Press Releases

Synopsys Posts Financial Results for First Quarter Fiscal Year 2015
Q1 2015 Financial Highlights
- Revenue: $542.0 million
- GAAP earnings per share: $0.41
- Non-GAAP earnings per share: $0.80

MOUNTAIN VIEW, Calif., Feb. 18, 2015 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its first quarter of fiscal year 2015.

For the first quarter of fiscal year 2015, Synopsys reported revenue of $542.0 million, compared to $479.0 million for the first quarter of fiscal 2014, an increase of approximately 13.2 percent.  

"Synopsys delivered strong results in the fiscal first quarter, and we are raising our revenue and non-GAAP earnings targets for the year," said Aart de Geus, chairman and co-CEO of Synopsys. "We see high demand for our new products, momentum in IP and prototyping, and we're making good progress in our higher-growth software quality and security space."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the first quarter of fiscal 2015 was $65.2 million, or $0.41 per share, compared to $67.7 million, or $0.43 per share, for the first quarter of fiscal 2014.

Non-GAAP Results

On a non-GAAP basis, net income for the first quarter of fiscal 2015 was $125.7 million, or $0.80 per share, compared to non-GAAP net income of $93.1 million, or $0.59 per share, for the first quarter of fiscal 2014.  Reconciliation between GAAP and non-GAAP results is provided at the end of this press release. 

Financial Targets

Synopsys also provided its financial targets for the second quarter and full fiscal year 2015.  These targets do not include any impact of future acquisition-related activities or costs that may be incurred in fiscal year 2015. These targets constitute forward-looking statements and are based on current expectations.  For a discussion of factors that could cause actual results to differ materially from these targets, see "Forward-Looking Statements" below.

Second Quarter of Fiscal Year 2015 Targets:

  • Revenue: $543 million - $553 million
  • GAAP expenses: $470 million - $489 million
  • Non-GAAP expenses: $418 million - $428 million
  • Other income and expense: $0 - $2 million
  • Tax rate applied in non-GAAP net income calculations: 22 - 23 percent
  • Fully diluted outstanding shares: 155 million - 159 million
  • GAAP earnings per share: $0.26 - $0.33
  • Non-GAAP earnings per share: $0.62 - $0.64

Full Fiscal Year 2015 Targets:

  • Revenue: $2.195 billion - $2.235 billion
  • Other income and expense: $5 million - $9 million
  • Tax rate applied in non-GAAP net income calculations: 19 - 20 percent
  • Fully diluted outstanding shares: 155 million - 159 million
  • GAAP earnings per share: $1.41 - $1.50
  • Non-GAAP earnings per share: $2.75 - $2.80
  • Cash flow from operations: approximately $450 million

GAAP Reconciliation

Synopsys continues to provide all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Accordingly, Synopsys presents non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Synopsys' operating results in a manner that focuses on what Synopsys believes to be its ongoing business operations and what Synopsys uses to evaluate its ongoing operations and for internal planning and forecasting purposes. Synopsys' management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Synopsys' management believes it is useful for itself and investors to review, as applicable, both GAAP information that includes: (i) the amortization of acquired intangible assets, (ii) the impact of stock compensation, (iii) acquisition-related costs, (iv) other significant items, including restructuring charges and certain accruals for legal and tax matters, and (v) the income tax effect of non-GAAP pre-tax adjustments as well as unusual or infrequent tax adjustments; and the non-GAAP measures that exclude such information in order to assess the performance of Synopsys' business and for planning and forecasting in subsequent periods. Whenever Synopsys uses a non-GAAP financial measure, it provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed below.

Reconciliation of First Quarter Fiscal Year 2015 Results

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP net income and earnings per share for the periods indicated below.

