inability to enhance our existing product solutions and develop new product solutions on a timely basis could harm 

our operating results and impede our growth.

If we become subject to product returns or claims resulting from defects in our products, we may incur significant 
costs resulting in a decrease in revenue.

We  develop  complex  products  in  an  evolving  marketplace  and  generally  warrant  our  products  for  a  period  of  12 
months from the date of delivery.  Despite testing by us and our customers, defects may be found in existing or new products.  
Manufacturing  errors  or  product  defects  could  result  in  a  delay  in  recognition  or  loss  of  revenue,  loss  of  market  share,  or 

20

failure  to  achieve  market  acceptance.    Additionally,  defects  could  result  in  financial  or  other  damages  to  our  customers, 
causing us to incur significant warranty, support, and repair costs, and diverting the attention of our engineering personnel 
from key product development efforts.

We must finance the growth of our business and the development of new products, which could have an adverse effect 
on our operating results.

To remain competitive, we must continue to make significant investments in research and development, marketing, and 
business development.  Our failure to sufficiently increase our net revenue to offset these increased costs would adversely 
affect our operating results.

From  time  to  time,  we  may  seek  additional  equity  or  debt  financing  to  provide  for  funds  required  to  expand  our 
business, including through acquisitions.  We cannot predict the timing or amount of any such requirements at this time.  If 
such  financing  is  not  available  to  us  on  satisfactory  terms,  we  may  be  unable  to  expand  our  business  or  to  develop  new 
business at the rate desired and our operating results may suffer.  If obtained, the financing itself carries risks including the 
following:  (i) debt financing increases expenses and must be repaid regardless of operating results; and (ii) equity financing, 
including  the  issuance  of  convertible  notes  or  additional  shares  in  connection  with  acquisitions,  could  result  in  dilution  to 
existing stockholders and could adversely affect the price of our common stock.

Risks Related to International Sales and Operations

Changes  to  import,  export  and  economic  sanction  laws  may  expose  us  to  liability,  increase  our  costs  and  adversely 
affect our operating results. 

As a global company headquartered in the U.S., we are subject to U.S. laws and regulations, including import, export, 
and economic sanction laws. These laws may include prohibitions on the sale or supply of certain products to embargoed or 
sanctioned  countries,  regions,  governments,  persons,  and  entities,  may  require  an  export  license  prior  to  the  export  of  the 
controlled item, or may otherwise limit and restrict the export of certain products and technologies.  Many of our customers, 
suppliers and contract manufacturers are foreign companies or have significant foreign operations. The imposition of new or 
additional economic and trade sanctions against our major customers, suppliers or contract manufacturers could result in our 
inability  to  sell  to,  and  generate  revenue  from  such  customer,  supplier,  or  contract  manufacturer.  As  a  result  of  restrictive 
export laws, our customers may also develop their own solutions to replace our products or seek to obtain a greater supply of 
similar  or  substitute  products  from  our  competitors  that  are  not  subject  to  these  restrictions,  which  could  material  and 
adversely affect our business and operating results.  

In addition, compliance with additional export regulations may result in increased costs to the company. Although we 
have an export compliance program, maintaining and adapting our export controls program to new and shifting regulations is 
expensive,  time-consuming  and  requires  significant  management  attention.  Failure  to  comply  with  trade  or  economic 
sanctions  could  subject  the  company  to  legal  liabilities  and  fines  from  the  U.S.  government.  We  must  also  comply  with 
export restrictions and laws imposed by other countries affecting trade and investments. Although these restrictions and laws 
have not materially restricted our operations in the recent past, there is a significant risk that they could do so in the future, 
which would materially and adversely affect our business and operating results. 

21

Changes  to  international  trade  policy  and  rising  concerns  of  international  tariffs,  including  tariffs  applied  to  goods 
traded between the U.S. and China, could materially and adversely affect our business and results of operations.

Many  of  the  materials  used  in  the  production  of  our  products  are  available  only  from  a  limited  number  of  foreign 
suppliers, particularly suppliers located in Asia.  The imposition of tariffs against foreign imports of certain materials could 
make  it  more  difficult  or  expensive  for  us  or  our  OEMs  to  obtain  sufficient  quantities  of  components  and  other  materials 
necessary  for  the  production  of  our  products  or  products  which  incorporate  our  product  solutions.    Any  interruptions  to 
supply could result in delay or cancellation of our products, which could adversely affect our business and operating results.  

In  addition,  the  institution  of  trade  tariffs  both  globally  and  between  the  U.S.  and  China  carry  the  risk  that  China’s 
overall economic condition may be negatively affected, which could affect our China operations, including the manufacturing 
operations on which we rely in China. Further, imposition of tariffs could cause a decrease in the sales of our products to 
customers located in China or to our OEMs selling to customers in China, which could impact our business, revenue, and 
operating results. 

International sales and manufacturing risks could adversely affect our operating results.

Our  manufacturing  and  assembly  operations  are  primarily  conducted  in  Taiwan,  China,  and  Korea  by  contract 
manufacturers  and  semiconductor  fabricators.    We  have  sales  and  logistics  operations  in  Hong  Kong,  and  sales  and 
engineering  design  support  operations  in  China,  India,  Japan,  Korea,  Poland,  Switzerland,  Taiwan,  and  the  U.K.    These 
international operations expose us to various economic, political, regulatory, and other risks that could adversely affect our 
operations and operating results, including the following:

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•

•

•

•

difficulties and costs of staffing and managing a multinational organization;

unexpected changes in regulatory requirements;

differing labor regulations;

differing environmental laws and regulations, including in response to climate change;

potentially adverse tax consequences;

possible employee turnover or labor unrest;

greater difficulty in collecting accounts receivable;

the burdens and costs of compliance with a variety of foreign laws;

the volatility of currency exchange rates;

potentially reduced protection for intellectual property rights;

political or economic instability in certain parts of the world; and

natural disasters, including earthquakes or tsunamis.

If any of these risks associated with international operations materialize, our operations could significantly increase in 

cost or be disrupted, which would negatively affect our revenue and operating results.

Our  operating  results  could  be  adversely  affected  by  fluctuations  in  the  value  of  the  U.S.  dollar  against  foreign 
currencies.

We transact business predominantly in U.S. dollars, and we invoice and collect our sales in U.S. dollars.  A weakening 
of the U.S. dollar could cause our overseas vendors to require renegotiation of either the prices or currency we pay for their 
goods and services.  In the future, customers may negotiate pricing and make payments in non-U.S. currencies.  For fiscal 
2021, approximately 13% of our costs were denominated in non-U.S. currencies, including British pounds, Canadian dollars, 
European  Union  euro,  Hong  Kong  dollars,  Indian  rupee,  New  Taiwan  dollars,  Japanese  yen,  Korean  won,  Chinese  yuan, 
Polish zloty, and Swiss francs.

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If  our  overseas  vendors  or  customers  require  us  to  transact  business  in  non-U.S.  currencies,  fluctuations  in  foreign 
currency  exchange  rates  could  affect  our  cost  of  goods,  operating  expenses,  and  operating  margins,  and  could  result  in 
exchange losses.  In addition, currency devaluation could result in a loss to us if we hold deposits of that currency.  Hedging 
foreign  currencies  can  be  difficult,  especially  if  the  currency  is  not  freely  traded.    We  cannot  predict  the  impact  of  future 
exchange rate fluctuations on our operating results.  

Risks Related to Our Employees

We depend on key personnel who would be difficult to replace, and our business will likely be harmed if we lose their 
services or cannot hire additional qualified personnel.

Our success depends substantially on the efforts and abilities of our senior management and other key personnel.  The 
competition  for  qualified  management  and  key  personnel,  especially  engineers,  is  intense.    Although  we  maintain 
nondisclosure  covenants  with  most  of  our  key  personnel,  and  our  key  executives  have  change  of  control  severance 
agreements, we do not have employment agreements with many of them.  The loss of services of one or more of our key 
employees or the inability to hire, train, and retain key personnel, especially engineers and technical support personnel, and 
capable  sales  and  customer-support  employees  outside  the  U.S.,  could  delay  the  development  and  sale  of  our  products, 
disrupt our business, and interfere with our ability to execute our business plan.

If we are unable to obtain stockholder approval of share-based compensation award programs or additional shares 
for such programs, we could be at a competitive disadvantage in the marketplace for qualified personnel or may be 
required to increase the cash element of our compensation program.

Competition  for  qualified  personnel  in  our  industry  is  extremely  intense,  particularly  for  engineering  and  other 
technical personnel.  Our compensation program, which includes cash and share-based compensation award components, has 
been instrumental in attracting, hiring, motivating, and retaining qualified personnel. Our success depends on our continued 
ability to use our share-based compensation programs to effectively compete for engineering and other technical personnel 
and  professional  talent  without  significantly  increasing  cash  compensation  costs.    In  the  future,  if  we  are  unable  to  obtain 
stockholder  approval  of  our  share-based  compensation  programs  or  additional  shares  for  such  programs,  we  could  be  at  a 
competitive disadvantage in the marketplace for qualified personnel or we may be required to increase the cash elements of 
our compensation program to account for this disadvantage.

Risks Related to Our Intellectual Property

Our ability to compete successfully and continue growing as a company depends on our ability to adequately protect 
our proprietary technology and confidential information.

We  protect  our  proprietary  technology  and  confidential  information  through  the  use  of  patents,  trade  secrets, 
trademarks, copyrights, confidentiality agreements and other contractual provisions. The process of seeking patent protection 
is  lengthy  and  expensive.  Further,  there  can  be  no  assurance  that  even  if  a  patent  is  issued,  that  it  will  not  be  challenged, 
invalidated, or circumvented, or that the rights granted under the patents will provide us with meaningful protection or any 
commercial  advantage.    Failure  to  obtain  trademark  registrations  could  compromise  our  ability  to  fully  protect  our 
trademarks and brands and could increase the risk of challenge from third parties to our use of our trademarks and brands. 
Effective  intellectual  property  protection  may  be  unavailable  or  limited  in  some  foreign  countries  in  which  we  operate.  In 
particular, the validity, enforceability and scope of protection of intellectual property in China, where we derive a significant 
portion of our net sales, and certain other countries where we derive net sales, are still evolving and historically, have not 
protected and may not protect in the future, intellectual property rights to the same extent as laws developed in the U.S.

We do not consistently rely on written agreements with our customers, suppliers, manufacturers, and other recipients of 
our  technologies  and  products  and  therefore,  some  trade  secret  protection  may  be  lost  and  our  ability  to  enforce  our 
intellectual  property  rights  may  be  limited.    Confidentiality  and  non-disclosure  agreements  that  are  in  place  may  not  be 
adequate to protect our proprietary technologies or may be breached by other parties. Additionally, our customers, suppliers, 
manufacturers, and other recipients of our technologies and products may seek to use our technologies and products without 
appropriate  limitations.  In  the  past,  we  did  not  consistently  require  our  employees  and  consultants  to  enter  into 
confidentiality,  employment,  or  proprietary  information  and  invention  assignment  agreements.    Therefore,  our  former 
employees  and  consultants  may  try  to  claim  some  ownership  interest  in  our  technologies  and  products  or  may  use  our 
technologies  and  products  competitively  and  without  appropriate  limitations.  Unauthorized  parties  may  attempt  to  copy  or 

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otherwise  use  aspects  of  our  technologies  and  products  that  we  regard  as  proprietary.  Other  companies,  including  our 
competitors,  may  independently  develop  technologies  that  are  similar  or  superior  to  our  technologies,  duplicate  our 
technologies,  or  design  around  our  patents.  If  our  intellectual  property  protection  is  insufficient  to  protect  our  intellectual 
property rights, we could face increased competition in the markets for our technologies and products.

We may pursue, and from time to time defend, litigation to enforce our intellectual property rights, to protect our trade 
secrets,  and  to  determine  the  validity  and  scope  of  the  proprietary  rights  of  others.    Litigation  whether  successful  or 
unsuccessful, could result in substantial costs and diversion of resources, which could have a material adverse effect on our 
business, financial condition, and operating results.

Any  claims  that  our  technologies  infringe  the  intellectual  property  rights  of  third  parties  could  result  in  significant 
costs and have a material adverse effect on our business.

We cannot be certain that our technologies and products do not and will not infringe issued patents or other third-party 
proprietary rights.  Any claims, with or without merit, could result in significant litigation costs and diversion of resources, 
including the attention of management, and could require us to enter into royalty or licensing agreements, any of which could 
have  a  material  adverse  effect  on  our  business.  There  can  be  no  assurance  that  such  licenses  could  be  obtained  on 
commercially reasonable terms, if at all, or that the terms of any offered licenses would be acceptable to us.  We may also 
have to pay substantial damages to third parties or indemnify customers or licensees for damages they suffer if the products 
they purchase from us or the technology they license from us violates any third-party intellectual property rights. An adverse 
determination  in  a  judicial  or  administrative  proceeding,  or  a  failure  to  obtain  necessary  licenses  to  use  such  third-party 
technology could prevent us from manufacturing, using, or selling certain of our products, and there is no guarantee that we 
will be able to develop or acquire alternate non-infringing technology.

In addition, we license certain technology used in and for our products from third parties.  These third-party licenses 
are granted with restrictions, and there can be no assurances that such third-party technology will remain available to us on 
commercially acceptable terms.

If  third-party  technology  currently  utilized  in  our  products  is  no  longer  available  to  us  on  commercially  acceptable 
terms, or if any third-party initiates litigation against us for alleged infringement of their proprietary rights, we may not be 
able  to  sell  certain  of  our  products  and  we  could  incur  significant  costs  in  defending  against  litigation  or  attempting  to 
develop or acquire alternate non-infringing products, which would have an adverse effect on our operating results.

Risks Related to Acquisitions

Any acquisitions that we undertake could be difficult to integrate, disrupt our business, dilute stockholder value, and 
harm our operating results.

We expect to continue to pursue opportunities to acquire other businesses and technologies in order to complement our 
current  solutions,  expand  the  breadth  of  our  markets,  enhance  our  technical  capabilities,  or  otherwise  create  growth 
opportunities.  We cannot accurately predict the timing, size, and success of any currently planned or future acquisitions.  We 
may  be  unable  to  identify  suitable  acquisition  candidates  or  to  complete  the  acquisitions  of  candidates  that  we  identify.  
Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase purchase 
prices for acquisitions to levels beyond our financial capability or to levels that would not result in the returns required by our 
acquisition  criteria.    Acquisitions  may  also  become  more  difficult  in  the  future  as  we  or  others  acquire  the  most  attractive 
candidates.  Unforeseen expenses, difficulties, and delays frequently encountered in connection with rapid expansion through 
acquisitions  could  inhibit  our  growth  and  negatively  impact  our  operating  results.    If  we  make  any  future  acquisitions,  we 
could  issue  stock  that  would  dilute  existing  stockholders'  percentage  ownership,  incur  substantial  debt,  assume  contingent 
liabilities, or experience higher operating expenses.

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We may be unable to effectively complete an integration of the management, operations, facilities, and accounting and 
information systems of acquired businesses with our own; efficiently manage, combine or restructure the operations of the 
acquired  businesses  with  our  operations;  achieve  our  operating,  growth,  and  performance  goals  for  acquired  businesses; 
achieve additional revenue as a result of our expanded operations; or achieve operating efficiencies or otherwise realize cost 
savings  as  a  result  of  anticipated  acquisition  synergies.    The  integration  of  acquired  businesses  involves  numerous  risks, 
including the following:

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the potential disruption of our core business;

the potential strain on our financial and managerial controls, reporting systems and procedures;

potential unknown liabilities associated with the acquired business;

costs relating to liabilities which we agree to assume;

unanticipated costs associated with the acquisition;

diversion of management’s attention from our core business;

problems assimilating the purchased operations, technologies, or products;

risks associated with entering markets and businesses in which we have little or no prior experience;

failure of acquired businesses to achieve expected results;

adverse effects on existing business relationships with suppliers and customers;

failure to retain key customers, suppliers, or personnel of acquired businesses;

the risk of impairment charges related to potential write-downs of acquired assets; and

the potential inability to create uniform standards, controls, procedures, policies, and information systems.

We  cannot  assure  you  that  we  would  be  successful  in  overcoming  problems  encountered  in  connection  with  any 
acquisitions, and our inability to do so could disrupt our operations, result in goodwill or intangible asset impairment charges, 
and adversely affect our business.

Potential strategic alliances may not achieve their objectives, and the failure to do so could impede our growth.

We  have  entered,  and  we  anticipate  that  we  will  continue  to  enter,  into  strategic  alliances.    We  continually  explore 
strategic  alliances  designed  to  enhance  or  complement  our  technology  or  to  work  in  conjunction  with  our  technology;  to 
provide  necessary  know-how,  components,  or  supplies;  and  to  develop,  introduce,  and  distribute  products  utilizing  our 
technology.  Certain strategic alliances may not achieve their intended objectives, and parties to our strategic alliances may 
not perform as contemplated.  The failure of these alliances to achieve their objectives may impede our ability to introduce 
new products and enter new markets.

We may incur material environmental liabilities as a result of prior operations at an acquired company.

In  connection  with  our  acquisition  in  July  2017  of  Conexant  Systems,  we  agreed  to  assume  certain  environmental 
liabilities,  including  remediation  of  environmental  impacts  at  a  property  formerly  owned  and  operated  by  Conexant  (the 
“Conexant  Site”)  and  for  potential  future  claims  alleging  personal  injury  or  property  damage  related  to  the  environmental 
impacts  at  and  about  the  Conexant  Site.  We  continue  to  incur  costs  to  investigate  and  remediate  the  Conexant  Site’s 
environmental  impacts,  and  we  are  at  risk  for  future  personal  injury  and  property  damage  claims  related  to  the  Conexant 
Site.  Various federal, state, and local authorities regulate the release of hazardous substances into the environment and can 
impose substantial fines if our remediation efforts at or about the Conexant Site fail or are deemed inadequate.  In addition, 
changes in laws, regulations and enforcement policies, the discovery of previously unknown contamination at the Conexant 
Site, the implementation of new technology at the Conexant Site, or the establishment or imposition of stricter federal, state, 
or local cleanup standards or requirements with respect to the Conexant Site could require us to incur additional costs in the 
future that could have a negative effect on our financial condition or results of operations. 

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Risks Factors Related to Our Indebtedness

Our indebtedness could adversely affect our financial condition or operating flexibility and prevent us from fulfilling 
our obligations outstanding under our credit agreement, our 4.000% senior notes due 2029, or the Senior Notes, and 
other indebtedness we may incur from time to time.

On  March  11,  2021,  we  completed  the  offering  of  the  Senior  Notes  in  the  aggregate  principal  amount  of  $400.0 
million,  with  a  corresponding  amendment  and  restatement  of  our  credit  agreement,  or  as  amended  and  supplemented,  the 
Credit  Agreement,  with  the  lenders  party  thereto,  or  the  Lenders,  and  Wells  Fargo  Bank,  National  Association,  or  the 
Administrative Agent, as administrative agent for the Lenders. The Senior Notes include a mandatory semi-annual payment 
of a 4.000% coupon.  We are permitted under the indenture governing our Senior Notes and the Credit Agreement to incur 
additional debt under certain conditions, including additional secured debt.  If new debt were to be incurred in the future, the 
related risks that we now face could intensify. 

Our level of indebtedness could have important consequences on our future operations, including:

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making  it  more  difficult  for  us  to  satisfy  our  payment  and  other  obligations  under  the  Notes,  the  Credit 
Agreement, or our other outstanding debt from time to time;

risking  an  event  of  default  if  we  fail  to  comply  with  the  financial  and  other  covenants  contained  in  the  Notes 
indenture  or  the  Credit  Agreement,  which  could  result  in  the  Senior  Notes  or  any  outstanding  bank  debt 
becoming immediately due and payable and could permit the lenders under the Credit Agreement to foreclose on 
the assets securing such bank debt;

subjecting us to the risk of increased sensitivity to interest rate increases on our debt with variable interest rates, 
including the debt that we may incur under the Credit Agreement;

the London interbank offered rate, or LIBOR, index is expected to be discontinued at the end of June 2023 and 
the  replacement  rate  could  be  more  volatile  or  more  costly,  resulting  in  a  higher  cost  of  borrowing  under  our 
Credit Agreement;

reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions and other 
general corporate purposes, and limiting our ability to obtain additional financing for these purposes;

limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, 
the industry in which we operate and the general economy; and

placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged.

Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us 
under the Credit Agreement, the indenture governing the Senior Notes or otherwise in an amount sufficient to enable us to 
pay our debt or to fund our other liquidity needs.

The covenants in the Credit Agreement impose restrictions that may limit our operating and financial flexibility.

The Credit Agreement includes certain covenants that limit (subject to certain exceptions) our ability to, among other 
things:  (i) incur  or  guarantee  additional  indebtedness;  (ii) incur  or  suffer  to  exist  liens  securing  indebtedness;  (iii) make 
investments; (iv) consolidate, merge or transfer all or substantially all of our assets; (v) sell assets; (vi) pay dividends or other 
distributions on, redeem or repurchase capital stock; (vii) enter into transactions with affiliates; (viii) amend, modify, prepay 
or redeem subordinated indebtedness; (ix) enter into certain restrictive agreements; and (x) engage in a new line of business. 
In addition, the Credit Agreement contains financial covenants that (i)  require the ratio of the amount of our consolidated 
total  indebtedness  to  consolidated  EBITDA  to  be  less  than  certain  maximum  ratio  levels,  and  (ii) require  the  ratio  of  the 
amount of our consolidated EBITDA to consolidated interest expense to be greater than a certain minimum ratio level.

If  we  violate  these  covenants  and  are  unable  to  obtain  waivers,  our  debt  under  the  Credit  Agreement  would  be  in 
default and could be accelerated, and could permit, in the case of secured debt, the lenders to foreclose on our assets securing 
the Credit Agreement. If the indebtedness is accelerated, we may not be able to repay our debt or borrow sufficient funds to 
refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms or on terms that are 
acceptable to us. If our debt is in default for any reason, our cash flows, results of operations or financial condition could be 
materially and adversely affected. In addition, complying with these covenants may also cause us to take actions that may 

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make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject 
to such restrictions.

General Risk Factors 

Our business, results of operations and financial condition (including liquidity) and prospects may be materially and 
adversely affected by health epidemics, including the COVID-19 pandemic.

Public health threats, such as COVID-19, influenza and other highly communicable diseases or viruses, outbreaks of 
which  have  from  time  to  time  occurred  in  various  parts  of  the  world  in  which  we  operate  could  adversely  impact  our 
operations,  as  well  as  the  operations  of  our  suppliers  and  customers.  Any  of  these  public  health  threats  and  related 
consequences could adversely affect our operating results and financial condition.

COVID-19 has spread rapidly and enveloped most of the world, causing a global public health crisis. On March 11, 
2020,  the  World  Health  Organization  characterized  the  COVID-19  outbreak  as  a  pandemic.  Governments  in  affected 
countries continue to periodically impose travel bans, quarantines, and other emergency public health measures. In response 
to the virus, national and local governments in numerous countries around the world have implemented substantial lockdown 
measures.  These  restrictions,  and  prevention  and  mitigation  measures,  have  had  an  adverse  impact  on  global  economic 
conditions, which could materially adversely affect our future operations. Uncertainties regarding the economic impact of the 
COVID-19 outbreak have resulted in market turmoil, which could also negatively impact our business, financial condition, 
and cash flows.

These measures have impacted and may further impact our workforce and operations, the operations of our customers, 
and  those  of  our  respective  vendors,  suppliers,  and  partners.  The  disruptions  to  our  operations  caused  by  the  COVID-19 
outbreak may result in inefficiencies, delays and additional costs in our product development, sales, marketing, and customer 
service efforts that we cannot fully mitigate through remote or other alternative work arrangements. Also, some suppliers of 
materials used in the production of our products may be located in areas more severely or repeatedly impacted by COVID-19 
and its variants, which could limit our ability to obtain sufficient materials for our products. In addition, the severe global 
economic  disruption  caused  by  COVID-19  may  cause  our  customers  and  end-users  of  our  products  to  suffer  significant 
economic hardship, which could result in decreased demand for our products in the future and materially adversely affect our 
business, operating results, financial condition (including liquidity) and prospects.

If  we  fail  to  manage  our  growth  effectively,  our  infrastructure,  management,  and  resources  could  be  strained,  our 
ability to effectively manage our business could be diminished, and our operating results could suffer.

The failure to manage our planned growth effectively could strain our resources, which would impede our ability to 
increase revenue.  We have increased the number of our solutions in the past and may plan to further expand the number and 
diversity of our solutions and their use in the future.  Our ability to manage our planned diversification and growth effectively 
will require us to:

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successfully hire, train, retain, and motivate additional employees, including employees outside the U.S.;

efficiently plan, expand, or cost-effectively reduce our facilities to meet headcount requirements;

enhance our global operational, financial, and management infrastructure; and

expand our development and production capacity.

In connection with the expansion and diversification of our product and customer base, we may increase our personnel 
and make other expenditures to meet demand for our expanding product offerings, including offerings in the IoT market, the 
PC  applications  market,  and  the  mobile  product  applications  market.    Any  increase  in  expenses  or  investments  in 
infrastructure  and  facilities  in  anticipation  of  future  orders  that  do  not  materialize  would  adversely  affect  our  profitability.  
Our customers also may require rapid increases in design and production services that place an excessive short-term burden 
on our resources and the resources of our contract manufacturers.  An inability to quickly expand our development, design or 
production  capacity  or  an  inability  of  our  third-party  manufacturers  to  quickly  expand  development,  design,  or  production 
capacity to meet this customer demand could result in a decrease to our revenue or operating results. If we cannot manage our 
growth effectively, our business and operating results could suffer.

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We face risks associated with security breaches or cyberattacks.

We  face  risks  associated  with  security  breaches  or  cyberattacks  of  our  computer  systems  or  those  of  our  third-party 
representatives, vendors, and service providers.  Although we have implemented security procedures and controls to address 
these threats, our systems may still be vulnerable to data theft, computer viruses, programming errors, ransomware, and other 
attacks by third parties, or similar disruptive problems.  If our systems, or systems owned by third parties affiliated with our 
company, were breached or attacked, the proprietary and confidential information of our company, our employees and our 
customers  could  be  disclosed  and  we  may  be  required  to  incur  substantial  costs  and  liabilities,  including  the  following: 
liability for stolen assets or information; fines imposed on us by governmental authorities for failure to comply with privacy 
laws or for disclosure of any personally identifiable information as a part of such attack; costs of repairing damage to our 
systems; lost revenue and income resulting from any system downtime caused by such breach or attack; loss of competitive 
advantage if our proprietary information is obtained by competitors as a result of such breach or attack; increased costs of 
cyber security protection; costs of incentives we may be required to offer to our customers or business partners to retain their 
business;  damage  to  our  reputation;  and  expenses  to  rectify  the  consequences  of  the  security  breach  or  cyberattack.    In 
addition, any compromise of security from a security breach or cyberattack could deter customers or business partners from 
entering into transactions that involve providing confidential information to us.  As a result, any compromise to the security 
of our systems could have a material adverse effect on our business, reputation, financial condition, and operating results.

If tax laws change in the jurisdictions in which we do business or if we receive a material tax assessment in connection 
with  an  examination  of  our  income  tax  returns,  our  consolidated  financial  position,  results  of  operations  and  cash 
flows could be adversely affected. 

We are subject to U.S. federal, state, and foreign income taxes in the various jurisdictions in which we do business. In 
addition, we are required to pay U.S. federal taxes on the operating earnings of certain of our foreign subsidiaries. Our future 
effective tax rates and the value of our deferred tax assets could be adversely affected by changes in tax laws in the U.S. or in 
the foreign jurisdictions in which we operate. In addition, we are subject to the examination of our income tax returns by the 
tax authorities in the jurisdictions in which we do business. The calculation of tax liabilities involves significant judgment in 
estimating the impact of uncertainties in the application of highly complex tax laws.  Our results have in the past, and could 
in the future, include favorable and unfavorable adjustments to our estimated tax liabilities in the period a determination of 
such estimated tax liability is made or resolved, upon the filing of an amended return, upon a change in facts, circumstances, 
or  interpretation,  or  upon  the  expiration  of  a  statute  of  limitation.   While  we  believe  we  have  adequately  provided  for 
reasonably  foreseeable  outcomes  in  connection  with  the  resolution  of  income  tax  uncertainties,  the  resolution  of  these 
uncertainties  in  a  manner  inconsistent  with  our  expectations  could  have  a  material  impact  on  our  consolidated  financial 
position, result of operations, or cash flows.

We are subject to governmental laws, regulations and other legal obligations related to privacy and data protection.

We collect, use, and store personally identifiable information, or PII, as part of our business and operations.  We are 
subject  to  federal,  state,  and  international  laws  relating  to  the  collection,  use,  retention,  security,  and  transfer  of  PII.    The 
legislative  and  regulatory  framework  for  privacy  and  data  protection  issues  worldwide  is  rapidly  evolving  and  is  likely  to 
remain  uncertain  for  the  foreseeable  future.  The  cost  of  complying  with  and  implementing  these  privacy-related  and  data 
governance  measures  could  be  significant  as  they  may  create  additional  burdensome  security,  business  process,  business 
record or data localization requirements. The theft, loss or misuse of PII collected, used, stored or transferred by us, our any 
inability, or perceived inability, to adequately address privacy and data protection concerns, even if unfounded, or our failure 
to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, 
could  result  in  additional  cost  and  liability  to  us,  including  litigation,  which  could  have  an  adverse  effect  on  our  business, 
operating results, cash flows, and financial condition.

Our charter documents and Delaware law could make it more difficult for a third-party to acquire us and discourage 
a takeover.

Our certificate of incorporation and the Delaware General Corporation Law contain provisions that may have the effect 
of making more difficult or delaying attempts by others to obtain control of our company, even when such attempts may be in 
the  best  interests  of  our  stockholders.    Our  certificate  of  incorporation  also  authorizes  our  Board  of  Directors,  without 
stockholder  approval,  to  issue  one  or  more  series  of  preferred  stock,  which  could  have  voting  and  conversion  rights  that 
adversely affect or dilute the voting power of the holders of our common stock.  Delaware law also imposes conditions on 

28

certain business combination transactions with “interested stockholders.”  Our certificate of incorporation divides our Board 
of  Directors  into  three  classes,  with  one  class  to  stand  for  election  each  year  for  a  three-year  term  after  the  election.    The 
classification  of  directors  tends  to  discourage  a  third-party  from  initiating  a  proxy  solicitation  or  otherwise  attempting  to 
obtain  control  of  our  company  and  may  maintain  the  incumbency  of  our  Board  of  Directors,  as  this  structure  generally 
increases  the  difficulty  of,  or  may  delay,  replacing  a  majority  of  directors.    Our  certificate  of  incorporation  authorizes  our 
Board  of  Directors  to  fill  vacancies  or  newly  created  directorships.    A  majority  of  the  directors  then  in  office  may  elect  a 
successor to fill any vacancies or newly created directorships, thereby increasing the difficulty of, or delaying a third-party’s 
efforts in, replacing a majority of directors.

The market price of our common stock has been and may continue to be volatile.

