Alex Wellins - Co-Founder and Managing Director, Blueshirt Group Richard Bergman - President and Chief Executive Officer Kathleen Bayless - Senior Vice President, Chief Financial Officer, Secretary and Treasurer

John Vinh - Pacific Crest Securities Kevin Cassidy - Stifel Nicolaus Osten Bernardez - Cross Research Jeff Schreiner - Feltl and Company Rob Stone - Cowen and Company Paul Coster - JPMorgan Liwen Zhang - Blaylock Robert Van Rajvindra Gill - Needham & Company Charlie Anderson - Dougherty & Company

Welcome to the Synaptics' second quarter fiscal 2014 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Alex Wellins of the Blueshirt Group. Please go ahead, sir.

Good afternoon and thanks for joining us today on Synaptics' second quarter fiscal 2014 conference call. This call is being broadcast live over the web and can be accessed from the Investor Relation section of the company's website at synaptics.com. With me on today's call are Rick Bergman, President and CEO; and Kathy Bayless, the company's CFO. In addition of the company's GAAP results, management will also provide supplementary results on a non-GAAP basis, which excludes share-based compensation charges and certain non-cash or non-recurring items. Please refer to the press release issued after the market closed today for a detailed reconciliation of GAAP and non-GAAP results. Additionally, we'd like to remind you that during the course of this conference call, Synaptics will make forward-looking statements. Forward-looking statements give our current expectations and projections related to our financial condition, results of operation, plans, objectives, future performance and business. Although, we believe that our estimates and assumptions to be reasonable, they are subject to a number of risk and uncertainties beyond our control and may prove to be inaccurate. Synaptics' cautions that actual results may differ materially from any future performance suggested in the company's forward-looking statements. We refer you to the company's current and periodic reports followed with the SEC, including the Synaptics' Form 10-K for the fiscal year ended June 30, 2013. For important risk factors that could cause actual results to differ materially from those contained in any forward-looking statement. Synaptics expressly disclaims any obligation to update this forward-looking information. With that said, I'll turn the call over to Rick Bergman. Rick?