GAAP to Non-GAAP Reconciliation of First Quarter Fiscal Year 2015 Results

(unaudited and in thousands, except per share amounts)

       
 

Three Months Ended

 

January 31,

 

2015

 

2014

GAAP net income

$   65,189

 

$ 67,696

Adjustments:

     

Amortization of intangible assets

32,308

 

28,131

Stock compensation

20,581

 

18,118

Acquisition-related costs

712

 

1,074

Restructuring charges

15,336

 

-

Legal and tax matters

(1,519)

 

(10,267)

Tax adjustments

(6,936)

 

(11,665)

Non-GAAP net income 

$ 125,671

 

$ 93,087

       
       
       
 

Three Months Ended

 

January 31,

 

2015

 

2014

GAAP net income per share

$       0.41

 

$     0.43

Adjustments:

     

Amortization of intangible assets

0.21

 

0.18

Stock compensation

0.13

 

0.12

Acquisition-related costs

0.00

 

0.01

Restructuring charges

0.10

 

-

Legal and tax matters

(0.01)

 

(0.07)

Tax adjustments

(0.04)

 

(0.08)

Non-GAAP net income per share

$       0.80

 

$     0.59

       

Shares used in calculation

157,206

 

156,756

 

 

Reconciliation of Target Non-GAAP Operating Results

The following tables reconcile the specific items excluded from GAAP in the calculation of target non-GAAP operating results for the periods indicated below.

GAAP to Non-GAAP Reconciliation of Second Quarter Fiscal Year 2015 Targets

(in thousands, except per share amounts)

       
 

 Range for Three Months 

 

Ending April 30, 2015 (1)

 

Low

 

High

Target GAAP expenses

$   470,000

 

$   489,000

Adjustments:

     

      Estimated impact of amortization of intangible assets

(32,000)

 

(36,000)

      Estimated impact of stock compensation

(20,000)

 

(25,000)

Target non-GAAP expenses

$   418,000

 

$   428,000

       
       
 

Range for Three Months

 

Ending April 30, 2015 (1)

 

Low

 

High

Target GAAP earnings per share

$         0.26

 

$         0.33

Adjustments:

     

Estimated impact of amortization of intangible assets

0.23

 

0.20

Estimated impact of stock compensation

0.16

 

0.13

Estimated impact of tax adjustments

(0.03)

 

(0.02)

Target non-GAAP earnings per share

$         0.62

 

$         0.64

       

Shares used in non-GAAP calculation (midpoint of target range)

157,000

 

157,000

       
       

GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2015 Targets

       
 

Range for Fiscal Year

 

Ending October 31, 2015 (1)

 

Low

 

High

Target GAAP earnings per share

$         1.41

 

$         1.50

Adjustments:

     

Estimated impact of amortization of intangible assets

0.85

 

0.80

Estimated impact of stock compensation

0.60

 

0.55

Acquisition-related costs

0.00

 

0.00

Restructuring charges

0.10

 

0.10

Legal and tax matters

(0.01)

 

(0.01)

Net non-GAAP tax adjustments

(0.20)

 

(0.14)

Target non-GAAP earnings per share

$         2.75

 

$         2.80

       

Shares used in non-GAAP calculation (midpoint of target range)

157,000

 

157,000

       

(1) Synopsys' second quarter and fiscal year end on May 2, 2015 and October 31, 2015, respectively. 

 

 

Earnings Call Open to Investors

Synopsys will hold a conference call for financial analysts and investors today at 2:00 p.m. Pacific Time.  A live webcast of the call will be available at Synopsys' corporate website at www.synopsys.com.  A recording of the call will be available by calling +1-800-475-6701 (+1-320-365-3844 for international callers), access code 352869, beginning at 4:00 p.m. Pacific Time today.  A webcast replay will also be available on the website from approximately 4:30 p.m. Pacific Time today through the time Synopsys announces its results for the second fiscal quarter in May 2015.  Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and co-chief executive officer, and Trac Pham, chief financial officer, on its website following the call.  In addition, Synopsys makes additional information available in a financial supplement and corporate overview presentation, also posted on the corporate website.

Effectiveness of Information

The targets included in this release, the statements made during the earnings conference call and the information contained in the financial supplement and corporate overview presentation (available in the Investor Relations section of Synopsys' website at www.synopsys.com) represent Synopsys' expectations and beliefs as of the date of this release only.  Although this press release, copies of the prepared remarks of the co-chief executive officer and chief financial officer made during the call, the financial supplement, and corporate overview presentation will remain available on Synopsys' website through the date of the second quarter fiscal year 2015 earnings call in May 2015, their continued availability through such date does not mean that Synopsys is reaffirming or confirming their continued validity.  Synopsys does not currently intend to report on its progress during the second quarter of fiscal year 2015 or comment to analysts or investors on, or otherwise update, the targets given in this earnings release.