The trading price of our common stock has been and may continue to be subject to wide fluctuations in response to 

various factors, including the following:

•

•

•

•

•

•

•

•

•

•

•

•

•

•

variations in our quarterly results;

the financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such 
guidance;

changes in financial estimates by industry or securities analysts or our failure to meet such estimates;

various market factors or perceived market factors, including rumors, whether or not correct, involving us, our 
customers, our suppliers, our competitors, or a potential acquisition of our company;

announcements of technological innovations by us, our competitors, or our customers;

introductions of new products or new pricing policies by us, our competitors, or our customers;

acquisitions or strategic alliances by us, our competitors, or our customers;

recruitment or departure of key personnel;

the gain or loss of significant orders;

the gain or loss of significant customers;

market conditions in our industry, the industries of our customers, and the economy as a whole;

short positions held by investors; 

new federal and state laws and regulations affecting our industry; and

general financial market conditions or occurrences, including market volatility resulting from geopolitical risks, 
and  rivalries,  acts  of  war,  terrorist  attacks,  cybersecurity  attacks,  health  pandemics,  financial  market 
technological glitches and interruptions of trading activity.

In addition, stocks of technology companies have experienced extreme price and volume fluctuations that often have 
been  unrelated  or  disproportionate  to  these  companies’  operating  performance.    Public  announcements  by  technology 
companies  concerning,  among  other  things,  their  performance,  accounting  practices,  or  legal  problems  could  cause  the 
market price of our common stock to decline regardless of our actual operating performance.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.

PROPERTIES

Our principal executive offices, as well as our principal research and development, sales, marketing, and administrative 
functions, are located in San Jose, California, where we own and utilize approximately 161,000 square feet of facilities.  We 
also  have  research  and  development  functions  in  leased  offices  in  California,  Georgia,  and  Massachusetts.    Our  two 
Asia/Pacific  principal  offices  are  located  in  leased  offices  in  Hong  Kong  and  Japan,  where  we  have  sales,  operations,  and 
research  and  development  functions.    We  have  leased  facilities  with  logistics  operations  in  Hong  Kong  and  Japan,  leased 
facilities  with  sales  and  support  operations  in  China,  Hong  Kong,  Japan,  Korea,  Switzerland,  and  Taiwan,  and  leased 
facilities  with  engineering  design  support  operations  in  China,  India,  Japan,  Korea,  Poland,  Switzerland,  Taiwan,  the  U.K. 
and California, U.S.

29

ITEM 3.

LEGAL PROCEEDINGS

We  are  party  to  various  litigation  matters  and  claims  arising  from  time  to  time  in  the  ordinary  course  of  business.  
While the results of such matters cannot be predicted with certainty, we believe that the final outcome of such matters will 
not have a material adverse effect on our business, financial condition, results of operations or cash flows.  

For further information regarding current legal proceedings, see Note 7 Leases, Commitments and Contingencies to the 

consolidated financial statements contained elsewhere in this report. 

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

30

PART II

ITEM 5. MARKET  FOR  REGISTRANT'S  COMMON  EQUITY,  RELATED  STOCKHOLDER  MATTERS 

AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information on Common Stock

Our common stock has been listed on the Nasdaq Global Select Market (formerly the Nasdaq National Market) under 

the symbol "SYNA" since January 29, 2002.  Prior to that time, there was no public market for our common stock.  

Stockholders

As of August 13, 2021, there were approximately 120 holders of record of our common stock.  The closing price of our 

common stock as quoted on the Nasdaq Global Select Market as of August 13, 2021 was $172.93.

Dividends

We  have  never  declared  or  paid  cash  dividends  on  our  common  stock.    We  currently  plan  to  retain  all  earnings  to 
finance  the  growth  of  our  business,  make  our  debt  payments,  or  purchase  shares  under  our  common  stock  repurchase 
program.  Payments of any cash dividends in the future will depend on our financial condition, operating results, and capital 
requirements, as well as other factors deemed relevant by our Board of Directors.

Our Credit Agreement also places restrictions on the payment of any dividends.  For a further description of the terms 

of the Credit Agreement, see Note 6 Debt to the consolidated financial statements contained elsewhere in this report.

Stock-Based Compensation

For  information  on  securities  authorized  for  issuance  under  our  equity  compensation  plans,  see  Item  12.  Security 

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Issuer Purchases of Equity Securities

From April 2005 through July 2021, our Board of Directors cumulatively authorized the repurchase of $1.8 billion for 
our  common  stock  in  our  stock  repurchase  program,  which  expires  in  July  2025.    The  remaining  amount  authorized  for 
repurchase  under  our  stock  repurchase  program  was  $577.4  million.    During  the  three-month  period  ended  June  26,  2021, 
there were no repurchases under our stock repurchase program.

31

Performance Graph

The following line graph compares cumulative total stockholder returns for the five years ended June 26, 2021 for (i) 
our common stock, (ii) the Nasdaq Composite Index and (iii) the Russell 2000 Index.  The graph assumes an investment of 
$100 on June 30, 2016.  The calculations of cumulative stockholder return on the Nasdaq Composite Index and the Russell 
2000 Index include reinvestment of dividends.  The calculation of cumulative stockholder return on our common stock does 
not include reinvestment of dividends because we did not pay any dividends during the measurement period.  The historical 
performance shown is not necessarily indicative of future performance.

COMPARISON OF 60 MONTH CUMULATIVE TOTAL RETURN
Among Synaptics Incorporated, The Nasdaq Composite Index and The Russell 2000 Index

$300

$250

$200

$150

$100

$50

6/16

6/17

6/18

6/19

6/20

6/21

Synaptics Incorporated

Nasdaq Composite Index

Russell 2000 Index

The performance graph above shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise 
subject to the liability of that section.  The performance graph above will not be deemed incorporated by reference into any 
filing of our company under the Exchange Act or the Securities Act.

32

ITEM 6.

RESERVED

ITEM 7. MANAGEMENT’S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND  RESULTS 

OF OPERATIONS

Forward-Looking Statements and Factors That May Affect Results

You should read the following discussion and analysis in conjunction with our financial statements and related notes 
contained elsewhere in this report.  This discussion contains forward-looking statements that involve risks, uncertainties, and 
assumptions.  Our actual results may differ materially from those anticipated in these forward-looking statements as a result 
of a variety of factors, including those set forth elsewhere in this report and under Item 1A. Risk Factors.

Impact of COVID-19

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. In response 

to the outbreak, governmental authorities implemented numerous containment measures, including travel bans and 
restrictions, quarantines, shelter-in-place orders, and business restrictions and shutdowns, resulting in rapidly changing 
market and economic conditions. In certain countries in which we operate, governments took swift and effective measures to 
stem the spread, while in other countries in which we operate governments were slow to react or missed opportunities to 
effectively contain the spread. Although some of these restrictions and other containment measures have since been lifted or 
scaled back, ongoing surges of COVID-19 have resulted in the re-imposition of certain restrictions and containment measures 
and may lead to other restrictions being re-implemented in the future in response to efforts to reduce the rapid spread of 
COVID-19 and its variants.

The health and wellbeing of our workforce is our highest priority.  Many of our employees have worked from home 

since the COVID-19 outbreak was declared a pandemic in order to minimize the potential risk of spread of COVID-19 in our 
office environment.  As the broad roll out of vaccines continues in various countries in which we operate, many employees 
have returned to the office environment on a part- or full-time basis.  As more employees return to the office, we will 
continue to adhere to return to work protocols, based on guidance from local and global health organizations and applicable 
laws and regulations.

While the severity and duration of business disruption to our customers and suppliers due to the COVID-19 pandemic 

continues to remain uncertain, we expect that the ongoing global vaccination programs will moderate the overall severity and 
duration and remain cautiously optimistic the most significant impact has passed.  If more infectious COVID-19 variants 
become resistant to the existing vaccines, however, we could experience renewed and sustained business disruption.  To date, 
we have not incurred significant disruptions to our business or a materially negative impact on our condensed consolidated 
results of operations and financial condition from the COVID-19 outbreak, and continue to believe our business will not be 
severely impacted as steps continue to be taken globally to mitigate the spread, vaccinate large portions of the population and 
achieve herd immunity. 

We will continue to evaluate the nature and scope of the impact to our business, consolidated results of operations, and 
financial condition and may take further actions altering our business operations and managing our costs and liquidity that we 
deem necessary or appropriate to respond to this fast moving and uncertain global health crisis and the resulting global 
economic consequences.

Overview

We are a leading worldwide developer and supplier of custom-designed semiconductor solutions that is changing the 
way humans engage with connected devices and data, engineering exceptional experiences throughout the home, at work, in 
the car and on the go.  We believe our results to date reflect the combination of our customer focus and the strength of our 
intellectual  property  and  our  engineering  know-how,  which  allow  us  to  develop  or  engineer  products  that  meet  the 
demanding design specifications of our OEMs.

We recognize revenue when control of the promised goods or services is transferred to our customers, in an amount 
that reflects the consideration we expect to receive in exchange for those goods or services.  All of our revenue, except an 
inconsequential  amount,  is  recognized  at  a  point  in  time,  either  on  shipment  or  delivery  of  the  product,  depending  on 
customer terms and conditions. For fiscal 2021, revenue from the IoT product applications market accounted for 43.4% of 
our net revenue, revenue from the PC product applications market accounted for 26.5% of our net revenue, and revenue from 
the mobile product applications market accounted for 30.2% of our net revenue.

33

Many  of  our  customers  have  manufacturing  operations  in  China,  and  many  of  our  OEM  customers  have  established 
design  centers  in  Asia.  With  our  expanding  global  presence,  including  offices  in  China,  Hong  Kong,  India,  Japan,  Korea, 
Poland,  Switzerland,  Taiwan,  the  U.K.,  and  the  U.S.,  we  are  well  positioned  to  provide  local  sales,  operational,  and 
engineering support services to our existing customers, as well as potential new customers, on a global basis. 

Our  manufacturing  operations  are  based  on  a  variable  cost  model  in  which  we  outsource  all  of  our  production 
requirements  and  generally  drop  ship  our  products  directly  to  our  customers  from  our  contract  manufacturers’  facilities, 
eliminating  the  need  for  significant  capital  expenditures  and  allowing  us  to  minimize  our  investment  in  inventories.  This 
approach  requires  us  to  work  closely  with  our  contract  manufacturers  and  semiconductor  fabricators  to  ensure  adequate 
production  capacity  to  meet  our  forecasted  volume  requirements.  As  a  result  of  recent  supply  constraints  and  capacity 
shortages affecting the global semiconductor industry, we have entered into long-term capacity and pricing agreements with 
some  suppliers.  We  use  third-party  wafer  manufacturers  to  supply  wafers  and  third-party  packaging  manufacturers  to 
package our proprietary ASICs. In certain cases, we rely on a single source or a limited number of suppliers to provide other 
key  components  of  our  products.  Our  cost  of  revenue  includes  all  costs  associated  with  the  production  of  our  products, 
including  materials;  logistics;  amortization  of  intangibles  related  to  acquired  developed  technology;  backlog;  supplier 
arrangements;  manufacturing,  assembly,  and  test  costs  paid  to  third-party  manufacturers;  and  related  overhead  costs 
associated  with  our  indirect  manufacturing  operations  personnel.  Additionally,  we  charge  all  warranty  costs,  losses  on 
inventory  purchase  obligations,  and  write-downs  to  reduce  the  carrying  value  of  obsolete,  slow  moving,  and  non-usable 
inventory to net realizable value, to cost of revenue. 

Our gross margin generally reflects the combination of the added value we bring to our OEM customers’ products by 
meeting  their  custom  design  requirements  and  the  impact  of  our  ongoing  cost-improvement  programs.  These  cost-
improvement programs include reducing materials and component costs and implementing design and process improvements. 
Our newly introduced products may have lower margins than our more mature products, which have realized greater benefits 
associated  with  our  ongoing  cost-improvement  programs.  As  a  result,  new  product  introductions  may  initially  negatively 
impact our gross margin.

Our  research  and  development  expenses  include  costs  for  supplies  and  materials  related  to  product  development,  as 
well as the engineering costs incurred to design ASICs and human experience solutions for OEM customers prior to and after 
our OEMs’ commitment to incorporate those solutions into their products. In addition, we expense in-process research and 
development  projects  acquired  as  part  of  a  business  acquisition,  which  have  not  yet  reached  technological  feasibility,  and 
which have no foreseeable alternative future use. We continue to commit to the technological and design innovation required 
to maintain our position in our existing markets, and to adapt our existing technologies or develop new technologies for new 
markets. 

Selling,  general,  and  administrative  expenses  include  expenses  related  to  sales,  marketing,  and  administrative 
personnel;  internal  sales  and  outside  sales  representatives’  commissions;  market  and  usability  research;  outside  legal, 
accounting, and consulting costs; and other marketing and sales activities. 

Acquired  intangibles  amortization,  included  in  operating  expenses,  consists  primarily  of  amortization  of  customer 

relationship and tradenames intangible assets recognized under the purchase method for business combinations.

Restructuring  costs  primarily  reflect  severance  and  facilities  consolidation  costs  related  to  the  restructuring  of  our 
operations to reduce operating expenses. These headcount and facilities related costs were in cost of revenue, research and 
development,  and  selling,  general  and  administrative  expenses.  See  Note  13  Restructuring  Activities  to  the  consolidated 
financial statements contained elsewhere in this report.

Gain  on  sale  of  audio  technology  assets  includes  the  sale  of  limited  audio  technology  intangible  assets.    See  below 

under “Divestiture”.

Gain  on  sale  of  assets  includes  the  sale  of  our  TDDI  product  line  for  LCD  mobile  displays.    See  below  under 

“Divestiture”.

Interest and other expense, net, primarily reflects interest expense on our Senior Notes, 0.50% convertible senior notes 
due in 2022, or Convertible Notes, and revolving line of credit as well as the amortization of debt issuance costs and discount 
on our convertible notes, partially offset by interest income earned on our cash, cash equivalents and short-term investments.

34

Equity  investment  loss  includes  amortization  of  intangible  assets  reflected  under  the  equity  method  of  accounting  in 
connection with our investment in OXi Technology Ltd. See Note 1 Organization and Summary of Significant Accounting 
Policies to the consolidated financial statements contained elsewhere in this report. 

Acquisitions

DisplayLink

On  July  17,  2020,  we  entered  into  a  definitive  agreement  to  acquire  all  of  the  equity  interests  in  DisplayLink 
Corporation, or DisplayLink, a leader in high-performance video compression technology. The acquisition closed on July 31, 
2020. As of June 26, 2021, our purchase consideration was $444.0 million. The results of DisplayLink are included in our 
consolidated financial statements for the period from August 1, 2020 through June 26, 2021.  For further discussion of the 
DisplayLink  acquisition,  see  Note  4  Acquisitions,  Divestiture  and  Investment  included  in  the  consolidated  financial 
statements contained elsewhere in this report.

Broadcom

On  July  2,  2020,  we  entered  into  definitive  agreements  with  Broadcom  to  acquire  certain  assets  and  assume  certain 
liabilities of, and obtain non-exclusive licenses relating to, Broadcom’s existing Wi-Fi, Bluetooth and GPS/GNSS products 
and business in the IoT market, or Broadcom Business Acquisition, for an aggregate consideration of $250 million in cash 
which closed on July 23, 2020.  We also entered into certain transition agreements with Broadcom for a period of three years. 
The results of the Broadcom Business Acquisition are included in our consolidated financial statements for the period from 
July 24, 2020 through June 26, 2021.  For further discussion of the Broadcom Business Acquisition, see Note 4 Acquisitions, 
Divestiture and Investment included in the consolidated financial statements contained elsewhere in this report. 

Divestitures

In  December  2020,  we  completed  the  sale  of  limited  audio  technology  intangible  assets,  received  a  fully-paid  up 
perpetual license back from the buyer and, as an element of the transaction, licensed other audio technology intangible assets 
to the buyer under a fully-paid up perpetual license arrangement.  Under the asset purchase agreement and the intellectual 
property license agreement, we received $35.0 million in cash.  The gain on the sale of the audio technology assets was $34.2 
million.

In  December  2019,  we  entered  into  an  asset  purchase  agreement  with  a  third-party  to  sell  the  assets  of  our  TDDI 
product  line  for  LCD  mobile  displays.  We  retained  our  automotive  TDDI  product  line  and  our  discrete  touch  and  discrete 
display  driver  product  lines  supporting  LCD  and  OLED  for  the  mobile  market.    The  assets  sold  under  the  asset  purchase 
agreement had a carrying value of approximately $33.6 million as of the closing date of the transaction in April 2020 for cash 
consideration of $138.7 million.  The gain on sale of this business component was $105.1 million.

35

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles, 
or  GAAP,  requires  us  to  make  estimates  and  judgments  that  affect  the  reported  amounts  of  assets,  liabilities,  revenue, 
expenses,  and  related  disclosure  of  contingent  assets  and  liabilities.  On  an  ongoing  basis,  we  evaluate  our  estimates, 
including  those  related  to  revenue  recognition,  allowance  for  doubtful  accounts,  cost  of  revenue,  inventories,  product 
warranty,  share-based  compensation  costs,  provision  for  income  taxes,  deferred  income  tax  asset  valuation  allowances, 
uncertain tax positions, tax contingencies, goodwill, intangible assets, investments, and contingencies.  We base our estimates 
on  historical  experience,  applicable  laws  and  regulations,  and  various  other  assumptions  that  we  believe  to  be  reasonable 
under  the  circumstances,  the  results  of  which  form  the  basis  for  making  judgments  about  the  carrying  value  of  assets  and 
liabilities  that  are  not  readily  apparent  from  other  sources.    Actual  results  may  differ  from  these  estimates  under  different 
assumptions or conditions.

The  methods,  estimates,  interpretations,  and  judgments  we  use  in  applying  our  most  critical  accounting  policies  can 
have a significant impact on the results that we report in our consolidated financial statements. The SEC considers an entity’s 
most  critical  accounting  policies  to  be  those  policies  that  are  both  most  important  to  the  portrayal  of  the  entity’s  financial 
condition and results of operations and those that require the entity’s most difficult, subjective, or complex judgments, often 
as  a  result  of  the  need  to  make  assumptions  and  estimates  about  matters  that  are  inherently  uncertain.    We  believe  the 
following  critical  accounting  policies  affect  our  more  significant  judgments  and  estimates  used  in  the  preparation  of  our 
consolidated financial statements.

Revenue Recognition

Our  revenue  is  primarily  generated  from  the  sale  of  ASIC  chips,  either  directly  to  a  customer  or  to  a  distributor. 
Revenue  is  recognized  when  control  of  the  promised  goods  or  services  is  transferred  to  our  customers,  in  an  amount  that 
reflects  the  consideration  we  expect  to  receive  in  exchange  for  those  goods  or  services.  All  of  our  revenue,  except  an 
inconsequential  amount,  is  recognized  at  a  point  in  time,  either  on  shipment  or  delivery  of  the  product,  depending  on 
customer  terms  and  conditions.  We  generally  warrant  our  products  for  a  period  of  12  months  from  the  date  of  sale  and 
estimate  probable  product  warranty  costs  at  the  time  we  recognize  revenue  as  the  warranty  is  considered  an  assurance 
warranty  and  not  a  performance  obligation.    Non-product  revenue  is  recognized  over  the  same  period  of  time  such 
performance obligations are satisfied. We then select an appropriate method for measuring satisfaction of the performance 
obligations. 

Revenue from sales to distributors is recognized upon shipment of the product to the distributors (sell-in basis). Master 
sales  agreements  are  in  place  with  certain  customers,  and  these  agreements  typically  contain  terms  and  conditions  with 
respect  to  payment,  delivery,  warranty,  and  supply.  In  the  absence  of  a  master  sales  agreement,  we  consider  a  customer's 
purchase order or our standard terms and conditions to be the contract with the customer.

Our  pricing  terms  are  negotiated  independently,  on  a  stand-alone  basis.  In  determining  the  transaction  price,  we 
evaluate whether the price is subject to refund or adjustment to determine the net consideration which we expect to receive 
for the sale of such products. In limited situations, we make sales to certain customers under arrangements where we grant 
stock rotation rights, price protection and price allowances; variable consideration associated with these rights is expected to 
be inconsequential. These adjustments and incentives are accounted for as variable consideration, classified as other current 
liabilities  under  the  new  revenue  standard  and  are  shown  as  customer  obligations  within  Other  Accrued  Liabilities  as 
disclosed in Note 1 Organization and Summary of Significant Accounting Policies to the consolidated financial statements 
contained  elsewhere  in  this  report.  We  estimate  the  amount  of  variable  consideration  for  such  arrangements  based  on  the 
expected value to be provided to customers, and we do not believe that there will be significant changes to our estimates of 
variable  consideration.    When  incentives,  stock  rotation  rights,  price  protection,  volume  discounts,  or  price  allowances  are 
applicable, they are estimated and recorded in the period the related revenue is recognized. Stock rotation reserves are based 
on  historical  return  rates  applied  to  distributor  inventory  subject  to  stock  rotation  rights  and  recorded  as  a  reduction  to 
revenue  with  a  corresponding  reduction  to  cost  of  goods  sold  for  the  estimated  cost  of  inventory  that  is  expected  to  be 
returned and recorded as prepaid expenses and other current assets.  In limited circumstances, we enter into volume-based 
tiered pricing arrangements and we estimate total unit volumes under such arrangement to determine the expected transaction 
price for the units expected to be transferred. Such arrangements are accounted for as contract liabilities within other accrued 
liabilities. Sales returns liabilities are recorded as refund liabilities within other accrued liabilities. 

Our  accounts  receivable  balance  is  from  contracts  with  customers  and  represents  our  unconditional  right  to  receive 
consideration from customers. Payments are generally due within three months of completion of the performance obligation 
and  subsequent  invoicing  and,  therefore,  do  not  include  significant  financing  components.  To  date,  there  have  been  no 
material impairment losses on accounts receivable. 

36

We invoice customers and recognize all of our revenue, except an inconsequential amount, at a point in time, either on 
shipment  or  delivery  of  the  product,  depending  on  customer  terms  and  conditions.  We  account  for  shipping  and  handling 
costs  as  fulfillment  costs  before  the  customer  obtains  control  of  the  goods.  We  classify  shipping  and  handling  costs  as 
fulfillment costs before the customer obtains control of the goods.  We continue to account for collection of all taxes on a net 
basis.   

We incur commission expense that is incremental to obtaining contracts with customers. Sales commissions (which are 
recorded  in  the  selling,  general  and  administrative  expense  line  item  in  the  consolidated  statements  of  operations)  are 
expensed when the product is shipped because such commissions are owed after shipment.

Inventory

We state our inventories at the lower of cost or net realizable value.  We base our assessment of the ultimate realization 
of  inventories  on  our  projections  of  future  demand  and  market  conditions.    Sudden  declines  in  demand,  rapid  product 
improvements,  or  technological  changes,  or  any  combination  of  these  factors  can  cause  us  to  have  excess  or  obsolete 
inventories.  On an ongoing basis, we review for estimated excess, obsolete, or unmarketable inventories and write down our 
inventories  to  their  net  realizable  value  based  on  our  forecasts  of  future  demand  and  market  conditions.    If  actual  market 
conditions  are  less  favorable  than  our  forecasts,  additional  inventory  write-downs  may  be  required.    The  following  factors 
influence  our  estimates:  changes  to  or  cancellations  of  customer  orders,  unexpected  or  sudden  decline  in  demand,  rapid 
product improvements, technological advances, and termination or changes by our OEM customers of any product offerings 
incorporating our product solutions.

Periodically, we purchase inventory from our contract manufacturers when a customer delays its delivery schedule or 
cancels its order.  In those circumstances, we record a write-down, if necessary, to reduce the carrying value of the inventory 
purchased to its net realizable value.  The effect of these write-downs is to establish a new cost basis in the related inventory, 
which  we  do  not  subsequently  write  up.    We  also  record  a  liability  and  charge  to  cost  of  revenue  for  estimated  losses  on 
inventory we are obligated to purchase from our contract manufacturers when such losses become probable from customer 
delays, order cancellations, or other factors.

Business Combinations

We  have  applied  significant  estimates  and  judgments  in  order  to  determine  the  fair  value  of  the  identified  assets 
acquired, liabilities assumed and goodwill recognized in connection with our business combinations to ensure the value of the 
assets and liabilities acquired are recognized at fair value as of the acquisition date. In measuring the fair value, we utilize 
valuation techniques consistent with the market approach, income approach, or cost approach.

The valuation of the identifiable assets and liabilities includes assumptions made in performing the valuation, such as 
projected  revenue,  weighted  average  cost  of  capital,  discount  rates,  estimated  useful  lives,  and  other  relevant  assessments. 
These  assessments  can  be  significantly  affected  by  our  estimates,  judgments,  and  assumptions.    If  actual  results  are  not 
consistent with our estimates, judgments, or assumptions, or if additional or new information arises in the future that affects 
our  fair  value  estimates,  then  adjustments  to  our  initial  fair  value  estimates  may  have  a  material  impact  to  our  purchase 
accounting or our results of operations.  If actual results are not consistent with our estimates, judgments, or assumptions, or 
if  additional  or  new  information  arises  in  the  future,  beyond  our  one  year  measurement  period,  that  affects  our  fair  value 
estimates, then adjustments to our initial fair value estimates may have a material impact to our results of operations.  

37

Results of Operations

The  following  sets  forth  certain  of  our  consolidated  statements  of  income  data  for  fiscal  2021  and  2020  along  with 

comparative information regarding the absolute and percentage changes in these amounts (in millions, except percentages):

IoT product applications.......................................................................................

 $

PC product applications........................................................................................

Mobile product applications.................................................................................

Net revenue....................................................................................................

Gross margin .................................................................................................

2021

2020

 $

580.9 

354.7 

404.0 

1,339.6 

611.2 

317.6 

317.4 

698.9 

1,333.9 

543.1 

  $ Change
 $

263.3 

Operating expenses:

Research and development ............................................................................

Selling, general, and administrative ..............................................................

Acquired intangibles amortization ................................................................

Restructuring costs ........................................................................................

Gain on sale of audio technology assets........................................................

Operating income ..........................................................................................

Interest and other income, net ..............................................................................

Interest expense ....................................................................................................

Loss on extinguishment of debt............................................................................

Gain on sale of assets ...........................................................................................

Income before provision for income taxes ....................................................

Provision for income taxes ...................................................................................

Equity investment loss..........................................................................................

313.4 

144.9 

32.7 

7.4 

(34.2)

147.0 

2.9 

(29.5)

(0.3)

— 
120.1 

31.4 

(9.1)

302.5 

127.0 

11.7 

33.0 

- 

68.9 

7.9 

(22.5)

— 

105.1 
159.4 

38.6 

(2.0)

Net income.....................................................................................................

 $

79.6 

 $

118.8 

 $

  % Change

82.9%

11.8%

(42.2%)

0.4%

12.5%

3.6%

14.1%

179.5%

(77.6%)

(100.0%)

113.4%

(63.3%)

31.1%

(100.0%)

(100.0%)

(24.7%)

(18.7%)

355.0%

(33.0%)

37.3 

(294.9)

5.7 

68.1 

10.9 

17.9 
21 
(25.6)

(34.2)

78.1 

(5.0)

(7.0)

(0.3)

(105.1)
(39.3)

(7.2)

(7.1)

(39.2)

The following sets forth certain of our consolidated statements of operations data as a percentage of net revenues for 

fiscal 2021 and 2020:

IoT product applications ........................................................................................
PC product applications .........................................................................................
Mobile product applications ..................................................................................
Net revenue ......................................................................................................
Gross margin....................................................................................................

Operating expenses:

Research and development ..............................................................................
Selling, general, and administrative.................................................................
Acquired intangibles amortization...................................................................
Restructuring costs...........................................................................................
Gain on sale of audio technology assets ..........................................................
Operating income.............................................................................................
Interest and other income, net................................................................................
Interest expense......................................................................................................
Gain on sale of assets.............................................................................................
Income before provision for income taxes ......................................................
Provision for income taxes.....................................................................................
Equity investment loss ...........................................................................................
Net income.......................................................................................................

38

2021

2020

  Percentage

Point
Increase
(Decrease)

43.3%   
26.5%   
30.2%   
100.0%   
45.6%   

23.4%   
10.8%   
2.4%   
0.6%   
(2.6%)   
11.0%   
0.2%   
(2.2%)   
0.0%   
9.0%   
2.3%   
(0.7%)   
5.9%   

23.8%   
23.8%   
52.4%   
100.0%   
40.7%   

22.7%   
9.5%   
0.9%   
2.5%   
0.0%   
5.2%   
0.6%   
(1.7%)   
7.9%   
11.9%   
2.9%   
(0.1%)   
8.9%   

19.5%
2.7%
(22.2%)

4.9%

0.7%
1.3%
1.5%
(1.9%)
(2.6%)
5.8%
(0.4%)
(0.5%)
(7.9%)
(2.9%)
(0.6%)
(0.6%)
(3.0%)

 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
   
 
 
   
 
 
 
 
   
 
 
   
 
 
 
 
 
   
 
 
   
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Fiscal 2021 Compared with Fiscal 2020

Net Revenue.

Net revenue was $1,339.6 million for fiscal 2021 compared with $1,333.9 million for fiscal 2020, an increase of $5.7 
million,  or  0.4%.    Of  our  fiscal  2021  net  revenue,  $580.9  million,  or  43.3%,  of  net  revenue  was  from  the  IoT  product 
applications  market,  $354.7  million,  or  26.5%,  of  net  revenue  was  from  the  PC  product  applications  market,  and  $404.0 
million, or 30.2%, of net revenue was from the mobile product applications market.  The overall increase in net revenue for 
fiscal 2021 was attributable to an increase of $263.3 million, or 82.9%, in net revenue from IoT product applications and an 
increase  of  $37.3  million,  or  11.8%,  in  net  revenue  from  PC  product  applications,  partially  offset  by  a  decrease  of  $294.9 
million,  or  42.2%,  in  net  revenue  from  mobile  product  applications.    The  increase  in  net  revenue  from  IoT  product 
applications was primarily driven by a 26% increase in the units sold as well as a 45.2% increase in average selling prices. 
The increase in net revenue from PC product applications was driven by a 9.3% increase in the units sold and a 2.3% increase 
in average selling prices.  The decrease in mobile product applications was driven by a 35.4% decrease in the units sold due 
primarily to the divestment of our TDDI product line during the fourth quarter of fiscal 2020.    

Gross Margin. 

Gross margin as a percentage of net revenue was 45.6%, or $611.2 million, for fiscal 2021 compared with 40.7%, or 
$543.1 million, for fiscal 2020.  The 490 basis point increase in gross margin was primarily due to a favorable product mix 
and  product  costs  reductions,  partially  offset  by  a  $37.6  million  increase  in  acquired  intangibles  amortization  that  was 
charged to cost of revenue during the year primarily related to the acquisition of DisplayLink and the Broadcom Business 
Acquisition and $26.0 million of inventory fair value adjustments associated with the DisplayLink acquisition. 

Because  we  sell  our  technology  solutions  in  designs  that  are  generally  unique  or  specific  to  an  OEM  customer’s 
application, gross margin varies on a product-by-product basis, making our cumulative gross margin a blend of our product 
specific  designs.    As  a  fabless  manufacturer,  our  gross  margin  percentage  is  generally  not  materially  impacted  by  our 
shipment  volume.    We  charge  losses  on  inventory  purchase  obligations  and  write-downs  to  reduce  the  carrying  value  of 
obsolete, slow moving, and non-usable inventory to net realizable value (including warranty costs) to cost of revenue.

Operating Expenses.