I'd like to welcome everyone to today's call. I am pleased to report another quarter of strong topline growth with revenue of approximately $206 million, up 44% year-over-year. Our guidance for the December quarter excluded any contribution from the acquisition of Validity, which subsequently closed on November 7. We delivered strong non-GAAP net income of $31.1 million or $0.86 per diluted share. Excluding the impact from Validity, non-GAAP EPS would have been approximately $0.95, well above the midpoint of our guidance. Synaptics presence at the recent consumer electronic show drove a record number of booth tours, media briefings and partner meetings. Our full product portfolio was on display, showcasing another year of firsts, such as the industry's first full high-definition Intel touchscreen, ClickPad 2.0 with TypeGuard. The first clear ClearPad Single Layer On-Cell shipment, the first ForcePad shipment and of course 3D-touch in the Samsung Galaxy S4. The product demos were a strong reflection of the significant growth we have achieved across our business. Moving forward, we will continue to leverage our industry-leading ClearPad and TouchPad product portfolios along with our fingerprint authentication solutions and new product innovations, to further entrance ourselves as the number one human interface company. I'd like to start with update on our core markets, then Kathy will review our second quarter results in more detail and provide our current outlook before opening up the call to your questions. Over the past year Synaptics has proven to be the technology leader in mobile, with a broadest array of mobile touchscreen offerings in the industry and earning key design wins at every major OEM across our global customer base. Most recently, these include the LG G Flex and Samsung Galaxy Round smartphones, which feature the only curve screens in production today. The LG Vu 3 with a 5.2-inch IPS display; the Nokia Lumia 1320 and 1520, which feature 6-inch displays; and then Nokia Asha 502 and 500, which is the first phone in the market with our face detect technology. Face detect makes it easier, more cost effective for the smartphones to detect large objects such as human faces to prevent false inputs during voice calls and to avoid unintentional pocket dialing. We are also proud to acknowledge that our ClearPad solution drive the touch experience in the Sony Xperia Z1, which features a high resolution, 5-inch full HD display, and was voted best phone at CES by The Verge and the best smartphone by LAPTOP Magazine. In addition to our core ClearPad business, the continued adoption of our display integration solution remains a significant trend for us as our customers are implementing a range of On-Cell, Single Layer On-Cell and In-Cell solutions. We continue to make significant investments in the evolution of our display integration technology to meet the demand as our customer moves towards larger, high resolution displays. Examples of recent display integrated design wins includes, Google Nexus 5, the industries first full HD Intel phone; and the Motorola Moto G, which uses a Single Layer On-Cell solution. China continues to be a significant growth opportunity for the smartphone market, representing a growing share of global unit shift. We have strengthened our relationships with leading Chinese OEMs, including Lenovo, Huawei, ZTE and Coolpad. In addition, we continue to expand our customer base with new OEM such as Gionee, which recently started shipping its Elife E7 phone featuring a 5.5-inch full HD display. Demos on display at CES also featured the new Oppo N1 phone with an impressive 5.9-inch full-HD display and unique rotating 13 megapixel camera. Display integration is also a highly sought-after solution for this market, and for our Single Layer On-Cell capability, is ideal of catering to the region as well as other emerging markets. Our PC presence at CES demonstrated our continued leadership in the notebook market, where we continue to push the envelope on product development. The first ForcePad enabled notebook, the HP Elite Folio 1040 is now shipping. Innovation such as ForcePad help Synaptics remain ahead of the competition by combining our deep systems engineering and human factors expertise, enabling device manufactures to deliver a consistent high-quality user experience across the wide range of products. We are currently sampling the next generation ForcePad to OEMs and are excited about the adoption of this new family of solutions, which will enable much thinner notebooks, while adding a new dimension of pressure sensing. Our innovations in the PC market were also recognized as our ClickPad 2.0 solution won at CES innovation design and engineering award. ClickPad 2.0 with TypeGuard which is now shipping in the HP Spectre 13 and the Fujitsu LIFEBOOK is the most advanced capacitive sensing TouchPad technology available, delivering best-in-class durability in the industries most responsive and consistent click performance. TypeGuard software technology virtually eliminates false cursor movements, accidental taps and false edge scrolls by differentiating between a finger and a palm, giving users a more accurate response during everyday use. In close working relationship with Microsoft, Synaptics has also shipped the first Precision TouchPad product and the optional keyboard for the Venue 11 Pro from Dell. The Precision TouchPad initiative is designed to deliver a more uniform TouchPad experience