Availability of Final Financial Statements

Synopsys will include final financial statements for the first quarter fiscal 2015 in its quarterly report on Form 10-Q to be filed by March 12, 2015.

About Synopsys

Synopsys, Inc. (Nasdaq:SNPS) is the Silicon to Software™ partner for innovative companies developing the electronic products and software applications we rely on every day. As the world's 15th largest software company, Synopsys has a long history of being a global leader in electronic design automation (EDA) and semiconductor IP, and is also a leader in software quality and security testing with its Coverity® solutions. Whether you're a system-on-chip (SoC) designer creating advanced semiconductors, or a software developer writing applications that require the highest quality and security, Synopsys has the solutions needed to deliver innovative, high-quality, secure products. Learn more at www.synopsys.com.  

Forward-Looking Statements

This press release and our upcoming earnings results conference call contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934.  Any statements that are not statements of historical fact may be deemed to be forward-looking statements.  Forward-looking statements include but are not limited to: sections of this press release entitled "Financial Targets" and "Reconciliation of Target Non-GAAP Operating Results"; and statements regarding Synopsys' business, acquisitions, products, technologies, business model, new markets, customer demand for our technology, and projected financial results and business objectives.  These statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in our forward-looking statements.  Accordingly, we caution stockholders and prospective investors not to place undue reliance on these statements.  Such risks, uncertainties and factors include, but are not limited to:

  • continued uncertainty in the global economy and its potential impact on the semiconductor and electronics industries;
  • uncertainty in the growth of the semiconductor and electronics industry, and consolidation among our customers;
  • increased competition in the market for Synopsys' products and services including through consolidation in the industry;
  • changes in demand for Synopsys' products due to fluctuations in demand for its customers' products;
  • Synopsys' ability to realize the potential financial or strategic benefits of acquisitions it completes, including its acquisition of Coverity, Inc., and challenges in entering new markets in which Synopsys is not experienced and in the integration of the products and operations of acquired companies or assets into Synopsys' products and operations, including possible delays in customer orders, potential loss of customers, key employees, partners or vendors, customer demand and support obligations for product offerings, and disruption of ongoing business operations and diversion of management attention;
  • adverse changes in the relationships between Synopsys and key participants in the complex semiconductor ecosystem, including major foundries and intellectual property providers;
  • litigation;
  • lower-than-anticipated new IC design starts;
  • lower-than-anticipated purchases or delays in purchases of products or consulting services by Synopsys' customers, including delays in the renewal, or non-renewal, of Synopsys' license arrangements with major customers;
  • changes in accounting principles or standards or in the way they are applied;
  • changes in the mix of time-based licenses and upfront licenses;
  • variability in the timing of revenue recognition due to factors such as payment terms and the timing and value of contract renewals and professional services projects;
  • lower-than-expected orders; and
  • failure of customers to pay license fees as scheduled.

In addition, Synopsys' actual expenses, earnings per share and tax rate on a GAAP and non-GAAP basis for the fiscal quarter ending April 30, 2015; actual expenses, earnings per share, tax rate, and other projections on a GAAP and non-GAAP basis for fiscal year 2015; and cash flow from operations on a GAAP basis for fiscal year 2015 could differ materially from the targets stated under "Financial Targets" above for a number of reasons, including, but not limited to, (i) integration and other acquisition-related costs, (ii) application of the actual consolidated GAAP and non-GAAP tax rates for such periods, or judgment by management, based upon the status of pending audits and settlements, to increase or decrease an income tax asset or liability, (iii) a determination by Synopsys that any portion of its goodwill or intangible assets has become impaired, (iv) changes in the anticipated amount of employee stock-based compensation expense recognized in Synopsys' financial statements, (v) actual change in the fair value of Synopsys' non-qualified deferred compensation plan obligations, (vi) increases or decreases to estimated capital expenditures, (vii) changes driven by new accounting rules, regulations, interpretations or guidance, (viii) fluctuations in foreign currency exchange rates, (ix) litigation, (x) general economic conditions, and (xi) other risks as detailed in Synopsys' SEC filings, including those described in the "Risk Factors" section in its Annual Report on Form 10-K for the fiscal year ended October 31, 2014. Furthermore, Synopsys' actual tax rates applied to income for the second quarter and fiscal year 2015 could differ from the targets given in this press release as a result of a number of factors, including the actual geographic mix of revenue during the quarter and year, and actions by the government. Finally, Synopsys' targets for outstanding shares in the second quarter and fiscal year 2015 could differ from the targets given in this press release as a result of higher than expected employee stock plan issuances or stock option exercises, acquisitions, and the extent of Synopsys' stock repurchase activity.