Research and Development Expenses.  Research and development expenses increased $10.9 million, to $313.4 million, 
for fiscal 2021 compared with fiscal 2020.  The increase in research and development expenses primarily reflected a $13.1 
million increase in share-based compensation primarily due to an increase in our phantom stock liability resulting from the 
increase  in  our  stock  price;  a  $9.2  million  increase  due  to  the  amortization  of  prepaid  development  services  related  to  the 
Broadcom  Business  Acquisition;  and  a  $1.5  million  increase  in  non-employee  services;  partially  offset  by  a  $4.4  million 
decrease in software licenses and maintenance; a $3.8 million decrease in employee compensation and employment-related 
costs,  resulting  from  a  9.9%  decrease  in  research  and  development  headcount  from  restructuring  actions  initiated  in  both 
fiscal  2020  and  2021  to  reduce  costs,  which  exceeded  the  increase  in  headcount  due  to  recent  acquisitions;  a  $2.4  million 
decrease in travel and entertainment related costs as a result of reduced headcount as well as travel restrictions related to the 
COVID-19 pandemic; and a $2.4 million in-process research and development charge in fiscal 2020 not repeated in fiscal 
2021. 

Selling, General, and Administrative Expenses.  Selling, general, and administrative expenses increased $17.9 million, 
to $144.9 million, for fiscal 2021 compared with fiscal 2020.  The increase in selling, general, and administrative expenses 
primarily  reflected  a  $18.3  million  increase  in  share-based  compensation  primarily  due  to  new  executive  grants  and  the 
increase  in  value  of  our  phantom  stock  liability  resulting  from  the  increase  in  our  stock  price;  a  $5.0  million  increase  in 
employee compensation and employment-related costs, largely driven by the timing of executive team hiring in fiscal year 
2020  and  2021,  including  a  higher  overall  bonus  accrual  driven  by  higher  profitability  in  fiscal  2021;  and  a  $1.2  million 
increase in accounting and consulting fees associated with our recent acquisitions; partially offset by a $3.7 million decrease 
in  bad  debt  expense;  a  $3.0  million  decrease  in  legal  fees;  and  a  $1.7  million  decrease  in  travel  and  entertainment  related 
costs as a result of travel restrictions related to the COVID-19 pandemic. 

Acquired Intangibles Amortization.  Acquired intangibles amortization reflects the amortization of intangibles acquired 
through recent acquisitions.  See Note 5 Acquired Intangibles to the consolidated financial statements contained elsewhere in 
this report.

39

Restructuring Costs. Restructuring costs primarily reflect employee severance costs and facilities consolidation costs 
related  to  the  restructuring  of  operations  to  reduce  operating  costs.    These  headcount-related  costs  included  personnel  in 
operations,  research  and  development,  and  selling,  general  and  administrative  functions.    Restructuring  costs  incurred  in 
fiscal 2021 were $7.4 million and in fiscal 2020 were $33.0 million.  See Note 13 Restructuring Activities to the consolidated 
financial statements contained elsewhere in this report.

Gain  on  Sale  of  Audio  Technology  Assets.    Gain  on  sale  of  audio  technology  assets  includes  the  sale  of  certain 
intangible assets related to our audio products.  See Note 1 Organization and Summary of Significant Accounting Policies, 
under Divestiture, to the consolidated financial statements contained elsewhere in this report.

Non-Operating Income.

Interest and Other Income, Net.  Interest and other income, net was $2.9 million for fiscal 2021 compared with $7.9 

million for fiscal 2020.  The decrease in interest and other income, net was due to lower interest rates in fiscal 2021. 

Interest Expense.  Interest expense was $29.5 million and $22.5 million, in fiscal 2021 and 2020, respectively, which 
represents interest and amortization of debt issuance costs and discount on the $525.0 million aggregate principal amount of 
the Convertible Notes issued in June 2017 as well as interest and amortization of debt issuance costs on the $400.0 million 
principal  amount  of  the  Senior  Notes  issued  in  March  2021.  See  Note  6  Debt  to  the  consolidated  financial  statements 
contained elsewhere in this report.

Gain on Sale of Assets. Gain on sale of assets in fiscal 2020 includes the sale of our TDDI product line for LCD mobile 
displays.  See Note 1 Organization and Summary of Significant Accounting Policies, under Divestiture, to the consolidated 
financial statements contained elsewhere in this report.

Provision for Income Taxes.

As a result of the decrease in the U.S. tax rate from the comprehensive tax legislation enacted in December 2017 by the 
U.S. government, commonly known as the Tax Cuts and Jobs Act, our U.S. statutory tax rate is lower than tax rates in many 
foreign  jurisdictions  in  which  we  operate.  This  resulted  in  an  increase  to  our  effective  tax  rate  relating  to  foreign  tax  rate 
differential for our fiscal 2019. However, this was largely offset by the remeasurement and release of various uncertain tax 
positions.  See Note 11 Income Taxes to the consolidated financial statements contained elsewhere in this report for the table 
reconciling the provision for income taxes from the federal statutory rate for fiscal 2021, 2020, and 2019.

It  is  reasonably  possible  that  the  amount  of  liability  for  unrecognized  tax  benefits  may  change  within  the  next  12 

months; an estimate of the range of possible changes could result in a decrease of $3.4 million to an increase of $3.0 million.

Fiscal 2020 Compared with Fiscal 2019.

For discussion related to the results of operations and changes in financial condition for fiscal 2020 compared to fiscal 
2019,  please  refer  to  “Part  II,  Item  7.  Management’s  Discussion  and  Analysis  of  Financial  Conditions  and  Results  of 
Operations” in our fiscal 2020 Form 10-K, which was filed with the SEC on August 21, 2020.

Liquidity and Capital Resources

Our cash and cash equivalents were $836.3 million as of the end of fiscal 2021 compared with $763.4 million as of the 
end of fiscal 2020, an increase of $72.9 million. This increase reflected cash flows provided by operating activities of $319.2 
million  and  $274.1  million  of  cash  provided  by  financing  activities,  partially  offset  by  $522.6  million  of  cash  used  in 
investing activities. 

We  consider  almost  all  earnings  of  our  foreign  subsidiaries  as  not  indefinitely  invested  overseas  and  have  made 
appropriate provisions for income or withholding taxes, that may result from a future repatriation of those earnings.  As of 
June 27, 2021, $247.5 million of cash and cash equivalents was held by our foreign subsidiaries.  If these funds are needed 
for our operations in the U.S., we will be able to repatriate these funds without an impact on our tax provision.

Cash Flows from Operating Activities.  For fiscal 2021, the $319.2 million in net cash provided by operating activities 
was  primarily  attributable  to  net  income  of  $79.6  million  plus  adjustments  for  non-cash  charges,  including  acquired 
intangibles amortization of $110.1 million, share-based compensation costs of $66.1 million, depreciation and amortization 
of  $21.6  million,  and  a  reduction  of  $34.2  million  for  gain  on  sale  of  audio  technology  assets,  as  well  as  other  non-cash 

40

adjustments  of  $30.4  million,  and  a  net  change  in  operating  assets  and  liabilities  of  $45.6  million.    The  net  change  in 
operating  assets  and  liabilities  related  primarily  to  a  $53.1  million  decrease  in  inventories,  a  $32.2  million  increase  in 
accounts  payable,  and  a  $14.9  million  increase  in  accrued  compensation;  partially  offset  by  a  $25.9  million  increase  in 
accounts receivable, a $17.2 million decrease in other accrued liabilities, and a $9.4 million increase in prepaid expenses and 
other  current  assets.    Our  days  sales  outstanding  remained  flat  at  63  days  in  fiscal  2021  as  compared  to  fiscal  2020.  Our 
inventory turns increased to seven in fiscal 2021 from six in 2020.  

For fiscal 2020, the $221.8 million in net cash provided by operating activities was primarily attributable to net income 
of $118.8 million plus adjustments for non-cash charges, including acquired intangibles amortization of $51.4 million, share-
based compensation costs of $49.3 million, depreciation and amortization of $26.7 million, and a reduction of $105.1 million 
for gain on sale of assets, as well as other non-cash adjustments of $28.9 million, and a net change in operating assets and 
liabilities of $51.8 million.  The net change in operating assets and liabilities related primarily to a $43.0 million decrease in 
inventories, a $31.0 million decrease in accounts receivable, a $29.1 million increase in accrued compensation, and a $13.8 
million increase in income taxes payable; partially offset by a $36.2 million decrease in accounts payable and a $29.9 million 
decrease in other accrued liabilities.  Our days sales outstanding decreased from 70 days to 63 days from fiscal 2019 to fiscal 
2020. Our inventory turns increased to six in fiscal 2020 from five in 2019.  

Cash Flows from Investing Activities.  Net cash used in investing activities for fiscal 2021 was $522.6 million and net 
cash  provided  by  investing  activities  in  2020  was  $119.9  million.  Net  cash  used  in  investing  activities  for  fiscal  2021 
consisted primarily of $626.5 million used for the acquisition of businesses, net of cash and cash equivalents acquired, and 
$21.1 million used for the purchases of capital assets; partially offset by $95.8 million in proceeds from sales of investments 
and $34.2 million in proceeds from sale of audio technology assets.  Net cash provided by investing activities for fiscal 2020 
consisted  primarily  of  $138.7  million  of  proceeds  from  the  sale  of  assets,  partially  offset  by  $16.3  million  used  for  the 
purchases of capital assets. 

Cash Flows from Financing Activities.  Net cash provided by financing activities for fiscal 2021 was $274.1 million 
and for fiscal 2020 was $93.9 million.  Our net cash provided by financing activities for fiscal 2021 was primarily attributable 
to $400.0 million in proceeds from issuance of debt and $27.8 million in proceeds from issuance of shares, partially offset by  
$100.0 million of payment on the line-of-credit borrowings, $28.2 million used for payroll taxes for restricted stock units, or  
RSUs,  market  stock  units,  or  MSUs,  and  performance  stock  units,  or  PSUs,  and  $19.4  million  used  for  payment  for 
redemption of convertible notes. Our net cash provided by financing activities for fiscal 2020 was primarily attributable to 
$100.0  million  proceeds  from  borrowing  under  the  line-of-credit  and  $34.5  million  of  proceeds  from  issuance  of  shares, 
partially offset by $30.2 million used to repurchase shares of our common stock in the open market and $9.7 million used for 
payroll taxes for RSUs, MSUs and PSUs.

For  discussion  related  to  the  statement  of  cash  flows  for  fiscal  2019,  please  refer  to  “Part  II,  Item  7.  Management’s 
Discussion and Analysis of Financial Conditions and Results of Operations” in our fiscal 2019 Form 10-K, which was filed 
with the SEC on August 23, 2019.

Common Stock Repurchase Program. As of June 26, 2021, our Board of Directors had authorized the purchase of up to 
an  aggregate  of  $1.4  billion  of  our  common  stock  pursuant  to  our  common  stock  repurchase  program,  which  was 
subsequently  increased  to  $1.8  billion  in  August  2021  and  extended  through  July  2025.    The  program  authorizes  us  to 
purchase our common stock in the open market or in privately negotiated transactions, depending upon market conditions and 
other  factors.    The  number  of  shares  purchased,  and  the  timing  of  purchases  is  based  on  the  level  of  our  cash  balances, 
general  business  and  market  conditions,  and  other  factors,  including  alternative  investment  opportunities.    Common  stock 
purchased  under  this  program  is  held  as  treasury  stock.    From  April  2005  through  the  end  of  fiscal  2021,  we  purchased 
31,749,195 shares of our common stock in the open market for an aggregate cost of $1.2 billion.  As of June 26, 2021, and as 
of  August  2021,  we  had  $177.4  million,  and  $577.4  million,  respectively,  remaining  under  our  common  stock  repurchase 
program.

Senior  Debt.  On  March  11,  2021,  we  completed  an  offering  of  $400.0  million  aggregate  principal  amount  of  4.0% 
senior  notes  due  2029,  or  the  Senior  Notes,  in  a  private  offering.  The  Senior  Notes  were  issued  pursuant  to  an  Indenture, 
dated as of March 11, 2021, or the Senior Notes Indenture, by and among us, the subsidiary guarantors named therein and 
Wells Fargo Bank, National Association, as trustee. 

The Senior Notes Indenture provides that the Senior Notes will bear interest at a rate of 4.0% per annum, payable in 
cash semi-annually in arrears on December 15 and June 15 of each year, commencing on June 15, 2021. The Senior Notes 
will mature on June 15, 2029 and are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis 
by each of our current and future domestic restricted subsidiaries that guarantee our obligations under our senior secured 
credit facilities. 

41

Prior to June 15, 2024, we may redeem the Senior Notes, in whole or in part, at a redemption price of 100% of the 

principal amount thereof, plus a make-whole premium set forth in the Senior Notes Indenture, plus accrued and unpaid 
interest, if any, up to, but excluding, the redemption date. 

We may redeem some or all of the Senior Notes on or after June 15, 2024 at the redemption prices specified below, 

plus accrued and unpaid interest, if any, up to, but excluding, the redemption date: 

Year
2024.....................................................................................   
2025.....................................................................................   
2026 and thereafter..............................................................   

Price

102%
101%
100%

In addition, at any time prior to June 15, 2024, we  may  redeem up to  40% of  the  aggregate principal amount of the 
Senior Notes at a redemption price equal to 104% of the principal amount thereof, plus accrued and unpaid interest, if any, up 
to, but excluding, the applicable redemption date with the net cash proceeds from one or more equity offerings by us. 

The  Senior  Notes  are  our  general  unsecured  obligations.  The  Senior  Note  guarantees  are  the  senior  unsecured 
obligations of each guarantor. Under certain circumstances, the guarantors may be released from their Senior Note guarantees 
without consent of the holders of Senior Notes. Under the terms of the Senior Notes Indenture, the Senior Notes rank equally 
in right of payment with all of our and the guarantors’ existing and future senior indebtedness, and rank contractually senior 
in right of payment to our and the guarantors’ future indebtedness and other obligations that are, by their terms, expressly 
subordinated  in  right  of  payment  to  the  Senior  Notes.  The  Senior  Notes  are  effectively  subordinated  to  our  and  the 
guarantors’  existing  and  future  secured  indebtedness,  including  secured  indebtedness  under  our  senior  secured  credit 
facilities, to the extent of the value of the assets securing such indebtedness. The Senior Notes and guarantees are structurally 
subordinated to all existing and future indebtedness and liabilities (including trade payables) of our subsidiaries that do not 
guarantee the Senior Notes. 

The Senior Notes Indenture contains covenants that, subject to exceptions and qualifications, among other things, limit 
our  ability  and  the  ability  of  our  Restricted  Subsidiaries  (as  defined  in  the  Senior  Notes  Indenture)  to  (i) incur  additional 
indebtedness  and  guarantee  indebtedness;  (ii) pay  dividends  or  make  other  distributions  or  repurchase  or  redeem  our 
company’s or any parent’s capital stock; (iii) prepay, redeem or repurchase certain indebtedness; (iv) issue certain preferred 
stock  or  similar  equity  securities;  (v) make  loans  and  investments;  (vi) dispose  of  assets;  (vii) incur  liens;  (viii) enter  into 
transactions with affiliates; (ix) enter into agreements restricting its subsidiaries’ ability to pay dividends; and (x) consolidate, 
merge or sell all or substantially all of its assets. 

The Senior Notes Indenture contains customary events of default including, without limitation, failure to make required 
payments, failure to comply with certain agreements or covenants, cross-acceleration to certain other indebtedness in excess 
of specified amounts, certain events of bankruptcy and insolvency, and failure to pay certain judgments. An event of default 
under the Senior Notes Indenture will allow either the trustee or the holders of at least 25% in aggregate principal amount of 
the then outstanding Senior Notes to accelerate, or in certain cases, will automatically cause the acceleration of, the maturity 
of the principal, and accrued and unpaid interest, if any, on all outstanding Senior Notes. 

Convertible Debt. On June 20, 2017, we entered into a purchase agreement, or the Purchase Agreement, with Wells 
Fargo  Securities,  LLC,  as  representative  of  the  initial  purchasers  named  therein,  or  collectively,  the  Initial  Purchasers, 
pursuant to which we issued and sold, and the Initial Purchasers purchased, $500 million aggregate principal amount of our 
0.50%  convertible  senior  notes  due  in  2022,  or  the  Convertible  Notes,  in  a  private  placement  transaction.  Pursuant  to  the 
Purchase  Agreement,  we  also  granted  the  Initial  Purchasers  a  30-day  option  to  purchase  up  to  an  additional  $25 million 
aggregate  principal  amount  of  Convertible  Notes,  which  was  exercised  in  full  on  June 21,  2017.  The  net  proceeds,  after 
deducting  the  Initial  Purchasers’  discounts,  were  $514.5  million,  which  included  proceeds  from  the  Initial  Purchasers’ 
exercise  of  their  option  to  purchase  additional  Convertible  Notes.  The  Convertible  Notes  were  issued  pursuant  to  an 
Indenture,  dated  as  of  June  26,  2017,  or  the  Convertible  Notes  Indenture,  by  and  among  us,  and  Wells  Fargo,  National 
Association, as trustee. We received the net proceeds on June 26, 2017, which we used to repurchase shares of our common 
stock,  to  retire  our  outstanding  bank  debt,  and  to  provide  additional  cash  resources  to  fund  the  Conexant  and  Marvell 
Business Acquisitions.

The  Convertible  Notes  bear  interest  at  a  rate  of  0.50%  per  year.  Interest  accrued  from  June 26,  2017  and  is  payable 
semi-annually in arrears, on June 15 and December 15 of each year, beginning on December 15, 2017. The Convertible Notes 
are senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated 
in  right  of  payment  to  the  Convertible  Notes;  equal  in  right  of  payment  to  any  our  liabilities  that  are  not  so  subordinated; 
effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such 
indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.

42

 
 
 
The  Convertible  Notes  mature  on  June 15,  2022,  or  the  Maturity  Date,  unless  earlier  repurchased,  redeemed  or 

converted.

Holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amounts, at their 
option at any time prior to the close of business on the business day immediately preceding March 15, 2022 under certain 
defined circumstances. 

On or after March 15, 2022 until the close of business on the business day immediately preceding the Maturity Date, 
holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amounts, at the option of 
the holder. Upon conversion, we will pay or deliver, at our election, shares of common stock, cash, or a combination of cash 
and shares of common stock.

The conversion rate for the Convertible Notes is initially 13.6947 shares of common stock per $1,000 principal amount 
of  Convertible  Notes  (equivalent  to  an  initial  conversion  price  of  approximately  $73.02  per  share  of  common  stock).  The 
conversion rate is subject to adjustment in certain circumstances.

Upon  the  occurrence  of  a  fundamental  change  (as  defined  in  the  Convertible  Notes  Indenture),  holders  of  the 
Convertible Notes may require us to repurchase for cash all or a portion of their Convertible Notes at a fundamental change 
repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid 
interest up to, but excluding, the fundamental change repurchase date.

Effective April 1, 2021, the Sales Price Condition of our Convertible Notes had been met at the end of the preceding 
calendar  quarter  and  holders  of  our  notes  became  entitled  to  redeem  their  notes  in  accordance  with  the  terms  of  the 
Convertible  Notes  Indenture  during  the  calendar  quarter  ending  June  30,  2021.  During  the  fourth  quarter  of  fiscal  2021,  a 
total  of  $19.4  million  principal  amount  of  our  Convertible  Notes  were  submitted  for  conversion,  which  was  completed  by 
June 26, 2021 through a combination of $19.4 million in cash and 118,092 shares of common stock from our treasury shares, 
resulting in a loss of approximately $0.3 million. 

Commencing June 20, 2020, we may redeem for cash all or any portion of the Convertible Notes, at our option, if the 
last reported sale price of our common stock, as determined by us, has been at least 130% of the conversion price then in 
effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the 
last  trading  day  of  such  period)  ending  on,  and  including,  the  trading  day  immediately  preceding  the  date  on  which  we 
provide  notice  of  redemption  at  a  redemption  price  equal  to  100%  of  the  principal  amount  of  the  Convertible  Notes  to  be 
redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date.  Our policy is to settle the principal 
amount of our Convertible Notes with cash upon conversion or redemption.

On June 1, 2021, we provided an irrevocable notice of redemption for all $525,000,000 aggregate principal amount of 
our  outstanding  Convertible  Notes,  or  Redemption.  The  Convertible  Notes  are  redeemable  at  a  cash  redemption  price  of 
100.0% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the redemption date of August 4, 
2021, or the Redemption Price.

Holders  of  the  Convertible  Notes  had  the  right  to  convert  the  Convertible  Notes  called  for  redemption  no  later  than 
August 3, 2021, or the Conversion Deadline. The conversion rate is equal to 13.7267 shares per $1,000 principal amount of 
the Convertible Notes, which is the initial conversion rate of 13.6947 shares per $1,000 principal amount of the Convertible 
Notes plus a number of additional shares equal to 0.0320 shares per $1,000 principal amount of the Convertible Notes. We 
elected to settle any conversions by Combination Settlement with a Specified Dollar Amount per $1,000 principal amount of 
Convertible  Notes  equal  to  $1,000,  plus  a  number  of  shares  of  the  our  common  stock,  to  be  determined  pursuant  to  the 
Convertible  Notes  Indenture,  together  with  additional  cash,  if  applicable,  in  lieu  of  delivering  any  fractional  shares  of 
common stock. As a result of this election, on August 4, 2021, we paid $505.6 million in cash for the principal amount of 
Convertible Notes outstanding and delivered approximately 3.5 million shares in common stock from our treasury stock for 
additional amounts, resulting in a loss of approximately $8.1 million.

Bank  Credit  Facility.  On  March  11,  2021,  we  amended  and  restated  our  Amended  and  Restated  Credit  Agreement, 
with the lenders and Wells Fargo Bank, National Association, as administrative agent, or the Credit Agreement, to, among 
other changes, extend the maturity date of our senior secured revolving credit facility, to five years from the closing date of 
the amendment, increase the facility size from $200.0 million to $250.0 million, and replace the requirement to maintain a 
total  debt  to  Consolidated  EBITDA  (as  defined  in  the  Credit  Agreement)  ratio  of  not  more  than  4.75  to  1.00  with  a 

43

requirement to maintain a net total debt to Consolidated EBITDA ratio of not more than 3.75 to 1.00 provided that for the 
four fiscal quarters ending after the date of a material acquisition, such maximum leverage ratio shall be adjusted to 4.25 to 
1.00,  and  thereafter  3.75  to  1.00,  provided  further,  that  such  deemed  increase  pursuant  to  the  foregoing  shall  not  apply  to 
more than two material acquisitions consummated during the term of the Credit Agreement.     

The  Credit  Agreement  provides  for  a  revolving  credit  facility  in  a  principal  amount  of  up  to  $250  million,  which 
includes a $20 million sublimit for letters of credit and a $25 million sublimit for swingline loans. Under the terms of the 
Credit Agreement, we may, subject to the satisfaction of certain conditions, request increases in the revolving credit facility 
commitments in an aggregate principal amount of up to $150 million to the extent existing or new lenders agree to provide 
such increased or additional commitments, as applicable. Future proceeds under the revolving credit facility are available for 
working  capital  and  general  corporate  purposes.  In  March  2021,  we  used  a  portion  of  the  proceeds  from  the  Senior  Notes 
described above to repay the $100.0 million outstanding borrowings on this revolving credit facility. As of June 26, 2021, 
there was no balance outstanding under the revolving credit facility.  The weighted average annualized interest rate on these 
borrowings for the fiscal year ended June 26, 2021, was 2.65%.

Borrowings under the revolving credit facility are required to be repaid in full by March 11, 2026. Debt issuance costs 
relating to the revolving credit facility of $1.6 million, included in non-current other assets on our consolidated balance sheet, 
are being amortized over 60 months.

Our  obligations  under  the  Credit  Agreement  are  guaranteed  by  the  material  domestic  subsidiaries  of  our  company, 
subject  to  certain  exceptions  (such  material  subsidiaries,  together  with  our  company,  collectively,  the  Credit  Parties).  The 
obligations of the Credit Parties under the Credit Agreement and the other loan documents delivered in connection therewith 
are secured by a first priority security interest in substantially all of the existing and future personal property of the Credit 
Parties, including, without limitation, 65% of the voting capital stock and 100% of the non-voting capital stock of certain of 
the Credit Parties’ direct foreign subsidiaries, subject to certain exceptions. 

The revolving credit facility bears interest at our election of a Base Rate plus an Applicable Margin or LIBOR plus an 
Applicable Margin. Swingline loans bear interest at a Base Rate plus an Applicable Margin. The Base Rate is a floating rate 
that  is  the  greater  of  the  Prime  Rate,  the  Federal  Funds  Rate  plus  50  basis  points,  or  LIBOR  plus  100  basis  points.  The 
Applicable Margin is based on a sliding scale that ranges from 0.25 to 100 basis points for Base Rate loans and 100 basis 
points to 175 basis points for LIBOR loans. We are required to pay a commitment fee on any unused commitments under the 
Credit Agreement, which is determined on a leverage-based sliding scale ranging from 0.175% to 0.25% per annum. Interest 
and fees are payable on a quarterly basis. The LIBOR index is expected to be discontinued at the end of 2021. Under our 
credit facility, when the LIBOR index is discontinued, we will switch to a comparable or successor rate as selected by us and 
the administrative agent, which may include the Secured Overnight Financing Rate, or SOFR.

Under the Credit Agreement, there are various restrictive covenants, including two financial covenants that limit the 
consolidated  total  leverage  ratio,  or  leverage  ratio,  the  consolidated  interest  coverage  ratio,  or  interest  coverage  ratio,  a 
restriction  that  permits  accounts  receivable  financings  provided  that  the  aggregate  unpaid  amount  of  permitted  accounts 
receivable financings are no more than the greater of $100.0 million and 50% of the amount of all accounts receivable of the 
company and specified subsidiaries and other specific items. The leverage ratio is the ratio of debt as of the measurement date 
to  Consolidated  EBITDA,  for  the  four  consecutive  quarters  ending  with  the  quarter  of  measurement.  The  current  leverage 
ratio shall not exceed 3.75 to 1.00 provided that for the four fiscal quarters ending after the date of a material acquisition, 
such  maximum  leverage  ratio  shall  be  adjusted  to  4.25  to  1.00,  and  thereafter  3.75  to  1.0.  The  interest  coverage  ratio  is 
Consolidated  EBITDA  to  interest  expense  for  the  four  consecutive  quarters  ending  with  the  quarter  of  measurement.  The 
interest coverage ratio must not be less than 3.50 to 1.0 during the term of the Credit Agreement. As of June 26, 2021, we 
remain in compliance with the restrictive covenants.

$100 Million Shelf Registration.  We have registered an aggregate of $100.0 million of common stock and preferred 
stock for issuance in connection with acquisitions, which shares generally will be freely tradeable after their issuance under 
Rule 145 of the Securities Act unless held by an affiliate of the acquired company, in which case such shares will be subject 
to the volume and manner of sale restrictions of Rule 144 of the Securities Act.

Working  Capital  Needs.    We  believe  our  existing  cash  and  cash  equivalents,  anticipated  cash  flows  from  operating 
activities, and available credit under our revolving credit facility will be sufficient to meet our working capital and other cash 
requirements and our debt service obligations, for at least the next 12 months. Our future capital requirements will depend on 
many factors, including our revenue, the effectiveness of vaccines on COVID-19 variants, including the deployment of those 
vaccines to help reduce the length, duration and severity of the COVID-19 pandemic, the timing and extent of spending to 

44

support  product  development  efforts,  costs  associated  with  restructuring  activities  net  of  projected  savings  from  those 
activities,  costs  related  to  protecting  our  intellectual  property,  the  expansion  of  sales  and  marketing  activities,  timing  of 
introduction of new products and enhancements to existing products, costs to ensure access to adequate manufacturing, costs 
of maintaining sufficient space for our workforce, the continuing market acceptance of our product solutions, our common 
stock  repurchase  program,  and  the  amount  and  timing  of  our  investments  in,  or  acquisitions  of,  other  technologies  or 
companies. Further equity or debt financing may not be available to us on acceptable terms or at all. If sufficient funds are 
not available or are not available on acceptable terms, our ability to fund our future long-term working capital needs, take 
advantage of business opportunities or to respond to competitive pressures could be limited or severely constrained. 

Based on our ability to access our cash and cash equivalents, our expected operating cash flows, and our other sources 
of  cash,  we  do  not  currently  anticipate  the  need  to  remit  undistributed  earnings  of  our  foreign  subsidiaries  to  meet  our 
working capital and other cash requirements.  While we have accrued taxes on almost all of our undistributed earnings of our 
foreign  subsidiaries,  if  we  did  remit  such  earnings,  we  may  be  required  to  pay  certain  state  and  foreign  taxes  to  repatriate 
these funds, which would impact our operating cash flows. 

Contractual Obligations and Commercial Commitments

The following table sets forth a summary of our material contractual obligations and commercial commitments as of 

the end of fiscal 2021 (in millions):

Contractual Obligations

Total

Less than
1 year

Payments due by period
1-3
Years

3-5
Years

Long-term debt (1) ............................................................   $ 1,033.2    $
Leases ..............................................................................    
37.7     
Purchase obligations and other commitments (2) .............    
136.1     
Transition tax payable (3) .................................................    
8.1     
Total ...........................................................................   $ 1,215.1    $

521.2    $
10.0     
86.1     
0.9     
618.2    $

32.0    $
10.3     
50.0     
4.2     
96.5    $

  Thereafter  
448.0 
9.7 
— 
— 
457.7  

32.0    $
7.7     
—     
3.0     
42.7    $

(1) Represents the principal and interest payable through the maturity date of the underlying contractual obligation.
(2) Purchase obligations and other commitments include payments due for inventory purchase obligations with contract manufacturers, long-term software 

tool licenses, and other licenses. 

(3) Represents the tax amount for the transition tax liability associated with our deemed repatriation of accumulated foreign earnings as a result of the Tax 

Cuts and Jobs Act, enacted into law on December 22, 2017. 

The amounts in the table above exclude unrecognized tax benefits related to uncertain tax positions of $22.6 million.  
As of June 26, 2021, we were unable to make a reasonably reliable estimate of when settlement with a taxing authority may 
occur in connection with our gross unrecognized tax benefit.

Subsequent to our fiscal year ended June 26, 2021, we executed an agreement for purchase and supply commitment 
with one of our contract manufacturers, under which we have a minimum commitment obligation estimated at approximately 
$111.0 million over a period of three years.

Off-Balance Sheet Arrangements

We do not have any transactions, arrangements, or other relationships with unconsolidated entities that are reasonably 
likely to materially affect our financial condition, revenues or expenses, results of operations, liquidity, or capital resources.  
We have no special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit 
risk support; engage in leasing, hedging, or research and development services; or have other relationships that expose us to 
liability that is not reflected in our financial statements.