across all OEMs. Synaptics' secure the majority of design featuring the Precision TouchPad for this generation. We look forward to continue to work with Microsoft in co-engineering the next generation Precision TouchPad. Moving to ThinTouch, since acquiring the technology, we have been working through the usability and manufacturability phases to ready the platform for markets later this calendar year. We've continued to develop exciting new keyboard use-case solutions and are currently sampling product with select customers. ThinTouch solutions featured at CES include prototypes with retractable keys and finger presence detection driven by Synaptics capacitive sensing capabilities, which will help to drive down the thickness and add enhanced usage model in the keyboard for notebook and add-on tablet keyboard solutions. Our approach enables flexible engagement models from OEMs, ranging from full functionality for the entire keyboard within a variety of form factors to custom implementation, such as capacitive sensors under the space bar and other touch-pace configurations that enrich the user experience. Our large display area at CES showcased a recent momentum in the tablet notebook market, featuring our recent design wins from Amazon, Dell and Lenovo as well as Acer and its recently launched Iconia W3 tablet. Our ClearPad Series 7 solution provided the most accurate finger and small object detection on the market, along with the faster report rate and superior noise resistance with an active stylus tracking option. The fine-tip active stylus option supports advanced features, such as hover detection and pressure, reporting to the host application. As the solution does not require separate digitizer, it enables very rich stylus usage models without adding cost, thickness or manufacturing complexity to the device. We see sustainable growth opportunities ahead in large display based on accelerating design win traction with leading OEMs. Turning to our biometrics group, Synaptics is uniquely positioned to deliver compelling benefits to OEMs and end-users through optimized performance and usability, advance integration and lowest systems cost. As a founding member of the FIDO Alliance, we are also helping to shape the standards for e-commerce authorization through fingerprint-based user identification, which will serve to simply the user experience and drive adoption. We are seeing very strong interest in our fingerprint solutions, not only in our target markets, smartphone, tablets and notebooks, but other market as well. While it's difficult to gauge the full extent to the opportunity, we currently see the market growing from 30 million units last year to over 0.5 billion in just two years. From a product standpoint, we now essentially have full share in the market for enterprise notebooks incorporating fingerprint solutions. Recent new design wins include multiple notebook and tablet releases from top three PC OEMs. Additionally, at CES, we showed the HTC One Max, Validity's first smartphone design win, which includes a swipe-based fingerprint sensor on the back. We are also sampling a small area sensor with customers. We expect to see a number of solutions in the market by the second half of the calendar year 2014, which will be a combination of slide and small area sensors depending on the OEM's need and time-to-market requirements. Future generation offerings contemplated in our roadmap include integrated solutions such as TouchPad as well as the inactive display area of mobile devices. And finally, we see the technology moving into the active display, allowing the solution to be incorporated anywhere within the touchscreen. We believe no other company could better serve this market in delivering touch-based fingerprint ID solutions across all applicable devices. As we closed out the calendar year, I'd like to take a moment to revisit our key priorities. We remain focused on continuing to drive strong sustainable growth, executing across the expanding opportunities in our core markets, furthering our leading innovation within human interfaces and building the scale necessary to continue our track record of success. Synaptics has benefited from strong organic growth over the years staring with our original TouchPad offerings in the PC market, which is starting to show signs of stabilization, and followed by our ClearPad solutions for mobile phones where we have successfully expanded our customer base and established a strong position as the opportunities shifts from growth in the high-end to the mid-to-low end of the market. We continue to drive product innovations through offerings, such as ForcePad in the PC area and display integration in mobile. We began to establish a solid foothold within tablets and large touchscreens and our roadmap for long-term growth includes additive inorganic growth through acquisitions we have made in biometrics video display interfaces and keyboards. As we entered the second half of the fiscal year, our core markets are healthy and we have taken strategic steps to double our available market opportunity. We are the clear technology and market leader in human interfaces. Our innovation pipeline is strong and we are starting to benefit as some of our new product growth engines begin to kick in the gear. We're extremely optimistic about the road ahead and look forward to continuing strong progress in fiscal 2014. With that, I will turn it over to Kathy for review of our financial results.