Synopsys is under no obligation to (and expressly disclaims any such obligation to) update or alter any of the forward-looking statements made in this earnings release, the conference call, the financial supplement, or the corporate overview presentation, whether as a result of new information, future events or otherwise, unless otherwise required by law.

 

SYNOPSYS, INC.

Unaudited Consolidated Statements of Operations (1)

(in thousands, except per share amounts)

       
       
       
 

  Three Months Ended January 31,

 

2015

 

2014

Revenue:

     

  Time-based license

$   431,026

 

$   400,146

  Upfront license

46,480

 

33,972

  Maintenance and service

64,537

 

44,833

      Total revenue

542,043

 

478,951

Cost of revenue:

     

  License

70,784

 

62,825

  Maintenance and service

27,983

 

20,271

  Amortization of intangible assets

25,866

 

22,753

     Total cost of revenue

124,633

 

105,849

Gross margin

417,410

 

373,102

Operating expenses:

     

  Research and development

181,610

 

167,543

  Sales and marketing

106,169

 

105,792

  General and administrative

36,354

 

34,233

  Amortization of intangible assets 

6,442

 

5,378

  Restructuring charges

15,336

 

-

     Total operating expenses

345,911

 

312,946

Operating income

71,499

 

60,156

Other income (expense), net

5,116

 

11,028

Income before income taxes

76,615

 

71,184

Provision (benefit) for income taxes

11,426

 

3,488

Net income

$     65,189

 

$     67,696

       

Net income per share:

     

  Basic

$         0.42

 

$         0.44

  Diluted

$         0.41

 

$         0.43

       

Shares used in computing per share amounts:

     

  Basic

154,458

 

154,066

  Diluted

157,206

 

156,756

       

(1)  Synopsys' first quarter and fiscal year 2015 and 2014 ended on January 31, 2015 and February 1, 2014, respectively. For presentation purposes, we refer to periods ended January 31.  

 

 

SYNOPSYS, INC.

Unaudited Consolidated Balance Sheets (1)

(in thousands, except par value amounts)

             
       

January 31, 2015

 

October 31, 2014

ASSETS:

           

Current assets:

           

  Cash and cash equivalents

     

$                     796,824

 

$                     985,762

  Short-term investments

     

120,238

 

-

          Total cash, cash equivalents and short-term investments

     

917,062

 

985,762

  Accounts receivable, net

     

283,007

 

326,727

  Deferred income taxes

     

95,800

 

111,449

  Income taxes receivable and prepaid taxes

     

28,089

 

26,496

  Prepaid and other current assets

     

92,315

 

54,301

          Total current assets

     

1,416,273

 

1,504,735

Property and equipment, net

     

256,092

 

249,098

Goodwill

     

2,245,920

 

2,255,708

Intangible assets, net

     

332,385

 

365,030

Long-term prepaid taxes

     

4,501

 

17,645

Long-term deferred income taxes

     

227,715

 

208,156

Other long-term assets

     

179,463

 

175,127

           Total assets

     

$                  4,662,349

 

$                  4,775,499

             

LIABILITIES AND STOCKHOLDERS' EQUITY:

           

Current liabilities:

           

  Accounts payable and accrued liabilities

     

$                     242,335

 

$                     397,113

  Accrued income taxes

     

12,024

 

31,404

  Deferred revenue

     

823,745

 

928,242

  Short-term debt

     