Recently Issued Accounting Pronouncements Not Yet Effective

In August 2020, the Financial Accounting Standards Board, or FASB, issued accounting standard update, or ASU, No. 
2020-06,  Debt—Debt  with  Conversion  and  Other  Options  (Subtopic  470-20)  and  Derivatives  and  Hedging  -  Contracts  in 
Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments. The guidance removes 
certain  accounting  models  which  separate  the  embedded  conversion  features  from  the  host  contract  for  convertible 
instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under Accounting Standards 
Codification,  or  ASC,  815  or  for  convertible  debt  issued  at  a  substantial  premium.  The  ASU  removes  certain  settlement 

45

 
 
 
 
 
 
 
 
 
 
 
conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for 
it.  In  addition,  the  guidance  eliminates  the  treasury  stock  method  to  calculate  diluted  earnings  per  share  for  convertible 
instruments  and  requires  the  use  of  the  if-converted  method.  The  ASU  is  effective  for  annual  reporting  periods  beginning 
after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no 
earlier than the fiscal year beginning after December 15, 2020. We do not expect the adoption of this ASU to have a material 
impact on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for 
Income Taxes, or ASU 2019-12, an amendment of the FASB Accounting Standards Codification. ASU 2019-12 simplifies 
the accounting for income taxes by removing certain exceptions for intra-period tax allocations and deferred tax liabilities for 
equity  method  investments  and  adds  guidance  regarding  whether  a  step-up  in  tax  basis  of  goodwill  relates  to  a  business 
combination or a separate transaction. This ASU is effective for fiscal years beginning after December 15, 2020, with early 
adoption  permitted.  We  will  adopt  this  ASU  at  the  beginning  of  our  fiscal  2022,  and  do  not  expect  it  to  have  a  material 
impact on our consolidated financial statements and related disclosures.

46

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain market risks in the ordinary course of our business. These risks primarily include:

Foreign Currency Exchange Risk 

Our total net revenue for fiscal 2021, 2020, and 2019 was denominated in U.S. dollars.  Costs denominated in foreign 

currencies were approximately 13%, 12%, and 11% of our total costs for fiscal 2021, 2020, and 2019, respectively. 

We  face  the  risk  that  our  accounts  payable  and  acquisition-related  liabilities  denominated  in  foreign  currencies  will 
increase if such foreign currencies strengthen quickly and significantly against the U.S. dollar. Approximately 2% and 3% of 
our accounts payable were denominated in foreign currencies at June 26, 2021 and June 27, 2020, respectively. 

To provide an assessment of the foreign currency exchange risk associated with our foreign currency exposures within 
revenue, cost, and operating expenses, we performed a sensitivity analysis to determine the impact that an adverse change in 
exchange  rates  would  have  on  our  financial  statements.  A  hypothetical  weighted-average  change  of  10%  in  currency 
exchange rates would have changed our operating income before taxes by approximately $14.9 million and our net income 
by approximately $17.2 million for fiscal 2021, assuming no offsetting hedge positions.  However, this quantitative measure 
has inherent limitations. The sensitivity analysis disregards the possibility that U.S. dollar and other exchange rates can move 
in opposite directions and that gains from one currency may or may not be offset by losses from another currency.

Interest Rate Risk on Cash, Cash Equivalents

Our exposure to market risk for changes in interest rates relates primarily to our cash and cash equivalents. We do not 
use  our  investment  portfolio  for  trading  or  other  speculative  purposes.    There  have  been  no  significant  changes  in  the 
maturity dates and average interest rates for our cash equivalents subsequent to fiscal 2021.  

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the financial statements, the report of our independent registered public accounting firm, and the 
notes thereto commencing at page F-1 of this report, which financial statements, report, and notes are incorporated herein by 
reference.    Reference  is  also  made  to  the  quarterly  results  of  operations  included  elsewhere  in  this  report,  which  are 
incorporated herein by reference.

ITEM 9.

CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND 
FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Conclusions Regarding Disclosure Controls and Procedures

Due  to  the  COVID-19  pandemic,  a  significant  portion  of  our  employees  are  working  from  home  while  under 
governmental restrictions. Established business continuity plans were initiated in order to mitigate the impact to our control 
environment,  operating  procedures,  data,  and  internal  controls.  The  design  of  our  processes  and  controls  allow  for  remote 
execution with accessibility to secure data.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief 
Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and 
procedures  (as  defined  in  Rules  13a-15(e)  and  15d-15(e)  under  the  Exchange  Act).  Based  on  this  evaluation,  our  Chief 
Executive Officer and Chief Financial Officer, as of June 26, 2021, concluded that our disclosure controls and procedures (as 
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective to ensure that information required to be 
disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported 
within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to 
our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions 
regarding required disclosure.

47

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as 
defined  in  Rules  13a-15(f)  and  15d-15(f)  under  the  Exchange  Act)  for  our  company.  Under  the  supervision  and  with  the 
participation  of  our  management,  including  our  Chief  Executive  Officer  and  Chief  Financial  Officer,  we  conducted  an 
evaluation  of  the  effectiveness  of  our  internal  control  over  financial  reporting  based  on  the  framework  in  the  Internal 
Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission 
(COSO 2013 framework). 

Based on our evaluation under the COSO 2013 framework, our management concluded that our internal control over 
financial reporting was effective, at the reasonable assurance level, as of June 26, 2021.  The effectiveness of our internal 
control  over  financial  reporting  as  of  June  26,  2021  has  been  audited  by  KPMG  LLP,  an  independent  registered  public 
accounting firm, as stated in their report included herein on page F-2.

Changes in Internal Control Over Financial Reporting

Except as noted above, there were no changes in our internal control over financial reporting that occurred during our 
most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over 
financial reporting.  

Inherent Limitations on Effectiveness of Controls

Our  management,  including  our  Chief  Executive  Officer  and  Chief  Financial  Officer,  does  not  expect  that  our 
disclosure  controls  and  procedures  or  our  internal  controls  over  financial  reporting  will  prevent  all  error  and  all  fraud.    A 
control  system,  no  matter  how  well  conceived  and  operated,  can  provide  only  reasonable,  not  absolute,  assurance  that  the 
objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource 
constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all 
control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and 
instances  of  fraud,  if  any,  within  our  company  have  been  or  will  be  prevented  or  detected.    Further,  internal  controls  may 
become inadequate as a result of changes in conditions, or through the deterioration of the degree of compliance with policies 
or procedures.

ITEM 9B. OTHER INFORMATION

There were no items requiring reporting on Form 8-K that were not reported on Form 8-K during the fourth quarter of 

the year covered by this Form 10-K.

48

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item relating to directors of our company and corporate governance is incorporated 
herein  by  reference  to  the  definitive  Proxy  Statement  to  be  filed  pursuant  to  Regulation  14A  of  the  Exchange  Act  for  our 
2021 Annual Meeting of Stockholders.  The information required by this Item relating to our executive officers is included in 
Item 1. Business – Information about our Executive Officers.

We have adopted a code of ethics that applies to our chief executive officer, chief financial officer, chief accounting 
officer, and other senior accounting personnel. The “Code of Ethics for the CEO and Senior Financial Officers” is located on 
our website at www.synaptics.com in the Investor Relations section under Corporate Governance.

We intend to satisfy the disclosure requirement under Item 5.05(c) of Form 8-K regarding any amendment to, or waiver 
from,  a  provision  of  this  code  of  ethics  by  posting  such  information  on  our  website,  at  the  address  and  location  specified 
above.

ITEM 11.

EXECUTIVE COMPENSATION

The  information  required  by  this  Item  is  incorporated  herein  by  reference  to  the  definitive  Proxy  Statement 
(particularly under the caption “Executive Compensation”) to be filed pursuant to Regulation 14A of the Exchange Act for 
our 2021 Annual Meeting of Stockholders.

ITEM 12.

SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT  AND 
RELATED STOCKHOLDER MATTERS

The  information  required  by  this  Item  is  incorporated  herein  by  reference  to  the  definitive  Proxy  Statement 
(particularly  under  the  captions  “Security  Ownership  of  Principal  Stockholders,  Directors,  and  Officers”  and  “Executive 
Compensation—Stock-Based Compensation Plan Information”) to be filed pursuant to Regulation 14A of the Exchange Act 
for our 2021 Annual Meeting of Stockholders.

ITEM 13. CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS,  AND  DIRECTOR 

INDEPENDENCE

The  information  required  by  this  Item  is  incorporated  herein  by  reference  to  the  definitive  Proxy  Statement 
(particularly under the caption “Certain Relationships and Related Transactions”) to be filed pursuant to Regulation 14A of 
the Exchange Act for our 2021 Annual Meeting of Stockholders.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The  information  required  by  this  Item  is  incorporated  herein  by  reference  to  the  definitive  Proxy  Statement 
(particularly under the caption “Ratification of Appointment of Independent Auditor”) to be filed pursuant to Regulation 14A 
of the Exchange Act for our 2021 Annual Meeting of Stockholders.

49

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

Financial Statements and Financial Statement Schedules

(1)

Financial Statements are listed in the Index to Financial Statements on page F-1 of this report.

(b) Exhibits

Exhibit
Number
  2.1(a)# Asset Purchase Agreement, dated December 18, 
2019, by and among Synaptics Incorporated and 
Creative Legend Investments Ltd.

Exhibit

Incorporated by Reference

To

Quarterly Report on Form 10-Q

Date Filed
February 6, 2020

  2.1(b)# First Amendment to Asset Purchase Agreement, 

Quarterly Report on Form 10-Q

May 7, 2020

  2.1(c)

  2.2#

dated March 3, 2020, by and among Synaptics 
Incorporated and Creative Legend Investments Ltd. 

Second Amendment to Asset Purchase Agreement, 
dated April 15, 2020, by and among Synaptics 
Incorporated and Beijing OmniVision Technologies 
Co. Ltd.

Agreement and Plan of Merger, dated July 17, 
2020, by and among Synaptics Incorporated, 
DisplayLink Corp., Falcon Merger Sub, Inc., the 
sellers who became parties thereto and Shareholder 
Representative Services LLC

Annual Report on Form 10-K

August 21, 2020

Quarterly Report on Form 10-Q

November 5, 2020

  3.1

  3.2

  3.3

  3.4

  3.5

  4.1

  4.2

  4.3

  4.2

  4.3

Certificate of Incorporationv

Quarterly Report on Form 10-Q

February 21, 2002

Certificate of Designation of Series A Junior 
Participating Preferred Stock

Third Amended and Restated Bylaws (amended and 
restated as of July 27, 2010)

Certificate of Amendment of Certificate of 
Incorporation of the registrant

Certificate of Amendment of Certificate of 
Incorporation of the registrant

Registration Statement on Form 8-A August 16, 2002

Current Report on Form 8-K

August 2, 2010

Current Report on Form 8-K

December 7, 2004

Current Report on Form 8-K

October 22, 2010

Form of Common Stock Certificate

Annual Report on Form 10-K

September 12, 2002

Indenture, dated as of June 26, 2017, by and 
between the Company and Wells Fargo, National 
Association, as trustee

Current Report on Form 8-K

June 26, 2017

Form of 0.50% Convertible Senior Note due 2022

Current Report on Form 8-K

June 26, 2017

Description of Registrant’s Securities

Annual Report on Form 10-K

August 23, 2019

Indenture, dated as of March 11, 2021, by and 
among the Company, the guarantors named therein 
and Wells Fargo Bank, National Association, as 
trustee

Current Report on Form 8-K

March 11, 2021

  4.6

Form of 4.000% Senior Notes due 2029 (included 
in Exhibit 4.3). 

50

Current Report on Form 8-K

March 11, 2021

10.1

Second Amended and Restated Credit Agreement, 
dated March 11, 2021, by and among Synaptics 
Incorporated, as borrower, the lenders from time to 
time party thereto, Wells Fargo Bank, National 
Association, as administrative agent, swingline 
lender and issuing lender, Wells Fargo Securities, 
LLC, as joint lead arranger and joint bookrunner, 
MUFG Union Bank, N.A. and BMO Capital 
Markets Corp., as joint lead arrangers, joint 
bookrunners and co-syndication agents

10.2(a)* Synaptics Incorporated 2019 Inducement Equity 

Registration Statement on Form S-8 August 16, 2019

Plan

10.2(b)* Form of Restricted Stock Unit Inducement Award 

Registration Statement on Form S-8 August 16, 2019

Agreement for 2019 Inducement Equity Plan

10.2(c)* Form of Market Stock Unit Inducement Award 

Registration Statement on Form S-8 August 16, 2019

Agreement for 2019 Inducement Equity Plan

10.2(d)* Form of Performance Stock Unit Inducement 

Registration Statement on Form S-8 August 16, 2019

Award Agreement for 2019 Inducement Equity 
Plan

10.3(a)* 2019 Equity and Incentive Compensation Plan

Registration Statement on Form S-8 November 1, 2019

10.3(b)* Amended and Restated 2019 Equity and Incentive 

Current Report on Form 8-K

October 29, 2020

Compensation Plan

10.3(c)* Form of Restricted Stock Unit Award Agreement 

Registration Statement on Form S-8 November 1, 2019

under the 2019 Equity and Incentive Compensation 
Plan (for awards granted before July 27, 2021)

10.3(d)* Form of Performance Stock Unit Award Agreement 
under the 2019 Equity and Incentive Compensation 
Plan (for awards granted before July 27, 2021)

Registration Statement on Form S-8 November 1, 2019

10.3(e)* Form of Market Stock Unit Award Agreement 

Registration Statement on Form S-8 November 1, 2019

under the 2019 Equity and Incentive Compensation 
Plan

10.3(f)* Form of Restricted Stock Unit Award Agreement 

Filed herewith

under the 2019 Equity and Incentive Compensation 
Plan (for awards granted after July 27, 2021)

10.3(g)* Form of Performance Stock Unit Award Agreement 
under the 2019 Equity and Incentive Compensation 
Plan (for awards granted after July 27, 2021)

Filed herewith

10.4*

2019 Employee Stock Purchase Plan

Registration Statement on Form S-8 November 1, 2019

10.5(a)* Amended and Restated 2010 Incentive 

Current Report on Form 8-K

November 1, 2018

Compensation Plan, as amended effective on 
October 30, 2018

10.5(b)* Form of Non-Qualified Stock Option Agreement 
for 2010 Incentive Compensation Plan

10.5(c)* Form of Incentive Stock Option Agreement for 
2010 Incentive Compensation Plan 

Annual Report on Form 10-K

August 18, 2017

Current Report on Form 8-K

October 22, 2010

10.5(d)* Form of Deferred Stock Award Agreement for 2010 

Annual Report on Form 10-K

August 18, 2017

Incentive Compensation Plan

51

  
10.5(e)* Form of Deferred Stock Award Agreement for 
Market Stock Units for Amended and Restated 
2010 Incentive Compensation Plan

Quarterly Report on Form 10-Q

February 8, 2018

10.5(f)* Form of Deferred Stock Award Agreement for 

Quarterly Report on Form 10-Q

February 8, 2018

Performance Stock Units for Amended and 
Restated 2010 Incentive Compensation Plan

Change of Control Severance Policy for Principal 
Executive Officers

Annual Report on Form 10-K

August 23, 2019

Severance Policy for Principal Executive Officers

Annual Report on Form 10-K

August 23, 2019

Form of Director and Officer Indemnification 
Agreement

Employment Offer Letter, dated February 7, 2019 
between the registrant and Kermit Nolan

Current Report on Form 8-K

May 17, 2016

Quarterly Report on Form 10-Q

May 9, 2019

10.6*

10.7*

10.8*

10.9*

10.10* Written Description of the Synaptics Incorporated 
Retention Program Adopted May 6, 2019

Annual Report on Form 10-K

August 23, 2019

10.11*

10.12*

10.13*

10.14*

10.15*

10.16*

21

23.1

31.1

31.2

32.1##

32.2##

101.INS
Inline

101.SCH
Inline

Employment Offer Letter, dated August 1, 2019 
between the registrant and Michael Hurlston

Employment Offer Letter, dated October 7, 2019 
between the registrant and Dean Butler

Employment Offer Letter, dated February 26, 2020 
between the registrant and Phil Kumin

Employment Offer Letter, dated December 4, 2018 
between the registrant and Saleel Awsare

Form of Market Stock Unit Award Agreement 
under the 2019 Equity and Incentive Compensation 
Plan

Form of Performance Stock Unit Award Agreement 
under the 2019 Equity and Incentive Compensation 
Plan

List of Subsidiaries

Consent 
Accounting Firm

of 

Independent  Registered  Public 

Quarterly Report on Form 10-Q

November 17, 2019

Quarterly Report on Form 10-Q

February 6, 2020

Annual Report on Form 10-K

August 21, 2020

Annual Report on Form 10-K

August 21, 2020

Quarterly Report on Form 10-Q

November 5, 2020

Quarterly Report on Form 10-Q

November 5, 2020

Filed herewith

Filed herewith

Certification of Chief Executive Officer pursuant to 
Rule 13a-14(a)/15d-14(a)

Filed herewith

Certification of Chief Financial Officer pursuant to 
Rule 13a-14(a)/15d-14(a)

Filed herewith

Section  1350  Certification  of  Chief  Executive 
Officer

Furnished herewith

Section  1350  Certification  of  Chief  Financial 
Officer

Furnished herewith

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

Filed herewith

Filed herewith

101.CAL
Inline

XBRL  Taxonomy  Extension  Calculation  Linkbase 
Document

Filed herewith

52

101.DEF
Inline

XBRL  Taxonomy  Extension  Definition  Linkbase 
Document

Filed herewith

101.LAB
Inline

XBRL  Taxonomy  Extension  Label  Linkbase 
Document

Filed herewith

101.PRE
Inline

XBRL Taxonomy Extension Presentation Linkbase 
Document

Filed herewith

104

Cover Page Interactive Data File – The cover page 
the 
interactive  data  file  does  not  appear 
Interactive  Data  File  because  its  XBRL  tags  are 
embedded within the Inline XBRL document

in 

Filed herewith

* Indicates a contract with management or compensatory plan or arrangement.
# Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted
schedule will be furnished as a supplement to the Securities and Exchange Commission upon request.

## This certification is being furnished solely pursuant to 18 U.S.C. § 1350 and shall not be deemed filed by the Company 
for  purposes  of  Section  18  of  the  Exchange  Act  or  incorporated  by  reference  in  any  registration  statement  of  the 
Company filed under the Securities Act.

ITEM 16.

FORM 10-K SUMMARY

Not applicable.

53

Pursuant  to  the  requirements  of  Section  13  or  15(d)  of  the  Securities  Exchange  Act  of  1934,  the  registrant  has  duly 

caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

Date: August 20, 2021

SYNAPTICS INCORPORATED

By: /s/ Michael E. Hurlston
Michael E. Hurlston
President and Chief Executive Officer

Pursuant  to  the  requirements  of  the  Securities  Exchange  Act  of  1934,  this  report  has  been  signed  below  by  the 

following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

/s/ Michael E. Hurlston
Michael E. Hurlston

President and Chief Executive Officer,
and Director (Principal Executive Officer)

/s/ Dean Butler
Dean Butler

/s/ Kermit Nolan
Kermit Nolan

/s/ Nelson C. Chan
Nelson C. Chan

/s/ Kiva A. Allgood
Kiva A. Allgood

/s/ Jeffrey D. Buchanan
Jeffrey D. Buchanan

/s/ Keith B. Geeslin
Keith B. Geeslin

/s/ Susan Hardman
Susan Hardman

/s/ James L. Whims
James L. Whims

Senior Vice President and Chief Financial Officer 
(Principal Financial Officer)

Corporate Vice President and Chief Accounting 
Officer (Principal Accounting Officer)

Chairman of the Board

Director

Director

Director

Director

Director

Date

August 20, 2021

August 20, 2021

August 20, 2021

August 20, 2021

August 20, 2021

August 20, 2021

August 20, 2021

August 20, 2021

August 20, 2021

54

INDEX TO FINANCIAL STATEMENTS

SYNAPTICS INCORPORATED AND SUBSIDIARIES

Report of Independent Registered Public Accounting Firm .................................................................................................. F-2

Consolidated Balance Sheets.................................................................................................................................................. F-5

Consolidated Statements of Operations.................................................................................................................................. F-6

Consolidated Statements of Comprehensive Income/(Loss).................................................................................................. F-7

Consolidated Statements of Stockholders' Equity.................................................................................................................. F-8

Consolidated Statements of Cash Flows ................................................................................................................................ F-9

Notes to Consolidated Financial Statements .......................................................................................................................... F-10

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Synaptics Incorporated:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Synaptics Incorporated and subsidiaries (the Company) as 
of  June 26, 2021  and  June  27,  2020,  the  related  consolidated  statements  of  operations,  comprehensive  income/(loss), 
stockholders’ equity, and cash flows for each of the fiscal years in the three fiscal year period ended June 26, 2021, and the 
related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over 
financial  reporting  as  of  June 26, 2021,  based  on  criteria  established  in  Internal  Control  –  Integrated  Framework  (2013) 
issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In  our  opinion,  the  consolidated  financial  statements  referred  to  above  present  fairly,  in  all  material  respects,  the  financial 
position of the Company as of June 26, 2021 and June 27, 2020, and the results of its operations and its cash flows for each of 
the fiscal years in the three fiscal year period ended June 26, 2021, in conformity with U.S. generally accepted accounting 
principles.  Also  in  our  opinion,  the  Company  maintained,  in  all  material  respects,  effective  internal  control  over  financial 
reporting as of June 26, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the 
Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The  Company’s  management  is  responsible  for  these  consolidated  financial  statements,  for  maintaining  effective  internal 
control  over  financial  reporting,  and  for  its  assessment  of  the  effectiveness  of  internal  control  over  financial  reporting, 
included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to 
express  an  opinion  on  the  Company’s  consolidated  financial  statements  and  an  opinion  on  the  Company’s  internal  control 
over  financial  reporting  based  on  our  audits.  We  are  a  public  accounting  firm  registered  with  the  Public  Company 
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in 
accordance  with  the  U.S.  federal  securities  laws  and  the  applicable  rules  and  regulations  of  the  Securities  and  Exchange 
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform 
the  audits  to  obtain  reasonable  assurance  about  whether  the  consolidated  financial  statements  are  free  of  material 
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in 
all material respects.

Our  audits  of  the  consolidated  financial  statements  included  performing  procedures  to  assess  the  risks  of  material 
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond 
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the 
consolidated  financial  statements.  Our  audits  also  included  evaluating  the  accounting  principles  used  and  significant 
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our 
audit  of  internal  control  over  financial  reporting  included  obtaining  an  understanding  of  internal  control  over  financial 
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness 
of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered 
necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A  company’s  internal  control  over  financial  reporting  is  a  process  designed  to  provide  reasonable  assurance  regarding  the 
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally 
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures 
that  (1)  pertain  to  the  maintenance  of  records  that,  in  reasonable  detail,  accurately  and  fairly  reflect  the  transactions  and 
dispositions  of  the  assets  of  the  company;  (2)  provide  reasonable  assurance  that  transactions  are  recorded  as  necessary  to 
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and 
expenditures  of  the  company  are  being  made  only  in  accordance  with  authorizations  of  management  and  directors  of  the 
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or 
disposition of the company’s assets that could have a material effect on the financial statements.

F-2

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate 
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial 
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or 
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, 
or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated 
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate 
opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of inventories and losses on inventory purchase obligations

As discussed in Note 1 to the consolidated financial statements, the Company held $82.0 million of inventories as of 
June 26, 2021, which are stated at the lower of cost or net realizable value. The Company records a write-down for 
excess,  obsolete,  or  unmarketable 
future  demand  and  market 
conditions.  Additionally, a liability and a charge are recorded to cost of sales for estimated losses on inventory the 
Company is obligated to purchase from contract manufacturers when a customer delays its delivery schedule, cancels 
its order, or for other factors.

inventories  based  on 

forecasts  of 

We identified the valuation of inventories associated with excess, obsolete, or unmarketable inventories and losses on 
inventory purchase obligations as a critical audit matter.  A higher degree of auditor judgment was required to evaluate 
the  Company’s  estimate  of  net  realizable  value  for  these  inventories  and  losses  on  inventory  purchase  obligations. 
Specifically,  there  is  a  high  degree  of  subjectivity  in  evaluating  the  effect  of  any  unexpected  or  sudden  declines  in 
market demand that may result from changes to or cancellations of customer orders, rapid product improvements, or 
technological advances due to the nature of the evidence available related to these factors.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design 
and  tested  the  operating  effectiveness  of  certain  internal  controls  related  to  the  Company’s  process  to  develop  the 
estimated  net  realizable  value  of  inventory  and  recognition  of  losses  related  to  outstanding  inventory  purchase 
obligations, including controls related to the evaluation of the effect of any unexpected or sudden declines in market 
demand. For a selection of inventory items, we assessed the Company’s assumptions by comparing them to historical 
activity  and  demand  forecasts.  We  also  considered  customer  communications,  as  well  as  end  user  and  third-party 
publications.  For  a  selection  of  inventory  items,  we  recalculated  the  required  write-downs  and  losses  and  compared 
this to the recorded amounts. We confirmed with the Company’s significant vendors regarding outstanding purchase 
obligations of the Company. Additionally, we tested a sample of returns which resulted from quality related issues of 
the Company's products during the year and subsequent to period-end to evaluate if additional write-downs or losses 
were warranted.

Evaluation of certain intangible assets acquired through business combinations

As discussed in Note 4 to the consolidated financial statements, during the year ended June 26, 2021, the Company 
consummated  two  business  combinations  for  total  consideration  of  $670.6  million.  In  connection  with  these 
acquisitions,  the  Company  recorded  various  intangible  assets,  which  included  developed  technology,  customer 
relationships,  and  In-Process  Research  &  Development  (“IPR&D”)  with  an  acquisition-date  fair  value  of  $175.0 
million, $72.0 million, and $51.0 million, respectively.

We identified the evaluation of the fair value allocated to acquired developed technology, customer relationships and 
IPR&D  intangible  assets  as  a  critical  audit  matter.   We  performed  sensitivity  analyses  to  determine  the  significant 
assumptions  used  to  value  the  acquired  intangible  assets,  individually  and  in  the  aggregate.  The  fair  value  of  these 
acquired intangible assets were sensitive to possible changes to the following key assumptions, requiring a high degree 
of auditor judgment and the use of valuation professionals with specialized skills and knowledge:

Developed technology:
● Forecasted revenue growth rates
● Technology migration

F-3

Customer relationships:
● Estimated customer ramp up periods

IPR&D:
● Forecasted revenue growth rates
● Technology migration

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design 
and  tested  the  operating  effectiveness  of  certain  internal  controls  over  the  Company’s  acquisition-date  valuation 
processes,  including  controls  related  to  the  development  of  the  key  assumptions,  as  listed  above.  We  evaluated  the 
reasonableness  of  the  Company’s  forecasted  revenue  growth  rates,  technology  migration,  and  estimated  customer 
ramp  up  periods  by  comparing  them  to  historical  actual  results  of  the  acquired  entities  and  certain  peer  and  market 
participant data. We involved valuation professionals with specialized skills and knowledge, who assisted in:

● evaluating certain peer group and market participant data used in the assessment of forecasted revenue growth 
rates by assessing the appropriateness of the guideline comparable companies identified by management’s 
specialist and recalculating certain peer group and market participant data

● assessing the reasonableness of technology migration based on the nature of the technology acquired.

/s/ KPMG LLP

We have served as the Company’s auditor since 2003.

Santa Clara, California
August 20, 2021

F-4

SYNAPTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except par value and share amounts)

Current Assets:

ASSETS

Cash and cash equivalents ..........................................................................................   $
Accounts receivable, net of allowances of  $5.8 at June 2021 and 2020 ...................  
Inventories ..................................................................................................................  
Prepaid expenses and other current assets..................................................................  
Total current assets ...............................................................................................  
Property and equipment, net ............................................................................................  
Goodwill ..........................................................................................................................  
Acquired intangibles, net .................................................................................................  
Non-current other assets ..................................................................................................  

  $

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable .......................................................................................................   $
Accrued compensation ...............................................................................................  
Income taxes payable .................................................................................................  
Other accrued liabilities..............................................................................................  
Convertible notes, net.................................................................................................  
Total current liabilities ..........................................................................................  

Long-term debt.................................................................................................................  
Convertible notes, net ......................................................................................................  
Other long-term liabilities................................................................................................  
Total liabilities ......................................................................................................  

June
2021

June
2020

836.3    $
228.3   
82.0   
33.1   
1,179.7   
91.2   
570.0   
301.5   
84.4   
2,226.8    $

97.6    $
76.4     
29.4     
96.2     
487.1     
786.7     

394.4     
—     
78.5     
1,259.6     

763.4 
195.3 
102.0 
16.9 
1,077.6 
84.3 
360.8 
93.4 
77.7 
1,693.8 

60.6 
59.5 
33.0 
91.0 
— 
244.1 

100.0 
486.6 
44.0 
874.7 

Commitments and contingencies

Stockholders' Equity:
Preferred stock:

$0.001 par value; 10,000,000 shares authorized; no shares issued and
   outstanding.........................................................................................................  

—   

— 

Common stock:

$0.001 par value; 120,000,000 shares authorized, 66,963,006 and 65,871,648
   shares issued, and 35,331,903 and 34,122,453 shares outstanding,
   at June 2021 and 2020, respectively ..................................................................  
Additional paid-in capital ...........................................................................................  
Treasury stock: 31,631,103 and 31,749,195 common shares at June 2021 and
   2020, respectively, at cost .......................................................................................  
Retained earnings .......................................................................................................  
Total stockholders' equity .....................................................................................  

See accompanying notes to consolidated financial statements.

  $

0.1   
1,391.5   

(1,205.4)  
781.0   
967.2   
2,226.8    $

0.1 
1,340.2 

(1,222.6)
701.4 
819.1 
1,693.8  

F-5

 
 
 
 
 
 
 
 
 
 
 
 
    
 
  
 
 
    
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
 
  
 
 
    
 
  
 
 
    
 
  
 
 
 
 
 
 
 
 
      
  
 
 
 
 
 
 
 
      
  
 
 
      
  
 
 
 
      
  
 
 
    
 
  
 
 
    
 
  
 
 
 
 
    
 
  
 
 
 
 
 
 
 
 
 
 
 
SYNAPTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)

Net revenue................................................................................................   $
Cost of revenue..........................................................................................    
Gross margin ..................................................................................    

Operating expenses:

Research and development...................................................................    
Selling, general, and administrative.....................................................    
Acquired intangibles amortization .......................................................    
Restructuring costs...............................................................................    
Gain on sale of audio technology assets ..............................................    
Total operating expenses ................................................................    
Operating income/(loss) .................................................................    
Interest and other income ..........................................................................    
Interest expense .........................................................................................    
Loss on redemption of convertible notes...................................................    
Gain on sale of assets ................................................................................    
Impairment recovery on investments, net .................................................    
Income/(loss) before provision for income taxes and equity investment 
loss.............................................................................................................
Provision for income taxes ........................................................................    
Equity investment loss...............................................................................    
Net income/(loss)............................................................................   $

2021

1,339.6    $
728.4     
611.2     

Fiscal Year
2020

1,333.9    $
790.8     
543.1     

2019

1,472.2 
975.1 
497.1 

313.4     
144.9     
32.7     
7.4     
(34.2)    
464.2     
147.0     
2.9     
(29.5)    
(0.3)    
—     
—     

120.1     
31.4     
(9.1)    
79.6    $

302.5     
127.0     
11.7     
33.0     
—     
474.2     
68.9     
7.9     
(22.5)    
—     
105.1     
—     

159.4     
38.6     
(2.0)    
118.8    $

342.7 
131.3 
11.7 
17.7 
— 
503.4 
(6.3)
3.9 
(21.2)
— 
— 
2.8 

(20.8)
0.3 
(1.8)
(22.9)

Net income/(loss) per share:

Basic.....................................................................................................   $
Diluted..................................................................................................   $

2.29    $
2.08    $

3.54    $
3.41    $

(0.66)
(0.66)

Shares used in computing net income/(loss) per share:

Basic.....................................................................................................    
Diluted..................................................................................................    