Thanks, Rick. We are very pleased with our December quarter result as revenue of $206 million represents record revenue for the second quarter period, and was above the midpoint of our guidance range. December quarter revenue increased 44% year-over-year and was down about 8% from the September quarter. The revenue mix from mobile and PC products was approximately 65% and 35% respectively in the December quarter. Revenue from mobile products was up 64% year-over-year and down 18% from the September quarter, and consistent predominantly of revenue from mobile phone applications. We also achieved strong tablet revenue growth year-over-year. Revenue from PC applications was up 17% from the prior year and 20% sequentially, above our expectations. Synaptics continues to lead the market for notebook TouchPads and ClickPads. In addition, we shipped our first ForcePad solution this quarter and added incremental revenue from our new fingerprint ID products. Non-GAAP gross margin was down 130 basis points year-over-year and 210 basis points sequentially at 47.1%. It was impacted by the higher than expected PC revenue, which generally carries lower margins. Non-GAAP operating expenses were $60.4 million, up $6.6 million from the prior quarter. The 12% increase in non-GAAP operating expenses was driven by a 20% increase in headcount from our December quarter-end, primarily related to the addition of over a 120 employees from our acquisition of Validity Sensors, which closed in early November. We intend to continue to invest in our new biometrics products group expanding both R&D and in-field customer supports headcount to accelerate market adoption of our new fingerprint solutions. GAAP operating expenses were $72.5 million, including $7.4 million of share-based compensation in the December quarter, non-cash charges of approximately $3.8 million for changed to contingent consideration, intangible amortization and deferred compensation and $1 million of non-recurring costs related to the closing of the Validity acquisition and post-acquisition integration and support services. The strong year-over-year increase in revenue and gross margin dollars in the December quarter drove about 54% increase in non-GAAP operating profit dollars. Our non-GAAP tax rate was 15.5% in the December quarter compared with 18% in the September quarter, primarily reflecting anticipated long-term cash tax benefits related to the Validity net operating losses. Our GAAP tax rate was 23.1%. Second quarter non-GAAP net income was $31.1 million or $0.86 per diluted share. As Rick mentioned, December quarter non-GAAP EPS, excluding the impact of the fingerprint operation and the increased weighted average share count related to the acquisition was $0.95 above the midpoint of our guidance range. To provide a little more color on the impact of the acquisition on the December quarter and non-GAAP result, revenue and operating loss were approximately $4 million and $3 million, respectively. And the share of issuance impact increased diluted shares by approximately 900,000. Turning to our balance sheet, we ended the first quarter with $369 million of cash. During the quarter, cash flow from operations was very strong at $57 million and we used $20 million of cash for part of the Validity purchase consideration and $20 million for share repurchases, bringing our year-to-date share repurchases to approximately 1.7 million shares or almost 5% of our shares outstanding. Remaining share repurchase authorization is $90 million available through October 2015. Employee participation in our equity incentive programs provided net cash of $29.3 million for the quarter. Capital expenditures for the quarter were $7.1 million, including final cash payments for the renovation of our headquarters campus in San Jose, California. In addition, we just purchased a building adjacent to our headquarters for $10 million to support our continuing business growth. Depreciation was $3.5 million for the quarter. Receivables at the end of the December quarter were $133 million, reflecting 58 days of sales outstanding, and inventories were $51.7 million, while inventory turns were eight. Before we dive into the quarterly outlook, I'd like to take a moment to review some of the details of the Validity acquisition. At the time of the acquisition in November, we paid approximately $90.3 million in a combination of cash and 1.6 million shares of common stock. In addition, we may pay up to an additional $162.5 million in earn-out payments primarily in cash. On Tuesday of this week, we filed the registration statement for the 1.6 million shares issued and the potential additional shares that could be issued as part of the earn-out. We determined that the purchase price consideration value for GAAP accounting could be approximately $127.8 million consisting of $70.3 million for the shares issued, $20 million for the cash paid and $37 million of contingent consideration. The contingent consideration incorporates a stock and cash component, which have been for as liability. Identified intangible assets were valued at $76.4 million and goodwill was determined to be $39 million. We anticipate that changes to the fair value of the contingent consideration could result in volatility in our GAAP operating results as we go forward. Further, the amortization of the purchased intangibles is expected to increase in future periods as the IP R&D is completed. Now, I will take a few minutes to discuss our quarterly outlook. Based on our backlog of approximately $75 million entering the March quarter, which is a typically a very back-end loaded quarter, customer forecast and expected product mix, we anticipate revenue to be in the range of $180 million to $200 million. Our expected revenue range reflects seasonality with some incremental contribution from our new fingerprint ID business. Taking into account our overall revenue mix, we expect non-GAAP gross margin for the March quarter to be similar to the December quarter at around 47%. We expect non-GAAP operating expenses in the March quarter to increase from the December quarter from the inclusion of a fourth quarter of investment in our biometrics product and technology as well as ongoing investment in engineering and in-field customer support to expand our overall product portfolio and customer base. We anticipate that SFAS 123(R) charge in the March quarter to be in the range of $7.7 million to $7.9 million. GAAP expenses will also include a non-cash charge of approximately $5 million related to intangible amortization and change to contingent consideration, however, the change in contingent consideration could vary depending upon changes to assumptions that drive the accounting fair value. We anticipate our non-GAAP cash tax rate for the March quarter and for the year to be in the range of 16% to 18%. Weighted shares are expected to be $37 million to $38 million, reflecting a full quarter impact of the shares issued in the Validity acquisition among other factors. Non-GAAP net income per diluted share for the March quarter is anticipated to be in the range of $0.44 to $0.64 per share. In closing, we are very pleased with our financial results for the first half of fiscal '14. We believe we're on track for record revenue in a fiscal year and believe the Validity acquisition will become accretive as early as the fourth quarter of the fiscal '14, sooner than previously expected. With that, we'll now turn the call over to the operator to start the Q&A.