265,000

 

30,000

           Total current liabilities

     

1,343,104

 

1,386,759

Long-term accrued income taxes

     

42,154

 

50,952

Long-term deferred revenue

     

98,413

 

77,646

Long-term debt

     

37,500

 

45,000

Other long-term liabilities

     

204,157

 

158,972

           Total liabilities

     

1,725,328

 

1,719,329

Stockholders' equity:

           

  Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding

     

-

 

-

  Common stock, $0.01 par value: 400,000 shares authorized; 153,457and

           

      155,965 shares outstanding, respectively

     

1,535

 

1,560

  Capital in excess of par value

     

1,586,965

 

1,614,603

  Retained earnings

     

1,608,758

 

1,551,592

  Treasury stock, at cost: 3,807 and 1,299 shares, respectively

     

(162,992)

 

(49,496)

  Accumulated other comprehensive loss 

     

(97,245)

 

(62,089)

           Total stockholders' equity

     

2,937,021

 

3,056,170

           Total liabilities and stockholders' equity

     

$                  4,662,349

 

$                  4,775,499

             

(1)  Synopsys' first quarter of fiscal 2015 ended on January 31, 2015, and its fiscal year 2014 ended on November 1, 2014. For presentation purposes, we refer to the closest calendar month end.  

 

 

SYNOPSYS, INC.

Unaudited Consolidated Statements of Cash Flows (1)

(in thousands)

       
 

 Three Months Ended January 31, 

 

2015

 

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

     

Net income

$  65,189

 

$   67,696

Adjustments to reconcile net income to net cash used in operating

     

    activities:

     

Amortization and depreciation

50,529

 

43,714

Stock compensation

20,581

 

18,118

Allowance for doubtful accounts 

300

 

(400)

Gain on sale of investments

(12)

 

(6,529)

Deferred income taxes

(158)

 

5,891

Net changes in operating assets and liabilities, net of 

     

acquired assets and liabilities:

     

Accounts receivable

40,857

 

7,910

Prepaid and other current assets

(42,860)

 

(13,635)

Other long-term assets

(7,597)

 

(6,695)

Accounts payable and other liabilities

(125,320)

 

(134,902)

Income taxes

(14,024)

 

(10,068)

Deferred revenue

(74,828)

 

(44,992)

Net cash used in operating activities

(87,343)

 

(73,892)

       

CASH FLOWS FROM INVESTING ACTIVITIES:

     

Proceeds from sales and maturities of short-term investments

8,012

 

-

Purchases of short-term investments

(128,427)

 

-

Proceeds from sales of long-term investments

-

 

6,791

Purchases of property and equipment

(19,607)

 

(14,353)

Cash paid for acquisitions and intangible assets, net of cash acquired

-

 

(900)

Capitalization of software development costs

(909)

 

(902)

Net cash used in investing activities

(140,931)

 

(9,364)

       

CASH FLOWS FROM FINANCING ACTIVITIES:

     

Proceeds from credit facility

250,000

 

-

Repayment of debt

(22,723)

 

(7,748)

Issuances of common stock

10,542

 

21,581

Purchase of equity forward contract

(36,000)

 

-

Purchases of treasury stock

(144,000)

 

(54,747)

Other

(14)

 

(111)

Net cash provided by (used in) financing activities

57,805

 

(41,025)

Effect of exchange rate changes on cash and cash equivalents

(18,469)

 

(5,107)

Net change in cash and cash equivalents

(188,938)

 

(129,388)

Cash and cash equivalents, beginning of the year

985,762

 

1,022,441

Cash and cash equivalents, end of the period

$796,824

 

$ 893,053

       
       

(1)  Synopsys' first quarter and fiscal year 2015 and 2014 ended on January 31, 2015 and February 1, 2014, respectively. For presentation purposes, we refer to periods ended January 31.  

 

 

INVESTOR CONTACT:
Lisa L. Ewbank
Synopsys, Inc.
650-584-1901
Synopsys-ir@synopsys.com

EDITORIAL CONTACT:
Yvette Huygen
Synopsys, Inc.
650-584-4547
yvetteh@synopsys.com

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SOURCE Synopsys, Inc.