34.8     
38.3     

33.6     
34.8     

34.6 
34.6  

See accompanying notes to consolidated financial statements.

F-6

 
 
 
 
 
   
   
 
     
       
       
 
 
 
 
     
       
       
 
     
       
       
 
 
     
       
       
 
     
       
       
 
SYNAPTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(in millions)

Net income/(loss).......................................................................................   $
Other comprehensive loss:

Change in unrealized net loss on investments .....................................    
Comprehensive income/(loss) ...................................................................   $

2021

Fiscal Year
2020

2019

79.6    $

118.8    $

(22.9)

—     
79.6    $

—     
118.8    $

(1.5)
(24.4)

See accompanying notes to consolidated financial statements.

F-7

 
 
 
 
 
   
   
 
   
      
      
  
SYNAPTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions, except share amounts)

Common Stock
Shares

   Amount    Capital

    Accumulated     
  Additional     
Other
   Paid-in     Treasury    Comprehensive   Retained    Stockholders' 
Income

    Stock

Equity

Total

Balance at June 2018......................................  62,889,679  $

Net loss .....................................................  
Other comprehensive income ...................  
Issuance of common stock for share-
   based award compensation plans...........   1,394,269    —   
—    —   
Payroll taxes for deferred stock units .......  
—    —   
Purchases of treasury stock.......................  
—    —   
Share-based compensation........................  

—    —   
—    —   

0.1  $ 1,195.2   $(1,073.9) $
—    
—    
—    
—    

—    
21.3    
—    
(9.4)  
(118.5)  
—    
—    
59.0    
0.1    1,266.1     (1,192.4)  

Balance at June 2019, as reported ..................  64,283,948   

Cumulative effect of changes in 
accounting principles for leases................  

Balance at June 2019, as adjusted ..................  64,283,948   

—    —   

—    
—    
0.1    1,266.1     (1,192.4)  
—    
—    

Net income................................................  
Issuance of common stock for share-
   based award compensation plans...........   1,587,700    —   
—    —   
Payroll taxes for deferred stock units .......  
—    —   
Purchases of treasury stock.......................  
—    —   
Share-based compensation........................  

—    —   

Balance at June 2020......................................  65,871,648   

—    —   

Net income................................................  
Issuance of common stock for share-
   based award compensation plans...........   1,091,358    —   
Treasury stock issued for redemption of 
convertible notes .......................................  
Payroll taxes for deferred stock units .......  
Share-based compensation........................  

—    —   
—    —   
—    —   

Balance at June 2021......................................  66,963,006  $

—    
34.5    
—    
(9.7)  
(30.2)  
—    
—    
49.3    
0.1    1,340.2     (1,222.6)  
—    
—    

   Earnings    
1.5   $ 606.4   $
(22.9)  
—    
(1.5)   —    

—     —    
—     —    
—     —    
—     —    
—     583.5    

(0.9)  
—    
—     582.6    
—     118.8    

—     —    
—     —    
—     —    
—     —    
—     701.4    
79.6    
—    

729.3 
(22.9)
(1.5)

21.3 
(9.4)
(118.5)
59.0 
657.3 

(0.9)
656.4 
118.8 

34.5 
(9.7)
(30.2)
49.3 
819.1 
79.6 

27.8    

—    

—     —    

27.8 

(17.5)  
(28.3)  
69.3    

17.2    
—    
—    
0.1  $ 1,391.5   $(1,205.4) $

—     —    
—     —    
—     —    
—   $ 781.0   $

(0.3)
(28.3)
69.3 
967.2  

See accompanying notes to consolidated financial statements.

F-8

 
  
 
   
 
   
 
    
 
 
    
 
 
 
  
 
   
 
 
   
    
 
   
 
 
 
 
 
   
 
SYNAPTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

Cash flows from operating activities
Net income/(loss)..............................................................................................................................  $
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:

Share-based compensation costs ............................................................................................... 
Depreciation and amortization .................................................................................................. 
Acquired intangibles amortization ............................................................................................ 

Gain on sale of audio technology assets.................................................................................... 
Gain on sale of assets ................................................................................................................ 
Gain on sale of property and equipment ................................................................................... 
Loss on redemption of convertible notes .................................................................................. 
Deferred taxes ........................................................................................................................... 
Amortization of convertible debt discount and issuance costs ................................................. 
Amortization of debt issuance costs.......................................................................................... 

Amortization of cost of development services.......................................................................... 
Impairment recovery on investments, net ................................................................................. 
Acquired in-process research and development........................................................................ 
Arbitration settlement................................................................................................................ 
Equity investment loss .............................................................................................................. 
Provision for bad debt reserves ................................................................................................. 
Foreign currency remeasurement (gain)/loss ............................................................................ 
Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable, net .................................................................................................... 
Inventories.......................................................................................................................... 
Prepaid expenses and other current assets ......................................................................... 
Other assets ........................................................................................................................ 
Accounts payable ............................................................................................................... 
Accrued compensation....................................................................................................... 
Acquisition related liabilities ............................................................................................. 
Income taxes payable ......................................................................................................... 
Other accrued liabilities ..................................................................................................... 
Net cash provided by operating activities......................................................................................... 
Cash flows from investing activities
Proceeds from sale of assets ............................................................................................................. 
Purchase of in-process research and development ........................................................................... 
Acquisition of businesses, net of cash and cash equivalents acquired ............................................. 
Proceeds from sale of audio technology assets ................................................................................ 
Proceeds from sales of investments.................................................................................................. 
Purchases of property and equipment............................................................................................... 
Cost method investment ................................................................................................................... 
Net cash provided by/(used in) investing activities.......................................................................... 
Cash flows from financing activities
Proceeds from issuance of debt ........................................................................................................ 
Proceeds from borrowings under line-of-credit................................................................................ 
Payment on line of credit borrowings............................................................................................... 
Purchases of treasury stock............................................................................................................... 
Proceeds from issuance of shares ..................................................................................................... 
Payment of debt issuance costs ........................................................................................................ 
Payment for redemption of convertible notes................................................................................... 
Payroll taxes for deferred stock and market stock units................................................................... 
Net cash provided by/(used in) financing activities ......................................................................... 
Effect of exchange rate changes on cash and cash equivalents........................................................ 
Net increase in cash and cash equivalents ........................................................................................ 
Cash and cash equivalents at beginning of year ............................................................................... 
Cash and cash equivalents at end of year .........................................................................................  $
Supplemental disclosures of cash flow information
Cash paid for interest........................................................................................................................  $

Cash paid for taxes ...........................................................................................................................  $

Cash refund on taxes.........................................................................................................................  $

Non-cash investing and financing activities:
Property and equipment received but unpaid ...................................................................................  $

2021

Fiscal Year
2020

2019

79.6    $

118.8    $

66.1   
21.6   
110.1   

(34.2 )  
—   
—    
0.3   
(5.2 )  
19.2   
0.6   

9.2   
—   
—   
—   
9.1   
—   
(2.8 )  

(25.9 )  
53.1   
(9.4 )  
—   
32.2   
14.9   
—   
(2.1 )  
(17.2 )  
319.2   

—   
—   
(626.5 )  
34.2   
95.8   
(21.1 )  
(5.0 )  
(522.6 )  

400.0   
—   
(100.0 )  
—   
27.8   
(6.1 )  
(19.4 )  
(28.2 )  
274.1   
2.2   
72.9   
763.4   
836.3    $

9.6    $

39.7    $

0.3    $

49.3   
26.7   
51.4   
—   
(105.1 )  
(1.2 )  
—   
2.7   
18.3   
0.6   
—   
—   
2.4   
—   
2.0   
3.7   
0.4   

31.0   
43.0   
(2.9)  
3.9   
(36.2 )  
29.1   
—   
13.8   
(29.9 )  
221.8   

138.7   
(2.5 )  
—   
—   
—   
(16.3 )  
—   
119.9   

—   
100.0   
—   
(30.2 )  
34.5   
(0.7 )  
—   
(9.7 )  
93.9   
—    
435.6   
327.8   
763.4    $

3.7    $

18.9    $

1.3    $

0.8    $

1.2    $

(22.9 )

59.0 
35.6 
74.4 
— 
— 
— 
— 
(15.2 )
17.6 
0.5 
— 
(2.8 )
— 
(1.9 )
1.8 
— 
0.1 

64.3 
(27.5 )
3.6 
3.9 
(55.8 )
4.9 
(6.8 )
0.9 
20.5 
154.2 

— 
—  
— 
— 
2.8 
(23.7 )
— 
(20.9 )

— 
— 
— 
(118.5 )
21.3 
— 
— 
(9.4 )
(106.6 )
0.1 
26.8 
301.0 
327.8 

3.6 

16.4 

6.4 

3.8  

See accompanying notes to consolidated financial statement

F-9

 
 
 
 
 
   
   
 
 
 
    
 
    
 
  
 
 
    
 
    
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
    
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
 
    
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
 
    
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
 
    
 
  
 
 
    
 
    
 
  
SYNAPTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Organization and Basis of Presentation

We are a leading worldwide developer and supplier of custom-designed semiconductor solutions that is changing the 
way humans engage with connected devices and data, engineering exceptional experiences throughout the home, at work, in 
the  car  and  on  the  go.    We  currently  generate  revenue  from  the  markets  for  Internet  of  Things,  or  IoT,  products,  which 
include  smart  devices  with  voice,  speech,  video,  wireless  connectivity,  smartphones,  augmented  reality  and  virtual  reality 
devices, tablets, personal computer, or PC, products, and other select electronic devices, including devices in automobiles.  
We  deliver  semiconductor  solutions  including  connectivity  products,  audio  input  and  output  System-On-Chips,  or  SoCs, 
high-definition video and vision SoCs, touch controllers, display drivers, fingerprint sensors, and touchpads, which comprise 
our semiconductor chip, firmware, and software as a complete customer solution.

The consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles, 
or  U.S.  GAAP,  and  include  our  financial  statements  and  those  of  our  wholly  owned  subsidiaries.    All  significant 
intercompany balances and transactions have been eliminated upon consolidation.

Our  fiscal  year  is  the  52-  or  53-week  period  ending  on  the  last  Saturday  in  June.    The  fiscal  years  presented  in  this 

report were 52-week periods ended June 26, 2021, June 27, 2020 and June 29, 2019. 

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and 
judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets 
and  liabilities.  On  an  ongoing  basis,  we  evaluate  our  estimates,  including  those  related  to  revenue,  allowance  for  doubtful 
accounts,  cost  of  revenue,  inventories,  loss  on  purchase  commitments,  product  warranty,  accrued  liabilities,  share-based 
compensation  costs,  provision  for  income  taxes,  deferred  income  tax  asset  valuation  allowances,  uncertain  tax  positions, 
goodwill, intangible assets, investments, and loss contingencies.  We base our estimates on historical experience, applicable 
laws and regulations, and various other assumptions that we believe to be reasonable under the circumstances, including our 
expectations regarding the potential impacts on our business of the COVID-19 pandemic,  the results of which form the basis 
for  making  judgments  about  the  carrying  value  of  assets  and  liabilities  that  are  not  readily  apparent  from  other  sources.  
Actual results may differ from these estimates under different assumptions or conditions.

Cash Equivalents and Investments

Cash equivalents consist of highly liquid investments with original maturities of three months or less. 

Our cash equivalents as of the end of fiscal 2021 are bank deposits and as of the end of fiscal 2020 were money market 

accounts with a fair value of $509.1 million and $521.1 million, respectively.  

Fair Value

We measure certain financial assets and liabilities at fair value.  When we measure fair value on either a recurring or 

nonrecurring basis, inputs used in valuation techniques are assigned a hierarchical level as follows:

•

•

•

Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

Level 2 inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices 
for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets 
or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation 
or other means.

Level 3  inputs  are  unobservable  inputs  reflecting  our  assumptions,  which  are  incorporated  into  valuation 
techniques  and  models  used  to  determine  fair  value.    The  assumptions  are  consistent  with  market  participant 
assumptions that are reasonably available.

F-10

Our financial assets measured at fair value are bank deposits and money market accounts, are included on a recurring 
basis, and are level 1 within the fair value hierarchy.  As of the end of fiscal 2021 our bank deposit balances were $509.1 
million and at the end of fiscal 2020 our money market balances were $521.1 million. 

There were no transfers in or out of our Level 1, 2 or 3 assets during fiscal 2021 or 2020.

The fair values of our accounts receivable and accounts payable approximate their carrying values because of the short-
term nature of those instruments.  Intangible assets, property and equipment, and goodwill are measured at fair value on a 
non-recurring basis if impairment is indicated.  The interest rate on our bank debt is variable, which is subject to change from 
time to time to reflect a market interest rate; accordingly, the carrying value of our bank debt approximates fair value.

The  fair  value  of  our  $400.0  million  principal  amount  of  4.0%  senior  notes  due  2029  is  measured  at  fair  value  for 
disclosure purposes. The fair value of the senior notes as of June 26, 2021 was approximately $401.5 million, based on the 
last trading price of the senior notes for the period. 

The fair value of our $505.6 million principal amount of 0.50% convertible notes due 2022 is measured at fair value for 
disclosure purposes. The fair value of the convertible notes as of June 26, 2021 was approximately $1,013.3 million, based on 
the last trading price of the convertible notes for the period. 

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, 
investments, and accounts receivable.  Our investment policy, which is predicated on capital preservation and liquidity, limits 
investments  to  U.S.  government  treasuries  and  agency  issues,  taxable  securities,  and  municipal  issued  securities  with  a 
minimum rating of A1 (Moody’s) or P1 (Standard and Poor’s) or their equivalent.  

We sell our products to contract manufacturers that provide manufacturing services for OEMs, to some OEMs directly, 
and to distributors.  We extend credit based on an evaluation of a customer’s financial condition, and we generally do not 
require collateral.

The following customers accounted for more than 10% of our accounts receivable balance as of the end of fiscal 2021 

and 2020:

Customer A .......................................................................... 
Customer B........................................................................... 
Customer C........................................................................... 

2021
15%    
12%    

*

2020
*

18%  
21%  

*

Less than 10%

Other Concentrations

Our products include certain components that are currently single sourced.  We believe other vendors would be able to 
provide  similar  components,  however,  the  qualification  of  such  vendors  may  require  additional  lead  time.    In  order  to 
mitigate any potential adverse impact from a supply disruption, we strive to maintain an adequate supply of critical single-
sourced components.

Revenue Recognition 

Our  revenue  is  primarily  generated  from  the  sale  of  ASIC  chips,  either  directly  to  a  customer  or  to  a  distributor. 
Revenue  is  recognized  when  control  of  the  promised  goods  or  services  is  transferred  to  our  customers,  in  an  amount  that 
reflects  the  consideration  we  expect  to  receive  in  exchange  for  those  goods  or  services.  All  of  our  revenue,  except  an 
inconsequential  amount,  is  recognized  at  a  point  in  time,  either  on  shipment  or  delivery  of  the  product,  depending  on 
customer  terms  and  conditions.  We  generally  warrant  our  products  for  a  period  of  12  months  from  the  date  of  sale  and 
estimate  probable  product  warranty  costs  at  the  time  we  recognize  revenue  as  the  warranty  is  considered  an  assurance 
warranty  and  not  a  performance  obligation.    Non-product  revenue  is  recognized  over  the  same  period  of  time  such 
performance obligations are satisfied. We then select an appropriate method for measuring satisfaction of the performance 
obligations. 

F-11

 
 
   
 
 
   
Revenue from sales to distributors is recognized upon shipment of the product to the distributors (sell-in basis). Master 
sales  agreements  are  in  place  with  certain  customers,  and  these  agreements  typically  contain  terms  and  conditions  with 
respect  to  payment,  delivery,  warranty  and  supply.  In  the  absence  of  a  master  sales  agreement,  we  consider  a  customer's 
purchase order or our standard terms and conditions to be the contract with the customer.

Our  pricing  terms  are  negotiated  independently,  on  a  stand-alone  basis.  In  determining  the  transaction  price,  we 
evaluate whether the price is subject to refund or adjustment to determine the net consideration which we expect to receive 
for the sale of such products. In limited situations, we make sales to certain customers under arrangements where we grant 
stock rotation rights, price protection and price allowances; variable consideration associated with these rights is expected to 
be inconsequential. These adjustments and incentives are accounted for as variable consideration, classified as other current 
liabilities under the revenue standard and are shown as customer obligations in other accrued liabilities on our consolidated 
balance sheets. We estimate the amount of variable consideration for such arrangements based on the expected value to be 
provided to customers, and we do not believe that there will be significant changes to our estimates of variable consideration.  
When  incentives,  stock  rotation  rights,  price  protection,  volume  discounts,  or  price  allowances  are  applicable,  they  are 
estimated and recorded in the period the related revenue is recognized. Stock rotation reserves are based on historical return 
rates  applied  to  distributor  inventory  subject  to  stock  rotation  rights  and  recorded  as  a  reduction  to  revenue  with  a 
corresponding reduction to cost of goods sold for the estimated cost of inventory that is expected to be returned and recorded 
as  prepaid  expenses  and  other  current  assets.    In  limited  circumstances,  we  enter  into  volume-based  tiered  pricing 
arrangements and we estimate total unit volumes under such arrangement to determine the expected transaction price for the 
units expected to be transferred. Such arrangements are accounted for as contract liabilities within other accrued liabilities. 
Sales returns liabilities are recorded as refund liabilities within other accrued liabilities. 

Our  accounts  receivable  balance  is  from  contracts  with  customers  and  represents  our  unconditional  right  to  receive 
consideration from customers. Payments are generally due within three months of completion of the performance obligation 
and  subsequent  invoicing  and,  therefore,  do  not  include  significant  financing  components.  In  fiscal  2021,  there  was  no 
material bad debt charge recorded on accounts receivable. There was $1.9 million of contract assets (i.e., unbilled accounts 
receivable, deferred commissions) recorded on the consolidated balance sheets as of June 26, 2021, and $0.4 million as of 
June  27,  2020.  Contract  assets  are  presented  as  part  of  prepaid  expenses  and  other  current  assets.  Contract  liabilities  and 
refund liabilities were $7.0 million and $36.1 million, respectively, as of June 26, 2021, and $3.2 million and $25.8 million, 
respectively, as of June 27, 2020. Both contract liabilities and refund liabilities are presented as part of customer obligations 
in other accrued liabilities on our consolidated balance sheets. During fiscal 2021 and 2020, we recognized $1.8 million and 
$2.0 million, respectively, in revenue related to contract liabilities outstanding as of the beginning of each such fiscal year.

We invoice customers for each delivery upon shipment and recognize revenue in accordance with delivery terms. As of 
June 26, 2021, we did not have any remaining unsatisfied performance obligations with an original duration greater than one 
year.    Accordingly,  under  the  optional  exception  provided  by  the  ASC,  we  do  not  disclose  revenues  allocated  to  future 
performance  obligations  of  partially  completed  contracts.  We  have  elected  to  account  for  shipping  and  handling  costs  as 
fulfillment costs before the customer obtains control of the goods. We continue to classify shipping and handling costs as a 
cost of revenue.  We have elected to continue to account for collection of all taxes on a net basis.   

We incur commission expense that is incremental to obtaining contracts with customers. Sales commissions (which are 
recorded  in  the  selling,  general  and  administrative  expense  line  item  in  the  consolidated  statements  of  operations)  are 
expensed when the product is shipped because such commissions are incurred after the product has been shipped.

Revenue from contracts with customers disaggregated by geographic area based on customer location and groups of 

similar products is presented in Note 12 Segment, Customers, and Geographical Information.

Advertising Costs

Advertising costs, if any, are expensed when incurred.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of customers to meet 
their financial obligations.  On an ongoing basis, we evaluate the collectability of accounts receivable based on a combination 
of factors.  In circumstances in which we are aware of a specific customer’s potential inability to meet its financial obligation, 
we  record  a  specific  reserve  of  the  bad  debt  against  amounts  due.  In  addition,  we  make  judgments  and  estimates  on  the 
collectability  of  accounts  receivable  based  on  our  historical  bad  debt  experience,  customers’  creditworthiness,  current 

F-12

economic trends, recent changes in customers’ payment trends, and deterioration in customers’ operating results or financial 
position.  If circumstances change adversely, additional bad debt allowances may be required. For the fiscal year ended June 
26, 2021 there were no credit losses on our accounts receivable and for the fiscal year ended June 27, 2020 credit losses on 
our accounts receivable were $3.7 million, and they were insignificant in the fiscal year ended June 29, 2019, and we believe 
that an adequate allowance for doubtful accounts has been provided.

Cost of Revenue

Our  cost  of  revenue  includes  the  cost  of  products  shipped  to  our  customers,  which  primarily  includes  the  cost  of 
products  built  to  our  specifications  by  our  contract  manufacturers,  the  cost  of  silicon  wafers  supplied  by  independent 
semiconductor wafer manufacturers, and the related assembly, package, and test costs of our products.  Also included in our 
cost of revenue are personnel and related costs, including share-based compensation for quality assurance and manufacturing 
support  personnel;  logistics  costs;  depreciation  of  equipment  supporting  manufacturing;  acquired  intangibles  amortization; 
fair value adjustments associated with acquired businesses; inventory write-downs and losses on purchase obligations; and 
warranty costs.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value as of the end of fiscal 2021 

and 2020, and consisted of the following (in millions):

Raw materials and work-in-progress ...................................   $
Finished goods .....................................................................    
  $

2021

2020

49.1   $
32.9    
82.0   $

53.6 
48.4 
102.0  

We record a write-down, if necessary, to reduce the carrying value of inventory to its net realizable value.  The effect 
of these write-downs is to establish a new cost basis in the related inventory, which we do not subsequently write-up.  We 
also record a liability and charge to cost of revenue for estimated losses on inventory we are obligated to purchase from our 
contract manufacturers when such losses become probable from customer delays, order cancellations, or other factors.  The 
following factors influence our estimates: changes to or cancellations of customer orders, unexpected or sudden decline in 
demand,  rapid  product  improvements,  technological  advances,  and  termination  or  changes  by  our  OEM  customers  of  any 
product offerings incorporating our product solutions.

Property and Equipment

We  state  property  and  equipment  at  cost  less  accumulated  depreciation  and  amortization.    We  compute  depreciation 
using the straight-line method over the estimated useful lives of the assets.  We amortize leasehold improvements over the 
shorter of the lease term or the useful life of the asset.

Other Assets

In  December  2020,  we  invested  $5.0  million  in  Eta  Compute  in  exchange  for  preferred  stock.    This  investment 
provides  us  with  a  strategic  relationship  that  enables  us  to  better  address  expanded  industry  opportunities  for  artificial 
intelligence applications.  The investment is accounted for under the cost method.  

In  April  2017,  we  paid  $18.4  million  for  a  14.4%  interest  in  OXi  Technology  Ltd.,  or  OXi.  In  April  2019,  our 
investment ownership was reduced to 13.8% as a result of new investment in OXi.  Our investment in OXi is included in 
non-current other assets on our consolidated balance sheets.  We determined the equity method of accounting applies to our 
investment as we have significant influence over OXi’s operating and financial policies.  We record our portion of OXi’s net 
income/(loss) on a one quarter lag due to the timing of the availability of OXi’s financial records.  In addition, we amortize 
intangible  assets  that  we  recorded  under  the  equity  method  of  accounting,  and  such  amortization  as  well  as  our  portion  of 
OXi’s net income/(loss) is included in equity investment loss on our consolidated statements of operations.  We did not have 
any material related party transactions with OXi.  As of June 26, 2021, we recorded a $7.7 million impairment charge on our 
investment in OXi, which is included in Equity investment loss in the consolidated statements of operations. 

F-13

 
 
  
 
 
Foreign Currency

The  U.S.  dollar  is  our  functional  and  reporting  currency.    We  remeasure  our  monetary  assets  and  liabilities  not 
denominated in our functional currency into U.S. dollar equivalents at the rate of exchange in effect on the balance sheet date.  
We measure and record non-monetary balance sheet accounts at the historical rate in effect at the date of transaction.  We 
remeasure foreign currency expenses at the weighted average exchange rate in the month that the transaction occurred.  These 
foreign currency transactions and remeasurement gains and losses, resulted in a net loss of $1.4 million and $1.1 million in 
fiscal  2021  and  2019,  respectively,  and  a  net  gain  of  $0.2  million  in  fiscal  2020.    Gains  and  losses  resulting  from  foreign 
currency  transactions  are  included  in  selling,  general,  and  administrative  expenses  in  the  consolidated  statements  of 
operations.  

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets 

acquired.  Changes in our goodwill balance for fiscal 2021 and 2020 were as follows (in millions):

Beginning balance................................................................  $
Acquisition activity..............................................................   
Goodwill allocated to sale of product line ...........................   
Ending balance.....................................................................  $

2021

2020

360.8   $
209.2    
—    
570.0   $

372.8 
— 
(12.0)
360.8  

We have allocated our goodwill to two reporting units.  We perform a qualitative assessment of goodwill in the fourth 
quarter  of  each  fiscal  year,  or  earlier  if  a  triggering  event  occurs.    In  assessing  the  qualitative  factors,  we  considered  the 
impact  of  key  factors  including  change  in  industry  and  competitive  environment,  potential  impacts  on  our  business  of  the 
COVID-19 pandemic, market capitalization, stock price, gross margin and cash flow from operating activities. During our 
qualitative  assessment  in  fiscal  2021,  we  determined  there  were  no  triggering  events  that  led  us  to  performing  a  step  1 
quantitative assessment.  No goodwill impairment was recognized for fiscal 2021, 2020, and 2019.

Impairment of Long-Lived Assets

We  evaluate  long-lived  assets,  such  as  property  and  equipment  and  intangible  assets  subject  to  amortization,  for 
impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.  
We  measure  recoverability  of  assets  to  be  held  and  used  by  a  comparison  of  the  carrying  amount  of  an  asset  to  estimated 
undiscounted  future  cash  flows  expected  to  be  generated  by  the  asset.    We  review  the  carrying  value  of  indefinite-lived 
intangible assets for impairment at least annually during the last quarter of our fiscal year, or more frequently if we believe 
indicators of impairment exist.  If the carrying amount of the asset exceeds its estimated undiscounted future cash flows, we 
recognize an impairment charge in an amount by which the carrying amount of the asset exceeds the fair value of the asset.  
Assets to be disposed of would be separately presented in the consolidated balance sheets and reported at the lower of the 
carrying amount or fair value less costs to sell and would no longer be depreciated.  The assets and liabilities of a disposed 
group  classified  as  held  for  sale  would  be  presented  separately  in  the  appropriate  asset  and  liability  sections  of  the 
consolidated balance sheets.  No impairment of long-lived assets was recognized for fiscal 2021, 2020, and 2019.

Leases

We determine if a contract is a lease or contains a lease at the inception of the contract and reassess that conclusion if 
the  contract  is  modified.  All  leases  are  assessed  for  classification  as  an  operating  lease  or  a  finance  lease.  Operating  lease 
right-of-use,  or  ROU,  assets  are  included  in  non-current  other  assets  on  our  consolidated  balance  sheet.  Operating  lease 
liabilities are separated into a current portion, included within other accrued liabilities on our consolidated balance sheet, and 
a  non-current  portion,  included  within  other  long-term  liabilities  on  our  consolidated  balance  sheet.  We  do  not  have  any 
finance lease ROU assets or liabilities. ROU assets represent our right to use an underlying asset for the lease term and lease 
liabilities represent our obligation to make lease payments arising from the lease. We do not obtain and control the right to 
use the identified asset until the lease commencement date.

F-14

 
 
  
 
Our lease liabilities are recognized at the applicable lease commencement date based on the present value of the lease 
payments required to be paid over the lease term. Because the interest rate implicit in the lease is not readily determinable, we 
generally  use  our  incremental  borrowing  rate  to  discount  the  lease  payments  to  present  value.  The  estimated  incremental 
borrowing rate is derived from information available at the lease commencement date. We factor in publicly available data 
for  instruments  with  similar  characteristics  when  calculating  our  incremental  borrowing  rates.  Our  ROU  assets  are  also 
recognized  at  the  applicable  lease  commencement  date.  The  ROU  asset  equals  the  carrying  amount  of  the  related  lease 
liability,  adjusted  for  any  lease  payments  made  prior  to  lease  commencement  and  lease  incentives  provided  by  the  lessor. 
Variable  lease  payments  are  expensed  as  incurred  and  do  not  factor  into  the  measurement  of  the  applicable  ROU  asset  or 
lease liability.

The term of our leases equals the non-cancellable period of the lease, including any rent-free periods provided by the 
lessor, and also include options to renew or extend the lease (including by not terminating the lease) that we are reasonably 
certain to exercise. We establish the term of each lease at lease commencement and reassess that term in subsequent periods 
if a triggering event occurs. Operating lease cost for lease payments is recognized on a straight-line basis over the lease term.

Our  lease  contracts  often  include  lease  and  non-lease  components.  For  our  leases,  we  have  elected  the  practical 
expedient  offered  by  the  standard  to  not  separate  lease  from  non-lease  components  and  account  for  them  as  a  single  lease 
component. 

We have elected, for all classes of underlying assets, not to recognize ROU assets and lease liabilities for leases with a 

term of twelve months or less. Lease cost for short-term leases is recognized on a straight-line basis over the lease term.

Other Accrued Liabilities and Other Long-Term Liabilities

As of the end of fiscal 2021 and 2020, other accrued liabilities consisted of the following (in millions):

Customer obligations ...........................................................   $
Inventory obligations ...........................................................    
Warranty ..............................................................................    
Other ....................................................................................    
  $

43.1   $
17.0    
5.4    
30.7    
96.2   $

29.0 
27.9 
3.9 
30.2 
91.0  

2021

2020

As of the end of fiscal 2021 and 2020, other long-term accrued liabilities consisted of the following (in millions):

Income taxes payable, long-term ....................................  $
Non-current deferred tax liability....................................   
Operating lease liabilities, long-term ..............................   
Other................................................................................   
  $

15.4 
27.1 
24.0 
12.0 
78.5 

 $

 $

16.4 
— 
14.6 
13.0 
44.0 

2021

2020

Segment Information

We operate in one segment:  the development, marketing, and sale of human experience semiconductor solutions for 
electronic devices and products.  The chief operating decision maker, or CODM, is our CEO, Our CODM evaluates financial 
performance and allocates resources using financial information reported on a company-wide basis.

Share-Based Compensation

We charge the estimated fair value less actual forfeitures to earnings on a straight-line basis over the vesting period of 
the entire underlying award, which is generally three to four years for our restricted stock units, or RSU, awards, three years 
for our market stock units, or MSU, awards, three years for our performance stock units, or PSU, awards, and up to one year 
for shares purchased under our 2019 employee stock purchase plan .

F-15

 
 
  
 
 
 
  
 
    
 
 
 
 
  
 
  
  
  
 
 
    
      
 
We  estimate  the  fair  value  of  market-based  MSUs  at  the  date  of  grant  using  a  Monte  Carlo  simulation  model  and 
amortize  those  fair  values  over  the  requisite  service  period,  which  is  generally  three  years.  The  Monte  Carlo  simulation 
model that we use to estimate the fair value of market-based MSUs at the date of grant incorporates into the valuation the 
possibility that the market condition may not be satisfied. Provided that the requisite service is rendered, the total fair value of 
the market-based MSUs at the date of grant must be recognized as compensation expense even if the market condition is not 
achieved.  However,  the  number  of  shares  that  ultimately  vest  can  vary  significantly  with  the  performance  of  the  specified 
market criteria.