(Operator Instructions) And our first question is from the line of John Vinh with Pacific Crest Securities. John Vinh - Pacific Crest Securities: First, just kind of housekeeping question. Can you talk about what the Validity contribution was in the December quarter and what the mix was of smartphones versus PCs? And then how do we think about Validity's contribution in your March quarter guidance?

John, as I mentioned on the call, I gave out some of the information related to Validity for the December quarter. So in the December quarter, the revenue impacts on Validity was about $4 million, operating loss about $3 million and the shares impact was about 900,000 additional shares for the quarter. As we talked about before on Validity, I mean the primary business at the time of acquisition was PC based, so the revenue, the majority of that, the $4 million was PC-based revenue. John Vinh - Pacific Crest Securities: And then how do we think about kind of the contribution of Validity or what assumptions are you making in terms of what that's contributing to your March quarter outlook?

Well, as we've talked about before, I mean we have a full quarter of Validity obviously for the first time, so we do have the ongoing business from the PC standpoint. They shipped their first mobile phone and there is additional design in process. So there will be additional incremental revenue this quarter that's been factored into our guidance. John Vinh - Pacific Crest Securities: And in terms of the mix, my last follow-up, do you think that in the March quarter you could have smartphone contributions outweigh PC contributions from the fingerprints sensing side?

I don't think that we're going get into that today, John.

Our next question is from the line of Kevin Cassidy with Stifel Nicolaus. Kevin Cassidy - Stifel Nicolaus: Your guidance for the March quarter on gross margin, are you assuming the same mix of PCs to handsets?

For the March quarter, I would say that PCs will likely be not quite as strong. It will be more of a mobile touchscreen type of mix. And as we've talked about before from a market standpoint, some of the unit growth is coming from mid-range and lower-end, so it's just the overall product mix of mobile and PC. Kevin Cassidy - Stifel Nicolaus: That was going to be my next question, within the handsets, whether you're seeing a more of a pull for the low-end to mid-range phones. Is that a drag on the gross margins?

Again, from an overall market standpoint, the high-end part, most of the growth now in the market, the market is still growing great. The biggest portion of the growth is in the mid-range and the lower-end type solution. So as we continue to grow, we have a broad product portfolio where we're addressing the wide range of market opportunities out there. But as we go forward, I mean, the whole mix of the portfolio is heavily weighted to premium as it has been over the several quarters. Kevin Cassidy - Stifel Nicolaus: Maybe I'll ask the one obvious question that someone else might ask, but you have once said that you had expected year-over-year growth, fiscal year over fiscal year to be over 20%. Is that confident? Are you still confident with that?

Sure, Kevin, actually I addressed this question at CES during my presentation there. So we're still confident that we'll have similar growth as last year on our core business. And then the acquisition of Validity will be added upon top of that. And as you well know, last year's growth was 20%.

Your next question is from the line of Osten Bernardez with Cross Research. Osten Bernardez - Cross Research: Just to begin, with respect to your comment on the Validity accretion taking place earlier, I want to know what are you seeing now that you've closed the deal from an integration standpoint. And what are your plans for OpEx for that business going forward? And why move on the accretion expectations?

I'll address the first half of that question, and then will Kathy talk about the OpEx expectations. As we mentioned, when we announced the acquisition, and we went out as part of our due diligence and talked to OEMs. There was already strong pull for the fingerprint sensing function. So no real surprise there. Kind of the message we heard is, hey, we want a big, credible supplier that can actually support us and help us with the integration that occurs with the fingerprint sensing and the security and everything else involved with it. And now actually what was, call it strong suggestion or push, we're seeing design wins come to fruition on a lot of these opportunities, and hence, that that will certainly help our growth in this marketplace. Again, to kind of repeat a little bit of my CES presentation, we talked about that the market growing from 30 million units last fiscal year up to 500 million units within a couple of year, so very robust, strong adoption of fingerprint sensing solutions. And Kathy, do you want to address the OpEx side of that?

Sure. From operating expense, again, to go back a little bit to what we've talked about it, when we did the Validity acquisition and subsequent to that, at the time of the acquisition, Validity was running around $7 million a quarter from an operating expense standpoint. So since the acquisition, we expect basically to continue to invest in the business, and that's what I mentioned on the script. So what we saw in last quarter, in the December quarter was a partial quarter of that investment, so a little beyond a partial quarter of above $7 million. And as we go forward, then we'll have full quarter in the March quarter of that investment.