We value PSUs using the aggregate intrinsic value on the date of grant and amortize the compensation expense over 

the three-year service period on a ratable basis, dependent upon the probability of meeting the performance measures.  

We recognize compensation expense for phantom stock units on a straight-line basis for each tranche of each award 
based on the average closing price of our common stock over the thirty calendar days ended prior to each balance sheet date.  
As our phantom stock is a cash-settled award, it is recorded as a liability and remeasured each reporting period.  

Income Taxes

We account for income taxes under the asset and liability method.  We recognize deferred tax assets and liabilities for 
the  future  tax  consequences  attributable  to  differences  between  the  financial  statement  carrying  amounts  of  existing  assets 
and liabilities and their respective tax bases, and operating loss and tax credit carryforwards.  We measure deferred tax assets 
and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences 
are expected to be recovered or settled.  We recognize the effect of a change in tax rates in income on deferred tax assets and 
liabilities  in  the  period  that  includes  the  enactment  date.    We  establish  valuation  allowances  when  necessary  to  reduce 
deferred tax assets to the amounts that are more likely than not to be realized.  

We  use  a  two-step  approach  to  recognizing  and  measuring  uncertain  tax  positions.    The  first  step  is  to  determine 
whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related 
appeals or litigation processes.  The second step is to measure the tax benefit as the largest amount that is more than 50% 
likely of being realized upon ultimate settlement with a taxing authority.  The calculation of tax liabilities involves significant 
judgment  in  estimating  the  impact  of  uncertainties  in  the  application  of  highly  complex  tax  laws.    Resolution  of  these 
uncertainties  in  a  manner  inconsistent  with  our  expectations  could  have  a  material  impact  on  our  consolidated  financial 
position, results of operations, and cash flows.  We believe we have adequately provided for reasonably foreseeable outcomes 
in connection with the resolution of income tax uncertainties.  However, our results have in the past, and could in the future, 
include favorable and unfavorable adjustments to our estimated tax liabilities in the period a determination of such estimated 
tax  liability  is  made  or  resolved,  upon  the  filing  of  an  amended  return,  upon  a  change  in  facts,  circumstances,  or 
interpretation, or upon the expiration of a statute of limitation.  Accordingly, our effective tax rate could fluctuate materially 
from period to period.

Research and Development

Research and development costs are expensed as incurred.

F-16

 
2. Net Income/(Loss) Per Share

The computation of basic and diluted net income/(loss) per share for fiscal 2021, 2020, and 2019 was as follows (in 

millions, except per share amounts):

2021

2020

2019

Numerator:

Net income/(loss)..........................................................  $

79.6   $

118.8   $

(22.9)

Denominator:

Shares, basic..................................................................   
Effect of dilutive share-based awards and convertible 
notes ..............................................................................   
Shares, diluted...............................................................   

Net income/(loss) per share:

Basic..............................................................................  $
Diluted ..........................................................................  $

34.8    

33.6    

34.6 

3.5    
38.3    

2.29   $
2.08   $

1.2    
34.8    

3.54   $
3.41   $

— 
34.6 

(0.66)
(0.66)

Diluted  net  income  per  share  does  not  include  the  effect  of  potential  common  shares  related  to  certain  share-based 

awards for fiscal 2021, 2020, and 2019 as follows (in millions):

Share-based awards ............................................................   

—     

0.7     

2.2  

2021

2020

2019

These share-based awards were not included in the computation of diluted net income per share because the proceeds 
received,  if  any,  from  such  share-based  awards  combined  with  the  average  unamortized  compensation  costs,  were  greater 
than the average market price of our common stock, and therefore, their effect would have been antidilutive.

Our  basic  net  income  per  share  amounts  for  each  period  presented  have  been  computed  using  the  weighted  average 
number of shares of common stock outstanding.  Our diluted net income per share amounts for each period presented include 
the  weighted  average  effect  of  potentially  dilutive  shares.    We  used  the  “treasury  stock”  method  to  determine  the  dilutive 
effect of our stock options, RSUs, MSUs, PSUs and our convertible notes.

3. Property and Equipment

Property and equipment as of the end of fiscal 2021 and 2020 consisted of the following (in millions):

Land ........................................................................................................... 
  $
Building and building improvements.........................................................  Up to 35 years    
Computer equipment.................................................................................. 
Manufacturing equipment.......................................................................... 
Furniture, fixtures, and leasehold improvements....................................... 
Capitalized software................................................................................... 

3 - 5 years
1 - 5 years
3 - 10 years
3 - 7 years

Life
—

Accumulated depreciation and amortization ............................................. 

Property and equipment, net.................................................................   

  $

2021

2020

13.3    $
52.7     
42.9     
57.9     
27.2     
28.2     
222.2     
(131.0)    
91.2    $

13.3 
52.7 
41.6 
51.9 
25.2 
30.8 
215.5 
(131.2)
84.3  

In  fiscal  2021  and  2020,  there  was  $19.8  million  and  $16.6  million,  respectively,  of  property  and  equipment  retired 

which was fully amortized.

F-17

 
 
   
   
 
   
     
     
  
   
     
     
  
   
     
     
  
 
 
   
 
 
 
 
 
 
   
 
   
   
   
   
 
 
 
   
 
   
4. Acquisitions, Divestiture and Investment

Acquisitions

DisplayLink

On  July  17,  2020,  we  entered  into  a  definitive  agreement  to  acquire  100%  of  equity  interest  in  DisplayLink 
Corporation, or DisplayLink, a leader in high-performance video compression technology, for $305 million in cash adjusted 
for (i) estimated cash and cash equivalents and short-term investments at the closing (ii) estimated indebtedness outstanding 
immediately  prior  to  the  closing,  (iii)  unpaid  portion  as  of  the  closing  of  certain  transaction  expenses  incurred  by 
DisplayLink, and (iv) the amount that the estimated working capital of DisplayLink exceeds or falls short, respectively, of a 
certain specified target working capital set forth in an Agreement and Plan of Merger, or the Merger Agreement, with $3.1 
million  of  the  purchase  price  held  in  escrow  accounts  for  adjustments  after  closing  and  to  secure  the  Seller  Parties’ 
indemnification  obligations  under  the  Merger  Agreement.  The  acquisition  closed  on  July  31,  2020,  or  the  DisplayLink 
Closing  Date,  whereupon  we  obtained  high-performance  video  compression  technology  which  will  further  enhance  our 
current IoT business.   

This  acquisition  has  been  accounted  for  using  the  purchase  method  of  accounting  in  accordance  with  the  business 
acquisition  guidance.  Under  the  purchase  accounting  method,  the  total  estimated  purchase  consideration  of  the  acquisition 
was  allocated  to  the  tangible  and  identifiable  intangible  assets  acquired  and  liabilities  assumed  based  on  their  relative  fair 
values.  The  excess  of  the  purchase  consideration  over  the  net  tangible  and  identifiable  intangible  assets  acquired  and 
liabilities has been recorded as goodwill. Our estimate of the fair values of the acquired intangible assets at June 26, 2021, 
was  based  on  established  and  accepted  valuation  techniques  performed  with  the  assistance  of  our  third-party  valuation 
specialists. 

The adjusted purchase price paid for DisplayLink was $444.0 million.

The following table summarizes the amounts recorded for the estimated fair values of the assets acquired and liabilities 

assumed as of the DisplayLink Closing Date (in millions):

Cash and cash equivalents............................................................  $
Short-term investments ................................................................   
Accounts receivable, net ..............................................................   
Inventory ......................................................................................   
Prepaid expenses and other current assets....................................   
Property and equipment ...............................................................   
Intangible assets ...........................................................................   
Right-of-use lease asset ................................................................   
Non-current other assets...............................................................   
Total identifiable assets acquired............................................   
Accounts payable .........................................................................   
Other accrued liabilities ...............................................................   
Short-term lease liabilities............................................................   
Long-term lease liabilities ............................................................   
Other long-term liabilities ............................................................   
Total liabilities ........................................................................   
Net identifiable assets acquired....................................................   
Goodwill.......................................................................................   

40.9 
94.0 
7.1 
33.1 
9.1 
6.8 
193.0 
20.0 
0.6 
404.6 
(5.2)
(9.1)
(1.7)
(18.2)
(32.8)
(67.0)
337.6 
106.4 
Net assets acquired..................................................................  $ 444.0 

During the fiscal year ended June 26, 2021, we recorded measurement period adjustments of $0.9 million to goodwill 

comprising of increases of $2.3 million in prepaid expenses and decreases of $0.8 million to other accrued liabilities and 
increases of $1.4 million in other long-term liabilities for a net increase of $1.7 million to the fair value of other acquired net 
tangible assets.

F-18

 
     
 
The following table summarizes the estimated fair value of the intangible assets as of the DisplayLink Closing Date (in 

millions): 

Estimated 
Weighted 
Average 
Useful 
Lives in 
Years

Estimated 
Fair
Value

Developed technology .........................................................    
Customer contracts and related relationships ......................    
In process research and development ..................................  
Trade names.........................................................................    
Licensed technology............................................................    
Estimated fair value of acquired intangibles..................    

   $

3.0
3.0
N/A     
4.0
2.5

   $

82.0 
54.0 
51.0 
3.0 
3.0 
193.0 

We  estimated  the  fair  value  of  the  identified  intangible  assets  using  a  discounted  cash  flow  model  for  each  of  the 
underlying identified intangible assets.  These fair value measurements were based on significant inputs not observable in the 
market  and  thus  represent  a  Level  3  measurement.    Key  assumptions  include  the  level  and  timing  of  expected  future  cash 
flows, conditions and demands specific to each intangible asset over its remaining useful life, and discount rates we believe 
to be consistent with the inherent risks associated with each type of asset, which range from 11.0% to 11.5%.  The fair value 
of these intangible assets is primarily affected by the projected revenue, gross margins, operating expenses, the technology 
migration curve, customer ramp up period and the anticipated timing of the projected income associated with each intangible 
asset  coupled  with  the  discount  rates  used  to  derive  their  estimated  present  values.    We  believe  the  level  and  timing  of 
expected future cash flows appropriately reflects market participant assumptions.

In-process  research  and  development  consists  of  a  next  generation  docking  and  video  interface  products  for  the  IoT 

market. We expect to complete the in-process research and development project in early fiscal 2023.

The value of goodwill reflects the anticipated synergies of the combined operations and workforce of DisplayLink as of 
the  DisplayLink  Closing  Date.  As  of  June  26,  2021,  none  of  the  goodwill  is  expected  to  be  deductible  for  income  tax 
purposes.  

Prior to the DisplayLink acquisition, we did not have an existing relationship or transactions with DisplayLink.  

The  consolidated  financial  statements  include  approximately  $110.0  million  of  revenue  from  DisplayLink  from  the 
DisplayLink  Closing  Date  through  June  26,  2021.  It  is  impracticable  to  determine  the  effect  on  net  income  attributable  to 
DisplayLink  as  we  integrated  a  substantial  portion  of  DisplayLink  into  our  ongoing  operations  during  the  first  quarter  of 
fiscal 2021.

F-19

 
 
   
 
 
    
      
 
    
    
    
 
 
    
      
 
The  following  unaudited  pro  forma  financial  information  (in  millions,  except  per  share  data)  presents  the  combined 
results of operations for us and DisplayLink as if the DisplayLink acquisition had occurred on June 30, 2019. The unaudited 
pro forma financial information has been prepared for comparative purposes only and does not purport to be indicative of the 
actual operating results that would have been recorded had the DisplayLink acquisition actually taken place on June 30, 2019 
and should not be taken as indicative of future consolidated operating results. Additionally, the unaudited pro forma financial 
results do not include any anticipated synergies or other expected benefits from the DisplayLink acquisition.

Revenue................................................................................   $
Net income ...........................................................................    
(1)

Includes results of Broadcom Wireless Connectivity Business

2021 (1)

1,346.9   $
72.1    

2020
1,449.9 
92.2  

Pro forma adjustments used to arrive at pro forma net income/(loss) included adjustments for historical amortization 
expense,  the  addition  of  intangible  amortization  expense  for  the  value  of  intangibles  under  the  purchase  price  allocation, 
transaction costs and restructuring costs.  The total pro forma adjustments for fiscal years 2021 and 2020 were a decrease to 
net income of $1.1 million and $33.8 million, respectively.

Broadcom Wireless Connectivity Business

On  July  2,  2020,  we  entered  into  definitive  agreements  with  Broadcom  to  acquire  certain  assets  and  assume  certain 
liabilities of, and obtain non-exclusive licenses relating to, Broadcom’s existing Wi-Fi, Bluetooth and GPS/GNSS products 
and business in the IoT market, or Broadcom Business Acquisition, for an aggregate consideration of $250 million in cash 
which closed on July 23, 2020, or the Broadcom Business Acquisition Closing Date.  We also entered into certain transition 
agreements  with  Broadcom  for  a  period  of  three  years.  We  acquired  these  assets  and  assumed  certain  liabilities  from 
Broadcom in order to obtain wireless connectivity technology which will enhance our current IoT business.  

The  acquisition  has  been  accounted  for  using  the  purchase  method  of  accounting  in  accordance  with  the  business 
acquisition  guidance.  Under  the  purchase  accounting  method,  the  total  estimated  purchase  consideration  of  the  acquisition 
was  allocated  to  the  tangible  and  identifiable  intangible  assets  acquired  and  liabilities  assumed  based  on  their  relative  fair 
values.  The  excess  of  the  purchase  consideration  over  the  net  tangible  and  identifiable  intangible  assets  acquired  and 
liabilities has been recorded as goodwill. Our estimate of the fair values of the acquired intangible assets at the Broadcom 
Business Acquisition Closing Date was based on established and accepted valuation techniques performed with the assistance 
of our third-party valuation specialists. 

The following table summarizes the adjusted purchase price paid for the Broadcom Business Acquisition (in millions):

Cash..............................................................................................  $ 250.1 
1.5 
Adjustments to consideration transferred, net..............................   
(25.0)
Roadmap products - estimated cost of development....................   
  $ 226.6 

F-20

 
 
  
 
 
 
     
 
We  entered  into  a  derivative  and  roadmap  product  agreement  and  an  asset  purchase  agreement  with  Broadcom.  The 
derivative and roadmap product agreement includes the purchase of derivative and roadmap product development services to 
be  performed  by  Broadcom.  We  estimated  the  value  of  the  development  services  to  be  approximately  $25.0  million, 
accounted for it separate from the business combination, and included $10.0 million in prepaid expenses and other current 
assets and $15.0 million ($5.8 million after amortization as of June 26, 2021) in non-current other assets in our consolidated 
balance sheets. The estimated value of the development services is amortizing over the period of time estimated to complete 
the  development  or  approximately  thirty  months.  The  amortization  of  the  estimated  cost  of  development  is  included  in 
research and development in our consolidated statements of comprehensive income. In addition, under the terms of the asset 
purchase  agreement  we  provided  replacement  equity  compensation  awards  to  the  transferred  employees  and  Broadcom 
agreed  to  make  cash  payments  to  transferred  employees  as  incentive  to  accept  employment  offers  from  our  company.  We 
determined $3.5 million of value related to these arrangements should be included as consideration transferred, which was 
partially offset by $2.0 million of cash payments to transferred employees as a reduction of consideration transferred.

The following table summarizes the amounts recorded for the estimated fair values of the assets acquired and liabilities 

assumed as of the Broadcom Business Acquisition Closing Date (in millions):

Property and equipment ...............................................................  $
Acquired intangible assets............................................................   
Total identifiable assets acquired............................................   
Liabilities assumed .......................................................................   
Goodwill.......................................................................................   

1.0 
123.0 
124.0 
(0.2)
102.8 
Net assets acquired..................................................................  $ 226.6 

We  estimated  the  fair  value  of  the  identified  intangible  assets  using  a  discounted  cash  flow  model  for  each  of  the 
underlying identified intangible assets.  These fair value measurements were based on significant inputs not observable in the 
market  and  thus  represent  a  Level  3  measurement.    Key  assumptions  include  the  level  and  timing  of  expected  future  cash 
flows, conditions and demands specific to each intangible asset over its remaining useful life, and discount rates we believe 
to be consistent with the inherent risks associated with each type of asset, which is 2.2% for order backlog and 13.0% for the 
rest of the intangible assets.  The fair value of these intangible assets is primarily affected by the projected revenue, gross 
margins,  operating  expenses,  the  technology  migration  curve,  customer  ramp  up  period  and  the  anticipated  timing  of  the 
projected income associated with each intangible asset coupled with the discount rates used to derive their estimated present 
values.  We believe the level and timing of expected future cash flows appropriately reflects market participant assumptions.

The following table summarizes the estimate of the intangible assets as of the Broadcom Business Acquisition Closing 

Date (in millions):

Estimated 
Weighted 
Average 
Useful 
Lives in 
Years

Estimated 
Fair
Value

Developed technology .........................................................    
Customer contracts and related relationships ......................    
Order backlog ......................................................................    
Estimated fair value of acquired intangibles..................    

6.0
6.0
0.5

   $

   $

93.0 
18.0 
12.0 
123.0 

The value of goodwill reflects the anticipated synergies of the combined operations and workforce of the transferred 
Broadcom Business assets as of the Broadcom Business Acquisition Closing Date. As of June 26, 2021, all of the goodwill is 
expected to be deductible for income tax purposes.  

Prior to the Broadcom Business Acquisition, we did not have an existing relationship or transactions with Broadcom.  

The consolidated financial statements include approximately $100.4 million of revenue from the Broadcom Business 
Acquisition from the Broadcom Business Acquisition Closing Date through June 26, 2021. It is impracticable to determine 

F-21

 
 
     
 
 
 
   
 
 
    
      
 
    
    
 
 
    
      
 
the effect on net income attributable to the Broadcom Business Acquisition as we had integrated a substantial portion of the 
Broadcom Business Acquisition into our ongoing operations at the close. 

We  determined  it  is  impractical  to  include  pro  forma  information  given  the  difficulty  in  obtaining  the  historical 
financial information for the Broadcom Business Acquisition as the business was part of Broadcom and did not have discrete 
financial  information  prior  to  the  acquisition.  Inclusion  of  such  information  would  require  us  to  make  estimates  and 
assumptions regarding the acquired business historical financial results that we believe may ultimately prove inaccurate.

Divestiture

In  December  2020,  we  completed  the  sale  of  limited  audio  technology  intangible  assets,  received  a  fully-paid  up 
perpetual license back from the buyer and, as an element of the transaction licensed other audio technology intangible assets 
to the buyer under a fully-paid up perpetual license arrangement.  Under the asset purchase agreement and the intellectual 
property license agreement, we received $35.0 million in cash.  The gain on the sale of the audio technology assets was $34.2 
million. 

 In  April  2020,  we  completed  the  sale  of  the  assets  of  our  LCD  Touch  Controller  and  Display  Driver  Integration 
product line, or TDDI, for LCD mobile displays. We retained our automotive TDDI product line and our discrete touch and 
discrete  display  driver  product  lines  supporting  LCD  and  OLED  for  the  mobile  market.  The  assets  sold  under  the  asset 
purchase  agreement  had  a  carrying  value  of  approximately  $33.6  million  as  of  the  closing  date  of  the  transaction  for  cash 
consideration of $138.7 million.  The gain on sale of the assets was $105.1 million.   

Investment

In  December  2020,  we  invested  $5.0  million  in  Eta  Compute  in  exchange  for  preferred  stock.    This  investment 
provides  us  with  a  partnership  that  enables  us  to  better  address  expanded  industry  opportunities  for  artificial  intelligence 
applications.  The investment is accounted for under the cost method.

5. Acquired Intangibles

The  following  table  summarizes  the  life,  the  gross  carrying  value  of  our  acquired  intangible  assets,  and  the  related 

accumulated amortization as of the end of fiscal 2021 and 2020 (in millions):

2021

2020

Weighted
Average
Life in
Years
5.0
4.2

Gross
Carrying
Value

Accumulated
Amortization  

Net Carrying
Value

Gross
Carrying
Value

Accumulated
Amortization  

Net Carrying
Value

    $

138.6  $
125.5   

(97.6) $
(63.8)  

41.0    $
61.7     

138.6  $
81.8   

(76.5) $
(61.4)  

62.1 
20.4 

Audio and video technology.........   
Customer relationships .................   
Wireless connectivity
technology..................................... 
Video interface technology...........   
Display driver technology.............   

Backlog ......................................... 
Licensed technology and other .....   
Patents...........................................   
Tradename ....................................   
In process research and 
development.................................. 
Acquired intangibles, gross .....   

6.0
3.0
7.0
Not 
applicable     
4.1
8.0
5.1
Not 
applicable     
    $
5.5

93.0   
82.0   
20.4   

12.0   
13.0   
4.4   
4.8   

(14.2)  
(25.1)  
(17.5)  

(12.0)  
(8.1)  
(3.2)  
(1.7)  

78.8     
56.9     
2.9     

—     
4.9     
1.2     
3.1     

—   
—   
164.0   

—   
—   
(158.2)  

—   
7.7   
4.4   
1.8   

—   
(5.5)  
(2.6)  
(0.7)  

— 
— 
5.8 

— 
2.2 
1.8 
1.1 

51.0   
544.7  $

—   
(243.2) $

51.0     
301.5    $

—   
398.3  $

—   
(304.9) $

— 
93.4  

F-22

 
   
 
   
   
 
 
 
 
 
 
   
 
 
     
 
 
   
     
     
     
     
     
In  fiscal  2021,  there  was  $143.6  million  of  display  driver  developed  technology  and  $28.3  million  of  customer 
relationships  retired  which  were  fully  amortized.    In  fiscal  2020,  there  was  $47.2  million  of  fingerprint  authentication 
technology retired which was fully amortized. 

Amortization  expense  is  calculated  using  the  straight-line  method  over  the  estimated  useful  lives  of  the  acquired 
intangibles.    The  total  amortization  expense  for  the  acquired  intangible  assets  was  $110.1  million  in  fiscal  2021,  $51.4 
million  in  fiscal  2020,  and  $74.4  million  in  fiscal  2019.    This  amortization  expense  was  included  in  our  consolidated 
statements of operations as acquired intangibles amortization and cost of revenue.

The following table presents expected annual aggregate amortization expense in future fiscal years (in millions):

2022 ........................................................................................  $
2023 ........................................................................................   
2024 ........................................................................................   
2025 ........................................................................................   
2026 ........................................................................................   
Thereafter................................................................................   
To be determined ....................................................................   
Future amortization ...........................................................  $

99.0 
86.1 
25.9 
19.0 
18.9 
1.6 
51.0 
301.5  

6. Debt 

Senior Debt 

On March 11, 2021, we completed an offering of $400.0 million aggregate principal amount of 4.0% senior notes due 
2029, or the Senior Notes, in a private offering. The Senior Notes were issued pursuant to an Indenture, dated as of March 11, 
2021,  or  the  Senior  Notes  Indenture,  by  and  among  our  company,  the  guarantors  named  therein  and  Wells  Fargo  Bank, 
National Association, as trustee. 

The Senior Notes Indenture provides that the Senior Notes will bear interest at a rate of 4.0% per annum, payable in 
cash semi-annually in arrears on December 15 and June 15 of each year, commencing on June 15, 2021. The Senior Notes 
will mature on June 15, 2029 and are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis 
by  each  of  our  current  and  future  domestic  restricted  subsidiaries  that  guarantee  our  obligations  under  our  senior  secured 
credit facilities. 

Prior to June 15, 2024, we may redeem the Senior Notes, in whole or in part, at a redemption price of 100% of the 
principal  amount  thereof,  plus  a  make-whole  premium  set  forth  in  the  Senior  Notes  Indenture,  plus  accrued  and  unpaid 
interest, if any, up to, but excluding, the redemption date. 

We may redeem some or all of the Senior Notes on or after June 15, 2024 at the redemption prices specified below, 

plus accrued and unpaid interest, if any, up to, but excluding, the redemption date: 

Year
2024.....................................................................................   
2025.....................................................................................   
2026 and thereafter..............................................................   

Price

102%
101%
100%

In addition, at any time prior to June 15, 2024, we  may  redeem up to  40% of  the  aggregate principal amount of the 
Senior Notes at a redemption price equal to 104% of the principal amount thereof, plus accrued and unpaid interest, if any, up 
to, but excluding, the applicable redemption date with the net cash proceeds from one or more equity offerings by us. 

The  Senior  Notes  are  the  general  unsecured  obligations  of  our  company.  The  Senior  Note  guarantees  are  the  senior 
unsecured obligations of each guarantor. Under certain circumstances, the guarantors may be released from their Senior Note 
guarantees without consent of the holders of Senior Notes. Under the terms of the Senior Notes Indenture, the Senior Notes 
rank  equally  in  right  of  payment  with  all  of  our  and  the  guarantors’  existing  and  future  senior  indebtedness,  and  rank 
contractually senior in right of payment to our and the guarantors’ future indebtedness and other obligations that are, by their 
terms, expressly subordinated in right of payment to the Senior Notes. The Senior Notes are effectively subordinated to our 
and the guarantors’ existing and future secured indebtedness, including secured indebtedness under our senior secured credit 
facilities, to the extent of the value of the assets securing such indebtedness. The Senior Notes and guarantees are structurally 

F-23

 
 
 
subordinated to all existing and future indebtedness and liabilities (including trade payables) of our subsidiaries that do not 
guarantee the Senior Notes. 

The Senior Notes Indenture contains covenants that, subject to exceptions and qualifications, among other things, limit 
our  ability  and  the  ability  of  our  Restricted  Subsidiaries  (as  defined  in  the  Senior  Notes  Indenture)  to  (i) incur  additional 
indebtedness  and  guarantee  indebtedness;  (ii) pay  dividends  or  make  other  distributions  or  repurchase  or  redeem  our 
company’s or any parent’s capital stock; (iii) prepay, redeem or repurchase certain indebtedness; (iv) issue certain preferred 
stock  or  similar  equity  securities;  (v) make  loans  and  investments;  (vi) dispose  of  assets;  (vii) incur  liens;  (viii) enter  into 
transactions with affiliates; (ix) enter into agreements restricting its subsidiaries’ ability to pay dividends; and (x) consolidate, 
merge or sell all or substantially all of its assets. 

The Senior Notes Indenture contains customary events of default including, without limitation, failure to make required 
payments, failure to comply with certain agreements or covenants, cross-acceleration to certain other indebtedness in excess 
of specified amounts, certain events of bankruptcy and insolvency, and failure to pay certain judgments. An event of default 
under the Senior Notes Indenture will allow either the trustee or the holders of at least 25% in aggregate principal amount of 
the then outstanding Senior Notes to accelerate, or in certain cases, will automatically cause the acceleration of, the maturity 
of the principal, and accrued and unpaid interest, if any, on all outstanding Notes. 

Debt  issuance  costs  relating  to  the  Senior  Notes  of  $5.7  million,  netted  against  the  debt  amount  on  the  consolidated 
balance sheet, are amortized as interest expense using the effective interest method over 99 months. The total interest expense 
recorded on the Senior Notes during the fiscal year ended June 26, 2021 was $5.0 million.

Convertible Debt

Our convertible debt consists of an original $525 million aggregate principal amount of 0.50% convertible senior notes 
due  2022,  or  the  Convertible  Notes,  which  were  issued  in  a  private  placement  transaction.  The  net  proceeds  from  the 
Convertible  Notes,  after  deducting  discounts,  were  $514.5  million.    The  Convertible  Notes  were  issued  pursuant  to  an 
Indenture, dated as of June 26, 2017, or the Convertible Notes Indenture, by and among our company, and Wells Fargo Bank, 
National Association, as trustee.

The Convertible Notes bear interest at a rate of 0.50% per year, which is payable semi-annually in arrears, on June 15 
and December 15 of each year. The Convertible Notes are senior unsecured obligations and rank senior in right of payment to 
any of our indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment 
to any our liabilities that are not so subordinated; effectively junior in right of payment to any of our secured indebtedness to 
the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities 
(including trade payables) of our subsidiaries.

The Convertible Notes mature on June 15, 2022, or the Maturity Date, unless earlier repurchased, redeemed or 

converted.

Holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amounts, at their 
option at any time prior to the close of business on the business day immediately preceding March 15, 2022 under certain 
defined  circumstances,  including  (1)  if  the  last  reported  sale  price  of  our  common  stock  has  been  at  least  130%  of  the 
conversion price then in effect for at least 20 trading days (whether or not consecutive) during any period of 30 consecutive 
trading days ending on the last trading day of the immediately preceding calendar quarter (the Sales Price Condition) or (2) 
during the five business day period after any five consecutive trading day period (the “measurement period”) in which the 
trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the 
product of the last reported sale price of our common stock and the conversion rate on each such trading day (the Trading 
Price Condition). 

Effective April 1, 2021, the Sales Price Condition of our Convertible Notes had been met at the end of the preceding 
calendar  quarter  and  holders  of  our  notes  became  entitled  to  redeem  their  notes  in  accordance  with  the  terms  of  the 
Convertible Indenture during the calendar quarter ending June 30, 2021. During the fourth quarter of fiscal 2021, a total of 
$19.4 million principal amount of our Convertible Notes were submitted for conversion, which completed by June 26, 2021 
through a combination of $19.4 million in cash and 118,092 shares of common stock from our treasury shares, resulting in a 
loss  of  approximately  $0.3  million  which  is  included  in  loss  on  extinguishment  of  debt  on  our  consolidated  statements  of 
operations. 

F-24

Commencing June 20, 2020, we may redeem for cash all or any portion of the Convertible Notes, at our option, if the 
last reported sale price of our common stock, as determined by us, has been at least 130% of the conversion price then in 
effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the 
last  trading  day  of  such  period)  ending  on,  and  including,  the  trading  day  immediately  preceding  the  date  on  which  we 
provide  notice  of  redemption  at  a  redemption  price  equal  to  100%  of  the  principal  amount  of  the  Convertible  Notes  to  be 
redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. This criteria was met by the end of our 
third quarter in fiscal 2021.  Our policy is to settle the principal amount of our Convertible Notes with cash upon conversion 
or redemption.

On June 1, 2021, we provided an irrevocable notice of redemption for all $525,000,000 aggregate principal amount of 
our  outstanding  Convertible  Notes,  or  Redemption.  The  Convertible  Notes  are  redeemable  at  a  cash  redemption  price  of 
100.0% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the redemption date of August 4, 
2021, or the Redemption Price.

Holders  of  the  Convertible  Notes  had  the  right  to  convert  the  Convertible  Notes  called  for  redemption  no  later  than 
August 3, 2021, or the Conversion Deadline. The conversion rate is equal to 13.7267 shares per $1,000 principal amount of 
the Convertible Notes, which is the initial conversion rate of 13.6947 shares per $1,000 principal amount of the Convertible 
Notes plus a number of additional shares equal to 0.0320 shares per $1,000 principal amount of the Convertible Notes. We 
have  elected  to  settle  any  conversions  by  Combination  Settlement  with  a  Specified  Dollar  Amount  per  $1,000  principal 
amount of Convertible Notes equal to $1,000, plus a number of shares of the our common stock, $0.001 par value, or the 
Common Stock, to be determined pursuant to the Convertible Notes Indenture, together with additional cash, if applicable, in 
lieu of delivering any fractional shares of Common Stock. As a result of this election, on August 4, 2021, we paid $505.6 
million in cash for the principal amount of Convertible Notes outstanding and delivered  approximately 3.5 million shares in 
Common Stock from our treasury stock for additional amounts, resulting in a loss of approximately $8.1 million.

As  of  the  issuance  date  of  the  Convertible  Notes,  we  recorded  $82.1  million  of  the  principal  amount  to  equity, 
representing the debt discount for the difference between our estimated nonconvertible debt borrowing rate of 4.39% and the 
coupon rate of the Convertible Notes of 0.50% using a five-year life, which coincides with the term of the Convertible Notes. 
In addition, we allocated the total of $11.1 million of debt issuance costs, consisting of the initial purchaser’s discount and 
legal, accounting, and printing costs, pro rata, to the equity and debt components of the Convertible Notes, or $1.9 million 
and  $9.2  million,  respectively.  The  debt  discount  and  the  debt  issuance  costs  allocated  to  the  debt  component  of  the 
Convertible Notes are amortized as interest expense using the effective interest method over five years, which was partially 
reclassified to additional paid in capital with the balance charged to Loss on redemption of convertible notes upon settlement 
in June and August 2021.

The contractual interest expense and amortization of the discount on the Convertible Notes for the fiscal year ended 

June 26, 2021, were as follows (in millions):

Interest expense ......................................................................  $
Amortization of discount and debt issuance costs..................   
Total interest......................................................................  $

2.6 
19.2 
21.8  

Fiscal
2021

The unamortized amounts of the debt issuance costs and discount associated with the Convertible Notes as of June 26, 

2021 were $1.9 million and $16.6 million, respectively.

Revolving Credit Facility

On  March  11,  2021,  we  amended  and  restated  our  Amended  and  Restated  Credit  Agreement,  with  the  lenders  and 
Wells Fargo Bank, National Association, as administrative agent, or the Credit Agreement, to, among other changes, extend 
the  maturity  date  of  our  senior  secured  revolving  credit  facility,  to  five  years  from  the  closing  date  of  the  amendment, 
increase  the  facility  size  from  $200.0  million  to  $250.0  million,  and  replace  the  requirement  to  maintain  a  total  debt  to 
Consolidated  EBITDA  (as  defined  in  the  Credit  Agreement)  ratio  of  not  more  than  4.75  to  1.00  with  a  requirement  to 
maintain a net total debt to Consolidated EBITDA ratio of not more than 3.75 to 1.00 provided that for the four fiscal quarters 
ending after the date of a material acquisition, such maximum leverage ratio shall be adjusted to 4.25 to 1.00, and thereafter 
3.75 to 1.00, provided further, that such deemed increase pursuant to the foregoing shall not apply to more than two material 
acquisitions consummated during the term of the Credit Agreement.     

F-25

 
 
 
 
 
 
The  Credit  Agreement  provides  for  a  revolving  credit  facility  in  a  principal  amount  of  up  to  $250  million,  which 
includes a $20 million sublimit for letters of credit and a $25 million sublimit for swingline loans. Under the terms of the 
Credit Agreement, we may, subject to the satisfaction of certain conditions, request increases in the revolving credit facility 
commitments in an aggregate principal amount of up to $150 million to the extent existing or new lenders agree to provide 
such increased or additional commitments, as applicable. Future proceeds under the revolving credit facility are available for 
working  capital  and  general  corporate  purposes.  In  March  2021,  we  used  a  portion  of  the  proceeds  from  the  Senior  Notes 
described above to repay the $100.0 million outstanding borrowings on this revolving credit facility. As of June 26, 2021, 
there was no balance outstanding under the revolving credit facility.  The weighted average annualized interest rate on these 
borrowings for the fiscal year ended June 26, 2021 was 2.65%.

Borrowings under the revolving credit facility are required to be repaid in full by March 11, 2026. Debt issuance costs 
relating to the revolving credit facility of $1.6 million, included in non-current other assets on our consolidated balance sheet, 
are being amortized over 60 months.

Our  obligations  under  the  Credit  Agreement  are  guaranteed  by  the  material  domestic  subsidiaries  of  our  company, 
subject  to  certain  exceptions  (such  material  subsidiaries,  together  with  our  company,  collectively,  the  Credit  Parties).  The 
obligations of the Credit Parties under the Credit Agreement and the other loan documents delivered in connection therewith 
are secured by a first priority security interest in substantially all of the existing and future personal property of the Credit 
Parties, including, without limitation, 65% of the voting capital stock and 100% of the non-voting capital stock of certain of 
the Credit Parties’ direct foreign subsidiaries, subject to certain exceptions. 

The revolving credit facility bears interest at our election of a Base Rate plus an Applicable Margin or LIBOR plus an 
Applicable Margin. Swingline loans bear interest at a Base Rate plus an Applicable Margin. The Base Rate is a floating rate 
that  is  the  greater  of  the  Prime  Rate,  the  Federal  Funds  Rate  plus  50  basis  points,  or  LIBOR  plus  100  basis  points.  The 
Applicable Margin is based on a sliding scale which ranges from 0.25 to 100 basis points for Base Rate loans and 100 basis 
points to 175 basis points for LIBOR loans. We are required to pay a commitment fee on any unused commitments under the 
Credit Agreement which is determined on a leverage-based sliding scale ranging from 0.175% to 0.25% per annum. Interest 
and fees are payable on a quarterly basis. The LIBOR index is expected to be discontinued at the end of June 2023. Under 
our credit facility, when the LIBOR index is discontinued, we will switch to a comparable or successor rate as selected by us 
and the administrative agent, which may include the Secured Overnight Financing Rate, or SOFR.

Under the Credit Agreement, there are various restrictive covenants, including two financial covenants which limit the 
consolidated  total  leverage  ratio,  or  leverage  ratio,  the  consolidated  interest  coverage  ratio,  or  interest  coverage  ratio,  a 
restriction  that  permits  accounts  receivable  financings  provided  that  the  aggregate  unpaid  amount  of  permitted  accounts 
receivable financings are no more than the greater of $100 million and 50% of the amount of all accounts receivable of our 
company and specified subsidiaries and other specific items. The leverage ratio is the ratio of debt as of the measurement date 
to  Consolidated  EBITDA,  for  the  four  consecutive  quarters  ending  with  the  quarter  of  measurement.  The  current  leverage 
ratio shall not exceed 3.75 to 1.00 provided that for the four fiscal quarters ending after the date of a material acquisition, 
such  maximum  leverage  ratio  shall  be  adjusted  to  4.25  to  1.00,  and  thereafter  3.75  to  1.0.  The  interest  coverage  ratio  is 
Consolidated  EBITDA  to  interest  expense  for  the  four  consecutive  quarters  ending  with  the  quarter  of  measurement.  The 
interest coverage ratio must not be less than 3.50 to 1.0 during the term of the Credit Agreement. As of June 26, 2021, we 
remain in compliance with the restrictive covenants.

F-26

7. Leases, Commitments and Contingencies

Leases

In  fiscal  2020,  we  adopted  Accounting  Standards  Codification  Topic  842,  or  ASC  842,  Leases,  which  requires 
recognition of ROU assets and lease liabilities for most leases on our consolidated balance sheet. We adopted ASC 842 using 
a modified retrospective transition approach as of the effective date as permitted. As a result, we were not required to adjust 
our comparative period financial information for effects of the standard or make the new required lease disclosures for the 
periods  before  the  date  of  adoption.  We  elected  the  package  of  practical  expedients  which  allows  us  not  to  reassess  (1) 
whether existing or expired contracts, as of the adoption date, contain leases, (2) the lease classification for existing leases, 
and (3) whether existing initial direct costs meet the new definition. We also elected the practical expedient to not separate 
lease and non-lease components for our leases, and to not recognize ROU assets and liabilities for short-term leases.

The most significant impact of the adoption of the standard was the recognition of ROU assets and lease liabilities for 
operating  leases  on  our  consolidated  balance  sheet.    Adoption  of  the  standard  did  not  have  a  material  impact  on  our 
consolidated statements of operations or cash flows.

Our  leases  mainly  include  our  worldwide  office  and  research  and  development  facilities  which  are  all  classified  as 
operating  leases.  Certain  leases  include  renewal  options  that  are  under  our  discretion.  The  leases  expire  at  various  dates 
through fiscal year 2030, some of which include options to extend the lease for up to 5 years. For the fiscal year ended June 
26, 2021, we recorded approximately $10.1 million of operating leases expense. Our short-term leases are immaterial and we 
do not have finance leases.

As of June 26, 2021, and June 27, 2020 the components of leases are as follows (in millions):

Operating lease right-of-use assets .................................  $
Operating lease liabilities................................................  $
Operating lease liabilities, long-term ..............................   
Total operating lease liabilities .......................................  $

31.7   $
9.3   $
24.0    
33.3   $

21.0 
6.5 
14.6 
21.1  

June
2021

June
2020

Supplemental cash flow information related to leases is as follows (in millions):

Cash paid for operating leases included in operating
   cash flows ..................................................................   $
Supplemental non-cash information related to lease
   liabilities arising from obtaining right-of-
   use assets ...................................................................    

Fiscal
2021

Fiscal
2020

10.0   $

8.4 

21.8    

2.9  

As of June 26, 2021, the weighted average remaining lease term was 6.18 years, and the weighted average discount rate 

was 4.01%.  

F-27

 
 
  
 
 
 
  
 
 
   
 
      
 
 
 
  
 
 
 
  
 
Future minimum lease payments for the operating lease liabilities are as follows (in millions):

  Operating

Fiscal Year
2022.....................................................................................   $
2023.....................................................................................    
2024.....................................................................................    
2025.....................................................................................    
2026.....................................................................................    
Thereafter ............................................................................    
Total future minimum operating lease payments................    
Less: interest .......................................................................    
Total lease liabilities ...........................................................   $

Lease
Payments

10.0 
5.9 
4.4 
3.8 
3.9 
9.7 
37.7 
(4.4)
33.3  

We  recognized  rent  expense  on  a  straight-line  basis  of  $10.1  million,  and  $10.3  million  for  fiscal  2021  and  2020, 

respectively.

Contingencies

We  have  in  the  past  and  may  in  the  future  receive  notices  from  third  parties  that  claim  our  products  infringe  their 
intellectual  property  rights.    We  cannot  be  certain  that  our  technologies  and  products  do  not  and  will  not  infringe  issued 
patents or other proprietary rights of third parties.

Any infringement claims, with or without merit, could result in significant litigation costs and diversion of management 
and  financial  resources,  including  the  payment  of  damages,  which  could  have  a  material  adverse  effect  on  our  business, 
financial condition, and results of operations.

Indemnifications

In  connection  with  certain  agreements,  we  are  obligated  to  indemnify  the  counterparty  against  third-party  claims 
alleging  infringement  of  certain  intellectual  property  rights  by  us.    We  have  also  entered  into  indemnification  agreements 
with  our  officers  and  directors.    Maximum  potential  future  payments  under  these  agreements  cannot  be  estimated  because 
these  agreements  do  not  have  a  maximum  stated  liability.    However,  historical  costs  related  to  these  indemnification 
provisions have not been significant.  We have not recorded any liability in our consolidated financial statements for such 
indemnification obligations.

8. Stockholders’ Equity

Preferred Stock

We  are  authorized,  subject  to  limitations  imposed  by  Delaware  law,  to  issue  up  to  a  total  of  10,000,000  shares  of 
preferred stock in one or more series without stockholder approval.  Our Board of Directors has the power to establish, from 
time to time, the number of shares to be included in each series and to fix the rights, preferences, and privileges of the shares 
of  each  wholly  unissued  series  and  any  of  its  qualifications,  limitations,  or  restrictions.    Our  Board  of  Directors  can  also 
increase  or  decrease  the  number  of  shares  of  a  series,  but  not  below  the  number  of  shares  of  that  series  then  outstanding, 
without any further vote or action by the stockholders.

Our Board of Directors may authorize the issuance of preferred stock with voting or conversion rights that could harm 
the  voting  power  or  other  rights  of  the  holders  of  our  common  stock.    The  issuance  of  preferred  stock,  while  providing 
flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect 
of delaying, deferring, or preventing a change in control of our company and might harm the market price of our common 
stock and the voting power and other rights of the holders of our common stock.  As of the end of fiscal 2021, there were no 
shares of preferred stock outstanding.

F-28

 
 
 
 
 
 
 
Shares Reserved for Future Issuance

Shares of common stock reserved for future issuance as of the end of fiscal 2021 were as follows:

55,061 
Stock options outstanding.......................................................   
Restricted stock units outstanding ..........................................    1,323,286 
347,027 
Market stock units outstanding...............................................   
Performance stock units outstanding ......................................   
317,392 
Awards available for grant under all share-based
   compensation plans..............................................................    3,322,989 
Reserved for future issuance .............................................    5,365,755  

Treasury Stock

Our cumulative authorization of repurchases under our common stock repurchase program as of the end of fiscal 2021 
was  $1.4  billion  and  in  August  2021  our  Board  of  Directors  approved  an  additional  $400.0  million  and  extended  the 
expiration date to July 2025.  The program authorizes us to repurchase our common stock in the open market or in privately 
negotiated  transactions  depending  upon  market  conditions  and  other  factors.    The  number  of  shares  repurchased  and  the 
timing of repurchases is based on the level of our cash balances, general business and market conditions, and other factors, 
including alternative investment opportunities.  Common stock repurchased under this program is held as treasury stock.  As 
of  the  end  of  fiscal  2021,  we  had  $177.4  million  of  common  stock  remaining  to  be  repurchased  under  our  common  stock 
repurchase program, and after the additional board authorization in August 2021 this remaining amount increased to $577.4 
million.    During  fiscal  2021,  we  issued  118,092  shares  from  treasury  stock  for  settlement  of  early  redemptions  of  our 
convertible notes and in August, subsequent to year end, we issued 3.5 million shares from treasury stock for the settlement 
of final redemptions of our Convertible Notes.

9. Share-Based Compensation

The  purpose  of  our  various  share-based  compensation  plans  is  to  attract,  motivate,  retain,  and  reward  high-quality 
employees,  directors,  and  consultants  by  enabling  such  persons  to  acquire  or  increase  their  proprietary  interest  in  our 
common  stock  in  order  to  strengthen  the  mutuality  of  interests  between  such  persons  and  our  stockholders  and  to  provide 
such  persons  with  annual  and  long-term  performance  incentives  to  focus  their  best  efforts  on  the  creation  of  stockholder 
value.  Consequently, we determine whether to grant share-based compensatory awards subsequent to the initial award for 
our employees and consultants primarily on individual performance.  

Share-Based Compensation Plans

On October 29, 2019, our stockholders approved: (i) our 2019 Equity and Incentive Compensation Plan, or the 2019 
Incentive Plan, to replace our Amended and Restated 2010 Incentive Compensation Plan, or the 2010 Incentive Plan, and (ii) 
our  2019  Employee  Stock  Purchase  Plan,  or  the  2019  ESPP,  to  replace  our  Amended  and  Restated  2010  Employee  Stock 
Purchase Plan, or our 2010 ESPP. Upon approval of the 2019 Incentive Plan, new awards are no longer issued under the 2010 
Incentive Plan. Awards outstanding at October 29, 2019 under our prior share-based compensation plans were not impacted 
by the approval of the 2019 Incentive Plan and continue to remain outstanding and vest by their terms under the applicable 
share-based  compensation  plan.  Shares  underlying  certain  share-based  awards  forfeited  under  the  2010  Incentive  Plan 
subsequent to the approval of the 2019 Incentive Plan automatically transfer to and become available for award issuance from 
the 2019 Incentive Plan. 

F-29

The 2019 Incentive Plan authorizes our Board of Directors to provide equity-based compensation in the form of stock 
options, stock appreciation rights, restricted stock units, cash incentive awards, performance shares, performance stock units, 
and other stock-based awards.  The cumulative number of shares approved under the 2019 Incentive Plan was 2,590,000. The 
2019  ESPP  authorizes  us  to  provide  eligible  employees  with  an  opportunity  to  acquire  an  equity  interest  in  our  company 
through the purchase of stock at a discount, with an initial authorization of 1,500,000 shares.

Effective August 19, 2019, we adopted the 2019 Inducement Equity Plan. 650,000 shares of our common stock have 
been reserved for issuance under the 2019 Inducement Equity Plan, subject to adjustment for stock dividends, stock splits, or 
other changes in our common stock or capital structure. The 2019 Inducement Equity Plan is intended to comply with Rule 
5635(c)(4) of the Nasdaq Stock Market Listing Rules, which provide an exception to the Nasdaq Stock Market Listing Rules’ 
on the shareholder approval requirement for the issuance of securities with regards to grants to employees of the company or 
its subsidiaries as an inducement material to such individuals entering into employment with the company or its subsidiaries. 
An individual was eligible to receive an award under the 2019 Inducement Equity Plan only if he or she was not previously 
an employee or director of our company (or is returning to work after a bona-fide period of non-employment), and an award 
under the 2019 Inducement Equity Plan is a material inducement for him or her to accept employment with our company. As 
a  result  of  approval  by  our  stockholders  of  our  amended  and  restated  2019  Incentive  Plan  on  October  27,  2020,  no  new 
awards will be granted under the 2019 Inducement Equity Plan.

Our share-based compensation plans with outstanding awards consist of our 2010 Incentive Plan, our 2019 Incentive 

Plan, our 2019 Inducement Equity Plan, and our 2019 ESPP.

Share-based compensation awards available for grant or issuance for each plan as of the beginning of the fiscal year, 

including changes in the balance of awards available for grant for fiscal 2021, were as follows:

  Awards
  Available    
  Under All
 Share-Based    Compensation    Equity

2019
Incentive

2019

    Employee     Employee    
   Inducement    

Stock

2010
Incentive

    Purchase    Compensation 

2019

Plan

Plan

Plan

Award 
Plans
Balance at June 2020 .............................  3,190,152     1,412,401     348,780    1,428,971    
—    
—    
—    
—    
—    

—    
Additional shares authorized............  1,360,000     1,360,000    
—    
264,679    
—    
Transferred between plans ...............  
(676,597)   (127,124)  
Restricted stock units granted ..........   (803,721)  
—    
(101,009)  
Market stock units granted...............   (101,009)  
Performance stock units granted ......   (174,231)  
(5,336)  
(168,895)  
Performance stock units 
performance adjustment...................   (242,651)  
Market stock units performance 
adjustment ........................................  
Purchases under employee stock 
purchase plan....................................   (220,389)  
Forfeited ...........................................   615,962    
Plan shares no longer available for 
new grants ........................................   (223,590)  

—     (220,389)  
—    
—    

—    
125,720    

—     (195,871)  

(101,892)  

(77,534)  

(20,449)  

—    

—    

Balance at June 2021 .............................  3,322,989     2,114,407    

—    
—    1,208,582    

Plan

— 
— 
(264,679)
— 
— 
— 

— 
490,242 

(27,719)
—  

—    

(120,310)

—    

(77,534)

Share-based compensation and the related tax benefit recognized in our consolidated statements of income for fiscal 

2021, 2020, and 2019 were as follows (in millions):

Cost of revenue....................................................... 
Research and development..................................... 
Selling, general, and administrative ....................... 
Total ..................................................................

Income tax benefit on share-based
   compensation....................................................... 

$

 $

$

2021

2020

2019

3.4  $
45.4   
44.3   
93.1  $

2.1  $
32.3   
26.0   
60.4  $

3.1 
33.7 
22.2 
59.0 

15.2  $

6.3  $

4.3  

F-30

 
    
 
   
   
    
 
 
 
 
 
   
   
 
 
 
 
   
   
   
   
 
 
 
  
  
 
 
 
Included  in  the  preceding  table  is  share-based  compensation  for  our  cash-settled  phantom  stock  units,  which  we 

granted in October 2019 (see Phantom Stock Units below) (in millions):

Cost of revenue ............................................................  $
Research and development ..........................................   
Selling, general, and administrative.............................   
Total........................................................................  $

0.4   $
21.9    
4.7    
27.0   $

0.2 
9.1 
1.8 
11.1  

2021

2020

We recognize a tax benefit upon expensing certain share-based awards associated with our share-based compensation 
plans,  including  RSUs,  market  stock  units,  or  MSUs,  PSUs,  and  phantom  stock  units.    We  do  not  recognize  a  tax  benefit 
upon  expensing  all  or  a  portion  of  share-based  awards  granted  to  certain  executive  officers  and  certain  foreign-based 
employees. 

We  compare  the  actual  tax  benefit  associated  with  the  tax  deduction  from  share-based  award  activity  to  the 
hypothetical tax benefit based on the grant date fair values of the corresponding share-based awards.  Tax benefit associated 
with excess tax deduction creditable to income tax provision is recognized when incurred.  Tax deficiency associated with a 
tax shortfall is debited to income tax provision when incurred.

Historically,  we  have  issued  new  shares  in  connection  with  our  share-based  compensation  plans,  however,  treasury 
shares are also available for issuance.  Any additional shares repurchased under our common stock repurchase program will 
be available for issuance under our share-based compensation plans.

Stock Options

Our share-based compensation plans with outstanding stock option awards include our 2010 Incentive Plan.  Under our 
2010 Incentive Plan, we were able to grant incentive stock options or nonqualified stock options to purchase shares of our 
common stock at not less than 100% of the fair market value, or FMV, on the date of grant. Option granting ceased in fiscal 
2018.

Options granted under our 2010 Incentive Plan generally vest three to four years from the vesting commencement date 

and expire seven years after the date of grant if not exercised.

Certain stock option activity for fiscal 2021 and balances as of the end of fiscal 2021 were as follows:

Stock
Option
  Awards
  Outstanding  

  Weighted
Average
Exercise
Price

Intrinsic
Value
    (In millions)  

Balance at June 2020..........................................................   
Exercised.......................................................................   
Expired..........................................................................   
Balance at June 2021..........................................................   
Exercisable at June 2021 ....................................................   

329,786    $
(221,164)   
(53,561)   
55,061     
55,061     

69.78     
69.17     
75.48     
66.68    $
66.68    $

4.5 
4.5  

The aggregate intrinsic value was determined using the closing price of our common stock on the last trading day of 
fiscal 2021, or June 25, 2021, of $147.58.  All of the stock options outstanding were vested and in-the-money as of the end of 
fiscal 2021. 

Cash  received  and  the  aggregate  intrinsic  value  of  stock  options  exercised  for  fiscal  2021,  2020,  and  2019  were  as 

follows (in millions):

Cash received .....................................................................  $
Aggregate intrinsic value ...................................................  $

23.9   $
8.6   $

23.9    $
10.8    $

5.2 
2.4  

2021

2020

2019

F-31

 
 
  
 
 
 
 
     
 
 
 
 
 
 
   
 
 
 
 
   
 
 
 
  
  
  
 
 
   
   
 
There were no stock options granted in fiscal 2021, 2020 or 2019.  

There was no unrecognized share-based compensation costs for stock options granted under our various plans.

Restricted Stock Units

Our 2019 Incentive Plan provides for the grant of RSUs to our employees, consultants, and directors, and previously 
our 2019 Inducement Equity Plan and our 2010 Incentive Plan provided for the grant of deferred stock units, or DSUs, to our 
employees, consultants, and directors.  An RSU and a DSU are each a promise to deliver shares of our common stock at a 
future  date  in  accordance  with  the  terms  of  the  grant  agreement  and  the  words  can  be  used  interchangeably.    We  began 
granting DSUs in January 2006 and RSUs in 2019.  The use of RSUs will cover the meaning of both RSUs and DSUs.  

RSUs granted generally vest ratably over three to four years from the vesting commencement date.  Delivery of shares 
under  the  plans  take  place  on  the  quarterly  vesting  dates.    At  the  delivery  date,  we  withhold  shares  to  cover  applicable 
statutory  minimum  tax  withholding  for  grantees  subject  to  withholding  and  deliver  a  net  quantity  of  shares  to  the  grantee 
after  such  withholding.    Until  delivery  of  shares,  the  grantee  has  no  rights  as  a  stockholder  with  respect  to  any  shares 
underlying the RSU award.

RSU activity, including RSUs granted, delivered, and forfeited in fiscal 2021, and the balance and aggregate intrinsic 

value of RSUs as of the end of fiscal 2021 was as follows:

  Aggregate
Intrinsic
Value

    Weighted
Average

  RSU Awards  
  Outstanding  

    Grant Date
  (in millions)     Fair Value

Balance at June 2020..........................................................    1,360,324       
803,721       
(587,192)   
(253,567)   
Balance at June 2021..........................................................    1,323,286    $

Granted..........................................................................   
Delivered.......................................................................   
Forfeited........................................................................   

    $

195.3     

42.40 
81.52 
41.61 
54.67 
64.13  

Of  the  shares  delivered,  173,301  shares  valued  at  $14.3  million  were  withheld  to  meet  statutory  tax  withholding 
requirements.  The aggregate intrinsic value was determined using the closing price of our common stock on the last trading 
day of fiscal 2021, or June 25, 2021, of $147.58.

The  unrecognized  share-based  compensation  cost  for  RSUs  granted  under  our  2019  Incentive  Plan,  our  2019 
Inducement Equity Plan and our 2010 Incentive Plan was approximately $61.5 million as of the end of fiscal 2021, which 
will  be  recognized  over  a  weighted  average  period  of  approximately  2.0  years.    The  aggregate  market  value  of  RSUs 
delivered in fiscal 2021, 2020, and 2019 was $48.2 million, $36.0 million, and $35.7 million, respectively. 

Market Stock Units

Our 2019 Incentive Plan, and previously our 2019 Inducement Equity Plan, provide for the grant of MSU awards, to 
our employees, consultants, and directors. An MSU is a promise to deliver shares of our common stock at a future date based 
on the achievement of market-based performance requirements in accordance with the terms of the MSU grant agreement. 

We  have  granted  MSU  awards  to  our  executive  officers  and  other  management  members  under  our  2010  Incentive 
Plan, our 2019 Incentive Plan and our 2019 Inducement Equity Plan, which are designed to vest in three or four tranches with 
the target quantity for each tranche equal to one-third or one-fourth of the total MSU grant. The first tranche vests based on a 
one-year performance period; the second tranche vests based on a two-year performance period; the third tranche vests based 
on  a  three-year  performance  period;  and  the  fourth  tranche  (in  the  case  of  four-year  vesting)  vests  based  on  a  four-year 
performance period.  

For MSU awards granted in fiscal 2021, performance is measured based on our achievement of a specified level of total 
stockholder  return,  or  TSR,  relative  to  the  TSRs  of  each  company  in  the  Russell  2000  Index.  The  potential  payout  ranges 
from 0% to 200% of the target grant quantity based on our TSR performance relative to the TSRs of each company in the 
Russell  2000  Index.    No  payout  will  occur  if  our  TSR  performance  falls  below  the  25th  percentile  of  the  TSRs  of  each 
company in the Russell 2000 Index, and a 200% payout will occur if our TSR performance exceeds the 75th percentile of the 

F-32

 
   
 
 
 
 
   
 
 
 
   
 
 
 
 
 
 
     
      
      
TSRs  of  each  company  in  the  Russell  2000  Index.  Performance  payouts  between  the  25th  and  75th  percentiles  will  be 
determined on a linear basis with performance at the 50th percentile equal to 100% of target. 

For MSU awards granted in fiscal 2021, the first tranche and the second tranche can payout up to 200%, and the payout 
for the third tranche will be calculated based on the total target quantity for the entire grant multiplied by the payout factor, 
based on performance for the three-year performance period, less shares issued for the first tranche and the second tranche. 

For  outstanding  MSU  awards  granted  prior  to  fiscal  2021,  performance  is  measured  based  on  our  achievement  of  a 
specified level of TSR relative to the TSR of the S&P Semiconductor Select Industry Index, or SPSISC Index. The potential 
payout  ranges  from  0%  to  200%  of  the  target  grant  quantity  and  is  adjusted  on  a  two-to-one  ratio  based  on  our  TSR 
performance relative to SPSISC Index TSR. 

For  MSU  awards  granted  prior  to  fiscal  2021  and  vesting  over  three  years,  the  payout  for  the  first  tranche  and  the 
second tranche will not exceed 100% and the payout for the third tranche will be calculated based on the total target quantity 
for the entire grant multiplied by the payout factor, based on performance for the three-year performance period, less shares 
issued for the first tranche and the second tranche. For MSUs vesting over four years, the payout for the first tranche, the 
second tranche and the third tranche will not exceed 100% and the payout for the fourth tranche will be calculated based on 
the  total  target  quantity  for  the  entire  grant  multiplied  by  the  payout  factor,  based  on  performance  for  the  four-year 
performance period, less shares issued for the first tranche, the second tranche and the third tranche.

Delivery  of  shares  earned,  if  any,  will  take  place  on  the  dates  provided  in  the  applicable  MSU  grant  agreement, 
assuming the grantee is still an employee, consultant, or director of our company at the end of the applicable performance 
period. On the delivery date, we withhold shares to cover statutory tax withholding requirements and deliver a net quantity of 
shares to the recipient after such withholding. Until delivery of shares, the grantee has no rights as a stockholder with respect 
to any shares underlying the MSU award. 

MSU activity, including MSUs granted, delivered, and forfeited in fiscal 2021, and the balance and aggregate intrinsic 

value of MSUs as of the end of fiscal 2021 were as follows:

  Aggregate
Intrinsic
Value

    Weighted
    Average
    Grant Date
  (in millions)     Fair Value

  MSU Awards  
  Outstanding  

Balance at June 2020..........................................................   
Granted..........................................................................   
Performance adjustment ...............................................   
Delivered.......................................................................   
Forfeited........................................................................   
Balance at June 2021..........................................................   

391,532       
101,009       
77,534       

(208,275)   
(14,773)   
347,027    $

    $

51.2     

56.93 
105.83 
— 
56.93 
54.71 
82.18  

As a result of the Synaptics TSR outperforming the Index TSR by 38.17 percentage points for the payout period ended 
in  fiscal  2021,  we  delivered  176.34%  of  the  targeted  shares  underlying  the  fiscal  2018  MSU  grants.    As  a  result  of  the 
Synaptics  TSR  outperforming  the  Index  TSR  by  35.61  percentage  points  for  the  payout  period  ended  in  fiscal  2021,  we 
delivered the capped out amount of 100% of the targeted shares underlying the fiscal 2019 MSU grants as it was for tranche 2 
which cannot exceed a 100% payout.  As a result of the Synaptics TSR outperforming the Index TSR by 64.62 percentage 
points  for  the  payout  period  ended  in  fiscal  2021,  we  delivered  the  capped  out  amount  of  100%  of  the  targeted  shares 
underlying the fiscal 2020 MSU grants as it was for tranche 1 which cannot exceed a 100% payout.  As a result of Synaptics’ 
TSR performing at the 76th percentile relative to the constituents of the Russell 2000 Index for the payout period ended in 
fiscal 2021, we delivered 200% of the targeted shares underlying the fiscal 2021 MSU grants.  

Of the shares delivered, 91,956 shares valued at $7.5 million were withheld to meet statutory minimum tax withholding 
requirements.  The aggregate intrinsic value assumes a 100% payout factor and was determined using the closing price of our 
common stock on the last trading day of fiscal 2021, or June 25, 2021, of $147.58.

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The fair value of each MSU granted from our plans for fiscal 2021, 2020, and 2019 was estimated at the date of grant 

using the Monte Carlo simulation model, assuming no expected dividends and the following assumptions:

2021

2020

2019

Expected volatility of company............    
Expected volatility of Index .................  
Correlation coefficient..........................    
Expected life in years ...........................    
Risk-free interest rate ...........................    
Fair value per award .............................   $131.34 - $175.15 

19.6% - 197.6% 
0.51 
2.87 
0.17% 

53.62% 

45.46% - 52.55%   
24.64% - 33.44%   
0.53 - 0.58   
2.50 - 4.00   
0.26% - 1.52%   

50.58% 
23.40% 
0.51 
2.88 
2.92% 

$55.52 - $100.38 

$27.70 - $85.52 

We amortize the compensation expense over the three- or four-year performance and service period on a ratable basis.  
The unrecognized share-based compensation cost of our outstanding MSUs was approximately $16.6 million as of the end of 
fiscal 2021, which will be recognized over a weighted average period of approximately 1.02 years.