Your next question is from the line of Jeff Schreiner with Feltl and Company. Jeff Schreiner - Feltl and Company: I was just wondering, you're not breaking biometric out at this point. Are you going to be breaking biometric out in the future, so that we can have a better understanding of how the core business is performing?

At this point in time, I mean what we have decided to do is we're going to possible have biometrics really fixed within the existing customer base. And so what we're going to do is we're going to, if it's related to mobile-base customer, the revenue will be in that category. And if it's related to the PC-based customer, then it will be in the other category. If it becomes a big, big portion of the business, then we'll provide some additional color beyond that. Jeff Schreiner - Feltl and Company: And obviously there was some strength in the PC segment, even on the core side of the business. Was that due to better pricing environment or better units?

So Jeff, our PC business obviously grew nicely. And it's kind of a, called a grab-bag at different reasons; there wasn't one consistent team. Obviously, we had the fingerprint revenue coming in there that Kathy mentioned. There was also stronger units in the market. We think gained a couple of percentages and market share there as well. And our ASP is holding nicely in that business, as things like ForcePad and ClickPad 2.0 kick into play.

Our next question is from the line of Rob Stone with Cowen and Company. Rob Stone - Cowen and Company: A couple more questions related to Validity, please. One is with respect to the orders ramping up sooner and getting to accretion in the June quarter. I know you're probably not going to break that out by end segment, but just proportionally, is that coming more from PC or smartphones for the moment?

Rob, as we've mentioned, we expected a big growth in the market data that we have shown to come first eventually from smartphones and tablets. And the notebook or PC segment is actually smaller in both of those segments now. So you're kind of question is how quickly do those other segments kick in to take over notebooks. Well, I can't give out specifics, but that's certainly as you could expect, you saw the run rate that we did last quarter on the notebook side, and you'd expect with a full quarter what would that number could turn out to and maybe some seasonality. You get a pretty good idea that the other segments are starting to kick in our fiscal Q4. Rob Stone - Cowen and Company: My follow-up question is related to the ramp-up of investments. You mentioned that you expect to grow expenses more in the March quarter. Is that something where the step-up rate above your normal investment should level off probably? And can you say if maybe fourth quarter is when that happens? Or do you see the biometrics business growing so rapidly that we'll continue to see above-average investment for several quarters?

Well, Rob, as I said the top priority is for us is still growth. And as long as we see some great opportunities out there in the markets, in the businesses that we have, we're going to continue to invest ahead of that curve. So both on the touch controller side as well as the fingerprint side, we see robust opportunities. So we're investing in both of those businesses. I will say in the fingerprint side, we're having a tough time dealing with all the opportunities, so we're trying to add as many people as quickly as we can over the next couple of quarters, but at the same time, we never comprise. We want the best people in the industry. I think one of the things that gets a kind of little bit ignored about Synaptics is what we've done in terms of investment and R&D. We have kept that at nice, healthy percentages, so we can have that growth. But we do a really good job managing the SG&A side of things as well. It's about 10% of our revenue. And in that way we kind of manage the overall OpEx, so more of that translates to the bottomline. Rob Stone - Cowen and Company: A final quick one if I may, you mentioned good progress in China. Do you have a sense of how your market share might have changed since you discussed it at the analyst day last year?

As you know, we only do the market share precision kind of once a year, because it is really, really hard to track it down. In China, it is the worst region to do it, because there's inventory effects, there's just the variety of many, many different customers and so on. So I can kind of talk in more generalities, and specific numbers, but we continue to do well in the high-end of the phones. The customers there are just as demanding as the rest of the world. So our top of the end products get designed in there, in our share, into the OEMs and so on, and I talked a little bit about that in the script. And we are making very good solid progress in more of the mid-range of the marketplace as well where things like Single Layer On-Cell come into the play. We still have work to do for the lower-end of the market. It does takes specific teams and solutions to get down to the some of the cost points there. But that's the opportunity for us. It's a big chunk of the market there, and we've got lasers aimed at that segment. And I think you'll start to see some results, maybe the tail-end of this fiscal year and certainly next year.

Your next question is from the line of Paul Coster with JPMorgan. Paul Coster - JPMorgan: Kathy, this may be difficult to answer, but could you take, hazard a guess at what the pro forma EPS guidance would have been in the March quarter without Validity, just so that we get kind of apples-to-apples comparison against the consensus numbers that are out there?

Yes. I really, we didn't put those together. It's just because of the fact that it is a full quarter impact out there and it's very much an estimate and overall forecast for the quarter.

The other, again a point to make there, Paul, is of course, whenever you get a question, that this is going to be difficult to answer, you probably know the answer before you start, but anyways, keep in mind that we've quickly integrated the Validity team into the company, so we have people from our operations and architect and analog team already contributing heavily to this business unit, so it gets harder and harder to do kind of the how much contribution from this particular business versus other businesses, if the world hadn't changed. So the world has changed a lot around here at Synaptics. I think we have made great progress integrating the team and leveraging the combined strengths of both company to really go after this marketplace.

And amortization and Kathy, we should assume about $5 million a quarter now for the next few, at least couple of years now, right? JPMorgan: And amortization and Kathy, we should assume about $5 million a quarter now for the next few, at least couple of years now, right?

So for the March quarter, what I said the amortization change, the contingent consideration, we're looking at it being around $5 million for the March quarter. And put some cautionary language in the script, because of the contingent considerations. It's a large number depending upon how successful we are with the business. Discount rates going forward every quarter that number gets adjusted, the fair value get adjusted, so that could move a little bit quarter-on-quarter and then as the IP R&D as we finish up the developments there that allowed some additional ongoing amortization after that. So $5 million next quarter, likely go forward, it will be little bit higher after that. Paul Coster - JPMorgan: Rick, you sound very confident that Validity is going to be adopted. Can you just remind folks what it means in terms of the average selling price per unit? And also what it means in terms of gross margins relative to the corporate average?

The ASP for the solutions can widely vary depending actually whether it's swipe or area. And then actually there is this kind of a chip versus tail-end module type of dynamic there as well. For those that have tracked Synaptics for awhile, you will kind of recognize that that language. And we're still sorting through what's the best business model, which can add a bit of a flavor to the overall selling price. And plus, we're so early in this marketplace. I mean, ultimately to get the adoption rates we want to have, we've got to drive down the solution cost to the OEM. So there is no doubt about that. So just like we said with the acquisition, for a swipe-type sensor, it's a little bit higher than we normally get in a touch controller, for a like a ClearPad type of solutions on the mobile phone. And then the area sensors is another notch above that. In terms of gross margin, it should land kind of right with our corporate average, is what we believe.

Our next question is from the line of Liwen Zhang with Blaylock Robert Van. Liwen Zhang - Blaylock Robert Van: My question has been answered.

Our next question is from the line of Rajvindra Gill with Needham & Company. Rajvindra Gill - Needham & Company: Just a point of clarification on the Validity or the overall fingerprint sensor market, so Rick, you said that the market is going from 50 million units in 2013 to 500 million units in 2015. Does that exclude Apple?

Let me be clear. It's actually 30 million units in 2013 and 530 million in calendar '16. And the same data, I showed at the CES presentation. So it's kind of third-party data, and obviously everybody is kind of watching what's going to happen here, but at least that's kind of one assessment of what the market will do and that does exclude Apple. Rajvindra Gill - Needham & Company: And going back to the Validity business as well, you're bringing in the accretiveness for the Validity business into the June quarter. At that point, you you'll recognize a full quarter of operating expenses. And I think Kathy said that it was a little bit over $7 million, partially of OpEx in the December quarter. So we expect the OpEx to increase for Validity going into March into June quarter. Remind us again what the gross margins for Validity are?

Gross margins for Validity, as Rick just mentioned, they should fall within the corporate range. Let me make a correction on the OpEx comment Rajvi. So OpEx was, when we talked about the acquisition of Validity, they were running at $7 million per quarter. We increased it some from there, but we only had a half of quarter. So I mean I really would look at it more like it was somewhere in the $4 million plus in the December quarter and then you get a full-quarter effect, double that in the March quarter, and then we're continuing to invest. Rajvindra Gill - Needham & Company: So if you're going to be accretive in the June quarter with a full quarter of OpEx, plus your investment in Validity, then the revenues must be $20 million plus for Validity?