Performance Stock Units 

Our  2019  Incentive  Plan  and  our  2010  Incentive  Plan  provide  for  the  grant  of  PSU  awards  to  our  employees, 
consultants,  and  directors.  A  PSU  is  a  promise  to  deliver  shares  of  our  common  stock  at  a  future  date  based  on  the 
achievement of performance-based requirements in accordance with the terms of the PSU grant agreement. 

We have granted PSUs to our executive officers and other management members under our 2010 Incentive Plan, our 
2019  Incentive  Plan  and  our  2019  Inducement  Equity  Plan,  which  are  designed  to  vest  in  three  tranches  with  the  target 
quantity for each tranche equal to one-third of the total PSU grant. Generally, the grants have a specific one-year performance 
period and vesting occurs over three service periods with the final service period ending approximately three years from the 
grant date. Performance is measured based on the achievement of a specified level of certain performance criteria (for PSUs 
granted in fiscal 2021 it is based on a combination of our design win revenue, non-GAAP gross margin percentage and non-
GAAP operating expenses and for the PSUs granted prior to fiscal 2021 it is based on non-GAAP earnings per share). The 
potential  payout  ranges  from  0%  to  200%  of  the  target  grant  quantity  and  is  adjusted  on  a  linear  basis  with  a  payout 
triggering  if  our  measurement  results  equals  greater  than  65%  of  the  target  with  a  maximum  payout  achieved  at  135%  of 
target. 

Delivery  of  shares  earned,  if  any,  will  take  place  on  the  dates  provided  in  the  applicable  PSU  grant  agreement, 
assuming the grantee is still an employee, consultant, or director of our company at the end of the applicable service period. 
On the delivery date, we withhold shares to cover statutory tax withholding requirements and deliver a net quantity of shares 
to the recipient after such withholding. Until delivery of shares, the grantee has no rights as a stockholder with respect to any 
shares underlying the PSU award.

During  the  fiscal  year  ended  June  26,  2021,  PSU  activity,  including  PSUs  granted,  delivered,  and  forfeited,  and  the 

balance and aggregate intrinsic value of PSUs as of June 26, 2021 was as follows:

  Aggregate
Intrinsic
Value

    Weighted
Average

  PSU Awards  
  Outstanding  

    Grant Date
  (in millions)     Fair Value

Balance at June 2020..........................................................   
Granted..........................................................................   
Performance adjustment ...............................................   
Delivered.......................................................................   
Forfeited........................................................................   
Balance at June 2021..........................................................   

333,848       
174,231       
84,111       

(201,835)   
(72,963)   
317,392    $

    $

46.8     

41.61 
68.37 
— 
41.95 
44.97 
62.41  

We value PSUs using the aggregate intrinsic value on the date of grant and amortize the compensation expense over 
the three-year service period on a ratable basis, dependent upon the probability of meeting the performance measures.  Of the 
shares  delivered,  82,240    shares  valued  at  $6.3  million  were  withheld  to  meet  statutory  minimum  tax  withholding 
requirements.  The unrecognized share-based compensation cost of our outstanding PSUs was approximately $13.4 million 
as of June 26, 2021, which will be recognized over a weighted average period of approximately 1.09 years.

F-34

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
   
 
 
 
   
 
 
 
 
 
 
     
     
      
      
Phantom Stock Units 

The  2019  Incentive  Plan  authorizes  the  grant  of  phantom  stock  units  to  non-employee  directors,  officers  and 
employees. We initially granted phantom stock units in October 2019.  Phantom stock units are cash-settled and entitle the 
recipient to receive a cash payment equal to the value of a single share for each unit based on the average closing share price 
of our stock over the thirty calendar days prior to the vesting date. Grants of phantom stock units vest over three years, with 
an  annual  vesting  date  of  October  31  each  year  subsequent  to  the  grant  date.  We  recognize  compensation  expense  for 
phantom stock units on a straight-line basis for each tranche of each award based on the average closing price of our common 
stock over the thirty calendar days ended prior to each balance sheet date.  The outstanding phantom stock units had a fair 
value of $140.17 per unit at June 26, 2021 and our accrued liability for such units was $18.4 million.

Phantom stock activity was as follows: 

    Aggregate  
Intrinsic
Value

  Phantom    
 Stock Units    
 Outstanding    (in millions) 

Balance as of June 2020.......................................................
Paid .................................................................................
Forfeited .........................................................................
Balance as of June 2021.......................................................

789,113     
(242,692)   
(143,963)   
402,458    $

59.4  

Employee Stock Purchase Plan

Our 2019 ESPP became effective October 29, 2019 which replaced our 2010 ESPP.  The 2019 ESPP, and previously 
the  2010  ESPP,  allows  employees  to  designate  up  to  15%  of  their  base  compensation,  subject  to  legal  restrictions  and 
limitations, to purchase shares of common stock at 85% of the lesser of the FMV at the beginning of the offering period or 
the  exercise  date.    Under  the  2019  ESPP,  the  offering  period  extends  for  up  to  one  year  and  includes  two  exercise  dates 
occurring at six-month intervals.  Under the 2010 ESPP, the offering period extended for up to two years and included four 
exercise dates occurring at six-month intervals.  Under the terms of our 2019 ESPP, and previously under our 2010 ESPP, if 
the  FMV  at  an  exercise  date  is  less  than  the  FMV  at  the  beginning  of  the  offering  period,  the  current  offering  period  will 
terminate and a new offering period will commence.

Shares purchased, weighted average purchase price, cash received, and the aggregate intrinsic value for employee stock 
purchase plan purchases in fiscal 2021, 2020, and 2019 were as follows (in millions, except shares purchased and weighted 
average purchase price):

Shares purchased ................................................................   
Weighted average purchase price.......................................  $
Cash received .....................................................................  $
Aggregate intrinsic value ...................................................  $

2021
220,389    
57.00   $
12.6   $
10.3   $

2020
346,502     
30.50    $
10.6    $
10.1    $

2019
544,886 
29.48 
16.1 
2.8  

The fair value of each award granted under our 2019 ESPP and our 2010 ESPP for fiscal 2021, 2020, and 2019 was 
estimated  using  the  Black-Scholes  option  pricing  model,  assuming  no  expected  dividends  and  the  following  range  of 
assumptions:

2021

2020

2019

Expected volatility ..........................................  43.8% - 57.0%     43.8%-45.4%     43.8%-44.2%  
Expected life in years...................................... 
Risk-free interest rate......................................  0.12% - 1.63%     1.62% - 2.43%     2.43%-2.68%  
Fair value per award .......................................  $

0.25 - .75

0.5 - 1.5

0.5 - 1.0

20.82

15.63

15.48

    $

    $

The expected volatility is based on either implied volatility for the expected lives of 0.5 years or a weighting of implied 
and historical volatility for expected lives greater than 0.5 years. The expected life is the period starting at the enrollment date 
until each purchase date remaining in the offering period at the date of enrollment in the plan. The risk-free interest rate is 
based on U.S. Treasury yields or yield curve in effect for each expected life.

F-35

 
  
 
 
 
 
 
 
  
  
  
  
  
  
  
 
 
   
   
 
 
 
   
   
 
   
   
 
 
Unrecognized share-based compensation costs for awards granted under our 2019 ESPP at the end of fiscal 2021 were 

approximately $1.1 million that will be amortized over the next 2 months. 

10. Employee Benefit Plans

401(k) Plan

We have a 401(k) Retirement Savings Plan for full-time employees in the U.S. Under the plan, eligible employees may 
contribute a portion of their net compensation up to the annual limit of $19,500, or $26,000 for employees who are 50 years 
or  older.    In  fiscal  2021,  we  provided  matching  funds  of  25%  of  our  employees’  contributions,  excluding  catch-up 
contributions.    The  employer  matching  funds  vest  immediately.    We  made  matching  contributions  of  $1.8  million,  $2.1 
million, and $2.4 million in fiscal 2021, 2020, and 2019, respectively.

11. Income Taxes

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security, or CARES, Act was enacted and signed into 

law. The CARES Act did not have a material impact on the income tax provision for the fiscal year ended June 26, 2021.

Income/(loss)  before  provision  for  income  taxes  for  fiscal  2021,  2020,  and  2019  consisted  of  the  following  (in 

millions):

United States ......................................................................  $
Foreign ...............................................................................   
Income/(loss) before provision for income taxes .........  $

(21.0)  $
141.1 
120.1    $

(13.5)  $
172.9 
159.4    $

(40.6)
19.8 
(20.8)

2021

2020

2019

The provision for income taxes for fiscal 2021, 2020, and 2019 consisted of the following (in millions):

Current tax expense/(benefit)

Federal ..........................................................................  $
State ..............................................................................   
Foreign ..........................................................................   

Deferred tax expense/(benefit)

Federal ..........................................................................   
State ..............................................................................   
Foreign ..........................................................................   

Provision for income taxes ......................................  $

2021

2020

2019

 $
4.1 
0.1     
36.1     
40.3     

(0.5)   
-     
(8.4)   
(8.9)   
31.4    $

 $
0.8 
—     
35.4     
36.2     

(5.8)   
0.1     
8.1     
2.4     
38.6    $

(4.9)
— 
20.4 
15.5 

(8.5)
— 
(6.7)
(15.2)
0.3  

F-36

 
 
   
   
 
  
  
 
 
 
 
 
 
 
     
       
       
 
 
   
     
       
       
 
 
   
The  provision  for  income  taxes  differs  from  the  federal  statutory  rate  for  fiscal  2021,  2020,  and  2019  as  follows  (in 

millions):

2021

2020

2019

Provision at U.S. federal statutory tax rate.........................  $
State income taxes ..............................................................   
Non-deductible share-based compensation ........................   
(Windfall)/shortfall related to share-based
compensation......................................................................   
Non-deductible officer compensation ................................   
Business credits ..................................................................   
Foreign tax differential.......................................................   
Nondeductible amortization ...............................................   
Foreign income inclusion ...................................................   
Deferred taxes on unremitted foreign earnings ..................   
Other differences ................................................................   
Provision for income taxes ......................................  $

25.1 
 $
0.1     
5.2     

(3.8)   
6.4     
(3.8)   
(6.7)   
—     
5.2     
3.5     
0.2     
31.4    $

33.5 

 $
—     
3.0     

2.1     
1.9     
(6.1)   
4.9     
—     
0.7     
—     
(1.4)   
38.6    $

(4.4)
— 
4.0 

3.3 
1.1 
(6.1)
1.0 
0.7 
0.4 
— 
0.3 
0.3  

Net  deferred  tax  assets  of  $1.2  million  and  $28.7  million  were  non-current  as  of  the  end  of  fiscal  2021  and  2020, 

respectively, and were included in other assets in the accompanying consolidated balance sheets.

Significant  components  of  our  deferred  tax  assets  (liabilities)  as  of  the  end  of  fiscal  2021  and  2020  consisted  of  the 

following (in millions):

Deferred tax assets:

Capital loss carryforward ........................................................................................  $
Inventory write downs............................................................................................. 
Property and equipment .......................................................................................... 
Accrued compensation ............................................................................................ 
Deferred compensation ........................................................................................... 
Share-based compensation ...................................................................................... 
Business credit carryforward................................................................................... 
Acquisition intangibles............................................................................................ 
Net operating loss carryforward.............................................................................. 
Other accruals.......................................................................................................... 

Valuation allowance ..................................................................................................... 

Deferred tax liabilities:

Property and equipment .......................................................................................... 
Interest..................................................................................................................... 
Unremitted foreign earnings.................................................................................... 
Acquisition intangibles............................................................................................ 

2021

2020

0.2    $
3.9   
—   
0.3   
0.8   
8.8   
39.1   
6.0   
7.2   
4.3   
70.6   
(32.6)  
38.0   

(0.9)  
(3.4)  
(3.5)  
(29.0)  
(36.8)  

Net deferred tax assets ..................................................................................................  $

1.2    $

— 
4.0 
1.2 
3.4 
0.6 
6.8 
41.3 
6.6 
— 
5.2 
69.1 
(33.3)
35.8 

— 
(7.1)
— 
— 
(7.1)
28.7  

Realization  of  deferred  tax  assets  depends  on  our  generating  sufficient  U.S.  and  certain  foreign  taxable  income  in 
future years to obtain a benefit from the utilization of those deferred tax assets on our tax returns. Accordingly, the amount of 
deferred tax assets considered realizable may increase or decrease when we reevaluate the underlying basis for our estimates 
of  future  U.S.  and  foreign  taxable  income.  As  of  the  end  of  fiscal  2021,  a  valuation  allowance  of  $32.6  million  was 
maintained to reduce deferred tax assets to levels we believe are more likely than not to be realized through future taxable 
income.  The net change in the valuation allowance during fiscal 2021 was a decrease of $0.7 million.

F-37

 
 
 
 
 
 
 
 
 
   
 
 
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
We  assessed  our  current  and  future  liquidity  in  the  fourth  quarter  of  fiscal  2021  and  determined  not  to  permanently 
reinvest earnings of certain foreign jurisdictions. As a result of our determination, we recorded $3.5 million of deferred tax 
liability.  We continue to indefinitely reinvest $2.1 million of accumulated earnings.  

As of the end of fiscal 2021, we had federal, California, and foreign net operating loss carryforwards of approximately 
$0.5 million, $4.8 million, and $30.6 million, respectively.  The California net operating loss will begin to expire in fiscal 
2033, if not utilized.  Under current tax law, net operating loss and tax credit carryforwards available to offset future income 
or  income  taxes  may  be  limited  by  statute  or  upon  the  occurrence  of  certain  events,  including  significant  changes  in 
ownership.

We had $16.2 million and $47.0 million of federal and state research tax credit carryforwards, respectively, as of the 
end of fiscal 2021. The federal research tax credit carryforward will begin to expire in 2038 and the state research tax credit 
can be carried forward indefinitely.

The total liability for gross unrecognized tax benefits related to uncertain tax positions, included in other liabilities in 
our consolidated balance sheets, increased by $2.5 million from $20.1 million in fiscal 2020 to $22.6 million in fiscal 2021.  
Of  this  amount,  $14.3  million  will  reduce  the  effective  tax  rate  on  income  from  continuing  operations,  if  recognized.    A 
reconciliation  of  the  beginning  and  ending  balance  of  gross  unrecognized  tax  benefits  for  fiscal  2021,  2020,  and  2019 
consisted of the following (in millions):

Beginning balance ..............................................................  $

20.1    $

18.9    $

24.8 

2021

2020

2019

Increase in unrecognized tax benefits related to 
current year tax
   positions .....................................................................   
Increase in unrecognized tax benefits related to prior 
year tax
   positions .....................................................................   
Decrease due to effective settlement with tax 
authorities......................................................................   
Remeasurement of unrecognized tax benefits ..............   
Decrease due to statute expiration ................................   
Ending Balance ..................................................................  $

5.5     

3.2     

4.2 

—     

0.1     

— 

—     
—     
(3.0)   
22.6    $

—     
—     
(2.1)   
20.1    $

(6.2)
(2.0)
(1.9)
18.9  

Accrued interest and penalties decreased by $0.2 million in fiscal 2021 as compared to fiscal 2020 and increased by 
$0.7 million representing income tax expense in fiscal 2019 as compared to fiscal 2018.  Accrued interest and penalties were 
$1.7  million  and  $1.9  million  as  of  June  26,  2021  and  June  27,  2020,  respectively.    Our  policy  is  to  classify  interest  and 
penalties, if any, as components of income tax expense.

It  is  reasonably  possible  that  the  amount  of  liability  for  unrecognized  tax  benefits  may  change  within  the  next  12 
months; an estimate of the range of possible changes could result in a decrease of $3.4 million to an increase of $3.0 million.  
Any  prospective  adjustments  to  our  unrecognized  tax  benefits  will  be  recorded  as  an  increase  or  decrease  to  income  tax 
expense  and  cause  a  corresponding  change  to  our  effective  tax  rate.  Accordingly,  our  effective  tax  rate  could  fluctuate 
materially from period to period.

Our major tax jurisdictions are the U.S., Hong Kong SAR, Japan and the U.K. From fiscal 2014 onward, we remain 

subject to examination by one or more of these jurisdictions. 

12. Segment, Customers, and Geographic Information

We operate in one segment: the development, marketing, and sale of semiconductor products used in electronic devices 
and  products.    We  generate  our  revenue  from  three  broad  product  categories:    the  IoT  product  applications  market,  the 
personal computing, or PC, product applications market, and the mobile, product market.

F-38

 
 
 
   
   
 
Net revenue within geographic areas based on our customers’ locations for fiscal 2021, 2020, and 2019, consisted of 

the following (in millions):

2021

2020

2019

China ..................................................................................  $
Taiwan ................................................................................   
Japan...................................................................................   
Other...................................................................................   
South Korea........................................................................   
United States ......................................................................   
  $

524.0   $
382.6    
330.7    
69.5    
28.5    
4.3    
1,339.6   $

540.6    $
204.5     
446.5     
77.3     
58.3     
6.7     
1,333.9    $

844.8 
239.8 
234.6 
64.9 
63.5 
24.6 
1,472.2  

Net revenue from external customers for each group of similar products for fiscal 2021, 2020, and 2019 consisted of 

the following (in millions):

IoT product applications.....................................................  $
PC product applications .....................................................   
Mobile product applications...............................................   
  $

580.9   $
354.7    
404.0    
1,339.6   $

317.6    $
317.4     
698.9     
1,333.9    $

313.2 
258.9 
900.1 
1,472.2  

2021

2020

2019

Long-lived  assets  within  geographic  areas  as  of  the  end  of  fiscal  2021  and  2020  consisted  of  the  following  (in 

millions):

United States ........................................................................  $
Asia/Pacific ..........................................................................   
Europe ..................................................................................   
  $

2021

2020

168.5   $
191.9    
602.3    
962.7   $

137.1 
223.5 
177.9 
538.5  

Our goodwill of $570.0 million has been allocated to two reporting units which include IoT and Mobile/PC.

Major customers’ revenue as a percentage of total net revenue for fiscal 2021, 2020, and 2019 were as follows:

Customer A......................................................................... 
Customer B ......................................................................... 
Customer C ......................................................................... 
Customer D......................................................................... 
Customer E ......................................................................... 
Customer F.......................................................................... 

2021
14%    
13%    
10%    

2020
18%    

*

12%    

2019
*
*
*

*
*
*

*
*
*

15%  
14%  
10%  

*

Less than 10%

F-39

 
 
   
   
 
 
 
 
   
   
 
 
 
 
   
 
 
 
 
   
   
 
 
   
 
 
   
   
   
   
   
   
13. Restructuring Activities

During fiscal 2021, we initiated restructuring activities, which included severance costs for activities intended to gain 
synergies from our recent acquisitions.  The restructuring costs related to these activities were recorded to the restructuring 
costs line item within our consolidated statements of comprehensive income and are complete as of the end of fiscal 2021. 

The restructuring liability activity for these restructuring activities during fiscal 2021 was as follows (in millions):

Accruals ...........................................................   $
Cash payments .................................................   
Balance as of June 2021...................................   $

5.7 
(5.5)
0.2  

Employee Severance
and Benefits

During fiscal 2020 we initiated restructuring activities, some of which included severance costs that were for activities 
intended to further improve efficiencies in our operational activities to align our cost structure consistent with our revenue 
levels and one was severance costs related to employees who transitioned with the sale of our assets of our TDDI product line 
for  LCD  mobile  displays  (See  Note  4  Acquisitions,  Divestiture  and  Investment  included  in  the  consolidated  financial 
statements  contained  elsewhere  in  this  Report).    The  restructuring  costs  related  to  these  activities  were  recorded  to  the 
restructuring costs line item within our consolidated statements of comprehensive income and are complete as of the end of 
fiscal 2021.    

The restructuring liability activity for these restructuring activities were as follows (in millions):

Employee Severance
and Benefits

Accruals ...........................................................   $
Cash payments .................................................   
Balance as of June 2020...................................    
Accruals ...........................................................    
Cash payments .................................................   
Balance as of June 2021...................................   $

25.1 
(19.0)
6.1 
1.7 
(7.8)
—  

F-40

 
 
 
 
 
 
 
 
 
 
 
 
(cid:2)(cid:8)(cid:10)(cid:9)(cid:8)(cid:10)(cid:1)(cid:3)(cid:11)(cid:5)(cid:7)(cid:4)(cid:8)(cid:10)(cid:6)(cid:1)(cid:5)(cid:8)(cid:7)(cid:11)
(cid:12)(cid:1)(cid:13)(cid:1)(cid:7)(cid:5)(cid:12)(cid:5)(cid:13)(cid:18)(cid:22)(cid:18)(cid:5)(cid:1)(cid:12)(cid:22)

(cid:11)(cid:27)(cid:21)(cid:26)(cid:20)(cid:23)(cid:29)(cid:43) (cid:7)(cid:38)(cid:35)(cid:29)(cid:36)(cid:37)(cid:32)(cid:31)(cid:43)

(cid:34)(cid:63)(cid:47)(cid:64)(cid:52)(cid:46)(cid:47)(cid:59)(cid:65)(cid:73)(cid:1)(cid:73)(cid:21)(cid:51)(cid:52)(cid:47)(cid:49)(cid:73)(cid:23)(cid:71)(cid:47)(cid:45)(cid:67)(cid:66)(cid:52)(cid:68)(cid:47)(cid:73)(cid:33)(cid:49)(cid:49)(cid:52)(cid:45)(cid:47)(cid:63)

(cid:4)(cid:23)(cid:20)(cid:31)(cid:43)(cid:2)(cid:38)(cid:37)(cid:29)(cid:23)(cid:35)(cid:43)

(cid:36)(cid:47)(cid:59)(cid:52)(cid:60)(cid:63)(cid:73)(cid:40)(cid:52)(cid:45)(cid:47)(cid:73)(cid:34)(cid:63)(cid:47)(cid:64)(cid:52)(cid:46)(cid:47)(cid:59)(cid:65)(cid:73)(cid:1)(cid:73)(cid:21)(cid:51)(cid:52)(cid:47)(cid:49)(cid:73)(cid:24)(cid:52)(cid:59)(cid:43)(cid:59)(cid:45)(cid:52)(cid:43)(cid:55)(cid:73)(cid:33)(cid:49)(cid:49)(cid:52)(cid:45)(cid:47)(cid:63)(cid:73)

(cid:15)(cid:20)(cid:29)(cid:23)(cid:23)(cid:29)(cid:43)(cid:1)(cid:40)(cid:36)(cid:20)(cid:35)(cid:23)

(cid:36)(cid:47)(cid:59)(cid:52)(cid:60)(cid:63)(cid:73)(cid:40)(cid:52)(cid:45)(cid:47)(cid:73)(cid:34)(cid:63)(cid:47)(cid:64)(cid:52)(cid:46)(cid:47)(cid:59)(cid:65)(cid:73)(cid:1)(cid:73)(cid:25)(cid:47)(cid:59)(cid:47)(cid:63)(cid:43)(cid:56)(cid:73)(cid:31)(cid:43)(cid:59)(cid:43)(cid:50)(cid:47)(cid:63)(cid:4)(cid:73) (cid:34)(cid:21)(cid:73)(cid:1)(cid:73)(cid:34)(cid:47)(cid:63)(cid:52)(cid:62)(cid:51)(cid:47)(cid:63)(cid:43)(cid:56)(cid:64)(cid:73)(cid:22)(cid:53)(cid:68)(cid:52)(cid:64)(cid:52)(cid:60)(cid:59)(cid:73)

(cid:11)(cid:27)(cid:21)(cid:26)(cid:20)(cid:23)(cid:29)(cid:43)(cid:2)(cid:35)(cid:32)(cid:32)(cid:28)(cid:23)(cid:35)

(cid:36)(cid:47)(cid:59)(cid:53)(cid:60)(cid:63)(cid:73)(cid:40)(cid:53)(cid:45)(cid:47)(cid:73)(cid:34)(cid:63)(cid:47)(cid:64)(cid:53)(cid:46)(cid:47)(cid:59)(cid:66)(cid:4)(cid:73)(cid:27)(cid:59)(cid:49)(cid:60)(cid:63)(cid:58)(cid:43)(cid:66)(cid:53)(cid:60)(cid:59)(cid:73)(cid:37)(cid:47)(cid:45)(cid:51)(cid:59)(cid:60)(cid:56)(cid:60)(cid:50)(cid:72)(cid:73)(cid:1)(cid:73)(cid:21)(cid:51)(cid:53)(cid:47)(cid:49)(cid:73)(cid:27)(cid:59)(cid:49)(cid:60)(cid:63)(cid:58)(cid:43)(cid:66)(cid:53)(cid:60)(cid:59)(cid:73)(cid:33)(cid:49)(cid:49)(cid:53)(cid:45)(cid:47)(cid:63)(cid:73)

(cid:1)(cid:29)(cid:23)(cid:41)(cid:43)(cid:3)(cid:26)(cid:32)(cid:38)

(cid:36)(cid:47)(cid:59)(cid:52)(cid:60)(cid:63)(cid:73)(cid:40)(cid:52)(cid:45)(cid:47)(cid:73)(cid:34)(cid:63)(cid:47)(cid:64)(cid:52)(cid:46)(cid:47)(cid:59)(cid:65)(cid:73)(cid:1)(cid:73)(cid:25)(cid:47)(cid:59)(cid:47)(cid:63)(cid:43)(cid:56)(cid:73)(cid:31)(cid:43)(cid:59)(cid:43)(cid:50)(cid:47)(cid:63)(cid:4)(cid:73)(cid:41)(cid:52)(cid:63)(cid:47)(cid:56)(cid:47)(cid:64)(cid:64)(cid:73)(cid:21)(cid:60)(cid:59)(cid:59)(cid:47)(cid:45)(cid:65)(cid:52)(cid:68)(cid:53)(cid:65)(cid:72)(cid:73)(cid:22)(cid:52)(cid:68)(cid:52)(cid:64)(cid:52)(cid:60)(cid:59)(cid:73)

(cid:15)(cid:20)(cid:37)(cid:27)(cid:36)(cid:26)(cid:43)(cid:6)(cid:20)(cid:31)(cid:23)(cid:36)(cid:20)(cid:31)(cid:43)

(cid:36)(cid:47)(cid:59)(cid:52)(cid:60)(cid:63)(cid:73)(cid:40)(cid:52)(cid:45)(cid:47)(cid:73)(cid:34)(cid:63)(cid:47)(cid:64)(cid:52)(cid:46)(cid:47)(cid:59)(cid:65)(cid:73)(cid:1)(cid:73)(cid:21)(cid:51)(cid:52)(cid:47)(cid:49)(cid:73)(cid:36)(cid:65)(cid:63)(cid:43)(cid:65)(cid:47)(cid:50)(cid:72)(cid:73)(cid:33)(cid:49)(cid:49)(cid:52)(cid:45)(cid:47)(cid:63)

(cid:17)(cid:23)(cid:31)(cid:28)(cid:20)(cid:37)(cid:43) (cid:9)(cid:32)(cid:22)(cid:20)(cid:39)(cid:20)(cid:37)(cid:27)(cid:43)

(cid:36)(cid:47)(cid:59)(cid:52)(cid:60)(cid:63)(cid:73)(cid:40)(cid:52)(cid:45)(cid:47)(cid:73)(cid:34)(cid:63)(cid:47)(cid:64)(cid:52)(cid:46)(cid:47)(cid:59)(cid:65)(cid:73)(cid:1)(cid:73)(cid:21)(cid:51)(cid:53)(cid:47)(cid:49)(cid:73)(cid:34)(cid:63)(cid:60)(cid:46)(cid:67)(cid:45)(cid:66)(cid:73)(cid:33)(cid:49)(cid:49)(cid:53)(cid:45)(cid:47)(cid:63)(cid:73)

(cid:16)(cid:32)(cid:22)(cid:22)(cid:43)(cid:10)(cid:23)(cid:33)(cid:27)(cid:31)(cid:36)(cid:28)(cid:27)(cid:43)

(cid:36)(cid:47)(cid:59)(cid:52)(cid:60)(cid:63)(cid:73)(cid:40)(cid:52)(cid:45)(cid:47)(cid:73)(cid:34)(cid:63)(cid:47)(cid:64)(cid:52)(cid:46)(cid:47)(cid:59)(cid:65)(cid:4)(cid:73) (cid:41)(cid:60)(cid:63)(cid:56)(cid:46)(cid:70)(cid:53)(cid:46)(cid:47)(cid:73) (cid:36)(cid:43)(cid:56)(cid:47)(cid:64)(cid:73)

(cid:8)(cid:32)(cid:26)(cid:31)(cid:43)(cid:11)(cid:21)(cid:5)(cid:20)(cid:35)(cid:29)(cid:20)(cid:31)(cid:22)(cid:43)

(cid:36)(cid:47)(cid:59)(cid:52)(cid:60)(cid:63)(cid:73)(cid:40)(cid:52)(cid:45)(cid:47)(cid:73)(cid:34)(cid:63)(cid:47)(cid:64)(cid:52)(cid:46)(cid:47)(cid:59)(cid:65)(cid:4)(cid:73) (cid:25)(cid:47)(cid:59)(cid:47)(cid:63)(cid:43)(cid:56)(cid:73)(cid:21)(cid:60)(cid:67)(cid:59)(cid:64)(cid:47)(cid:56)(cid:73)(cid:1)(cid:73)(cid:36)(cid:47)(cid:45)(cid:63)(cid:47)(cid:65)(cid:43)(cid:63)(cid:72)(cid:73)

(cid:8)(cid:20)(cid:31)(cid:27)(cid:21)(cid:23)(cid:43)(cid:11)(cid:32)(cid:35)(cid:27)

(cid:9)(cid:23)(cid:35)(cid:30)(cid:27)(cid:37)(cid:43)(cid:12)(cid:32)(cid:29)(cid:20)(cid:31)(cid:43)

(cid:4)(cid:27)(cid:39)(cid:42)(cid:23)(cid:36)(cid:26)(cid:43)(cid:15)(cid:26)(cid:20)(cid:26)(cid:43)

(cid:12)(cid:27)(cid:21)(cid:32)(cid:29)(cid:23)(cid:43)(cid:15)(cid:27)(cid:31)(cid:25)(cid:23)(cid:35)

(cid:3)(cid:35)(cid:20)(cid:27)(cid:25)(cid:43)(cid:15)(cid:37)(cid:23)(cid:27)(cid:31)

(cid:36)(cid:47)(cid:59)(cid:52)(cid:60)(cid:63)(cid:73)(cid:40)(cid:52)(cid:45)(cid:47)(cid:73)(cid:34)(cid:63)(cid:47)(cid:64)(cid:52)(cid:46)(cid:47)(cid:59)(cid:65)(cid:4)(cid:73)(cid:20)(cid:67)(cid:64)(cid:53)(cid:59)(cid:47)(cid:64)(cid:64)(cid:73)(cid:22)(cid:47)(cid:68)(cid:47)(cid:56)(cid:60)(cid:62)(cid:58)(cid:47)(cid:59)(cid:66)

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