That was the backward math that everybody has been running, ever since we did the Validity acquisition.

Next question is from the line of Charlie Anderson with Dougherty & Company. Charlie Anderson - Dougherty & Company: Just two quick housekeeping ones. Number one, did you have a 10% customer, and what was that percent? And then also, in terms of that $4 million coming from Validity in Q4, was there anything abnormal? Was it more back-half weighted, or is that sort of the run rate, it's more like an $8 million quarter-type of a business now in terms of mostly being PC?

I'll take the second half and then let Kathy answer that percentage question. So obviously, fingerprint sensors are used primarily in commercial notebooks and, and from our reports and our own experience, it was a very good calendar Q4 for commercial notebook. So we enjoyed some of that strength. Now, our hope is, because the world is getting conditioned to using fingerprint sensing, it really brings all the security and the convenience aspects of it that we'll see attach rates increase both in the commercial and consumer segment. So over time, we actually hope that the attach rate goes up. So that's kind of the dynamic, the very strong calendar Q4 in commercial notebooks. And then, Kathy?

So the other part of the question was, from a 10% customer standpoint, we actually had two. And the biggest OEM that we're working with, I mean their contribution was about 19% of revenue this quarter. And we have one other 10% customer, which was an ODM at 11%. Charlie Anderson - Dougherty & Company: And then it strikes me that you have two extremely important products that are sort of in sampling mode right now. One would be the small-area sensor in biometrics and the other will be ThinTouch. Rick, do you feel like we're going to move into maybe a quarter from now you'll talk about design wins, and then maybe we see revenue maybe by the December quarter? Just walk us through how you see those two starting to contribute?

Let's start with the fingerprint first. As you well know from following us Charlie, we don't talk about design wins, we talk about product launches, after our customers go out and announce. And certainly for fingerprint sensing, we should start to see a cadence begin in the June quarter, and then going from there in terms of customer announcements. On ThinTouch it's a bit of a longer cycle, just because it's so fundamental to the physical ID of the notebook and so on. It's really the first decision that's made on a notebook or a tablet. And so as everyone saw at CES, we have something that we think is now pretty good and we can go out and begin sampling to the OEMs. But that cycle, the design-in and qualification and so on, really would push us to the latter part of calendar '14 and then even into '15 as well.

The next question is a follow-up from the line of Jeff Schreiner with Feltl and Company. Jeff Schreiner - Feltl and Company: I just want to clarify one thing. Did you say that Validity's contribution was about $20 million in the March quarter?

No, we did not. I think we said that we expected to be accretive in the fourth quarter, so the conversation was is, if you go through OpEx and in gross margins, what that would mean would be, it would need to be somewhere around the $20 million contribution level in the fourth quarter. Jeff Schreiner - Feltl and Company: And just a follow-up, Rick, you talked about growing at 20% the core business, and then adding accretion on from the Validity acquisition. How are we able to track, whether you're keeping along those guidelines, if you're not going to break out Validity?

Well, it's a fair question. But we try to provide the annual guidance to help you do your roles best as possible and give you the much flavor as we can, on where we're going. But the annual guidance is something we give once a year. And as I said, we are, and it's a classic touch controller business, what we believe we will get there for fiscal '14. Jeff, one other thing to keep in mind is we look at how we break out the businesses, we're also looking ahead. And it's not inconceivable a year from now that you'll see a TouchPad solution, for example, with a fingerprint sensor. And so how do you account for that. Well, one way is, well, notebook, and that's part of the PC segment. So we're kind of making what's the best way to give visibility, we're thinking kind of a little bit ahead as well.

At this time, there are no further questions in queue. I'd like to turn the call back over to management for closing remarks.

Well, thank you to everybody for participating and it was great to see everybody at CES as well. And certainly it's going to be exciting calendar '14 for us with a lot of new products and a lot of excitement in the market with our customers that use our product. So look forward to talking to some of you in a little bit as well as the rest of you three months from now. Thank you.

Thank you. Ladies and gentlemen, this does conclude our conference for today. We'd like to thank you for your participation. And you may now disconnect.