Press Releases

Synopsys Posts Financial Results for First Quarter Fiscal Year 2009
PRNewswire-FirstCall
MOUNTAIN VIEW, Calif.
(NASDAQ-NMS:SNPS)

MOUNTAIN VIEW, Calif., Feb. 18 /PRNewswire-FirstCall/ -- Synopsys, Inc. , a world leader in software and IP for semiconductor design and manufacturing, today reported results for its first quarter ended January 31, 2009.

For the first quarter of fiscal 2009, Synopsys reported revenue of $339.8 million, a 7.7 percent increase compared to $315.5 million for the first quarter of fiscal 2008.

"Synopsys' first quarter was characterized by solid financial performance, continued technology momentum and visible customer success," said Aart de Geus, chairman and CEO of Synopsys. "While the recession has clearly deepened and we have seen signs of customer stress, we believe that Synopsys is well positioned to help our customers weather the storm, and to emerge an even stronger company as a result."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the first quarter of fiscal 2009 was $52.4 million, or $0.37 per share, compared to $46.4 million, or $0.31 per share, for the first quarter of fiscal 2008.

Non-GAAP Results

On a non-GAAP basis, net income for the first quarter of fiscal 2009 was $71.6 million, or $0.50 per share, compared to non-GAAP net income of $66.0 million, or $0.44 per share, for the first quarter of fiscal 2008.

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 2009. These targets constitute forward-looking information 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 2009 Targets:
    * Revenue: $332 million - $340 million
    * GAAP expenses: $280.5 million - $296 million
    * Non-GAAP expenses: $257 million - $267 million
    * Other income and expense: $0 - $3 million
    * Tax rate applied in non-GAAP net income calculations: approximately 27
      percent
    * Fully diluted outstanding shares: 142 million - 147 million
    * GAAP earnings per share: $0.25 - $0.30
    * Non-GAAP earnings per share: $0.39 - $0.41
    * Revenue from backlog: greater than 90 percent


    Full-Year Fiscal Year 2009 Targets:
    * Revenue: approximately $1.37 billion - $1.40 billion
    * Other income and expense: $6 million - $10 million
    * Tax rate applied in non-GAAP net income calculations: approximately 27
      percent
    * Fully diluted outstanding shares: 144 million - 149 million
    * GAAP earnings per share: $1.11 - $1.27
    * Non-GAAP earnings per share: $1.60 - $1.72
    * Cash flow from operations: $200 million - $220 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) share-based compensation; (ii) the amortization of acquired intangible assets and in- process research and development charges; and (iii) the income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes; 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 such 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 2009 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 Results
            (Unaudited and in thousands, except per share amounts)

                                                       Three Months Ended
                                                           January 31,
                                                     2009              2008
    GAAP net income                                $52,429           $46,445
    Adjustments:
      Amortization of intangible assets             11,808            11,624
      Share-based compensation                      14,143            15,644
      In-process research and development              600               -
      Tax effect                                    (7,384)           (7,697)
    Non-GAAP net income                            $71,596           $66,016



                                                       Three Months Ended
                                                           January 31,
                                                      2009              2008
    GAAP earnings per share                          $0.37             $0.31
    Adjustments:
      Amortization of intangible assets               0.08              0.08
      Share-based compensation                        0.09              0.10
      In-process research and development             0.01               -
      Tax effect                                     (0.05)            (0.05)
    Non-GAAP earnings per share                      $0.50             $0.44

    Shares used in calculation                     142,612           150,683


Reconciliation of Target 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 2009 Targets
                   (in thousands, except per share amounts)

                                                    Range for Three Months
                                                     Ending April 30, 2009
                                                     Low              High
    Target GAAP expenses                          $280,500          $296,000
    Adjustment:
      Estimated impact of amortization of
       intangible assets                           (10,500)          (14,000)
      Estimated impact of share-based
       compensation                                (13,000)          (15,000)
    Target non-GAAP expenses                      $257,000          $267,000


                                                      Range for Three Months
                                                      Ending April 30, 2009
                                                      Low               High
    Target GAAP earnings per share                   $0.25             $0.30
    Adjustment:
      Estimated impact of amortization of
       intangible assets                              0.10              0.07
      Estimated impact of share-based
       compensation                                   0.10              0.09
      Net non-GAAP tax effect                        (0.06)            (0.05)
    Target non-GAAP earnings per share               $0.39             $0.41

    Shares used in non-GAAP calculation (midpoint
     of target range)                              144,500           144,500



         GAAP to Non-GAAP Reconciliation of Fiscal Year 2009 Targets

                                                      Range for Fiscal Year
                                                     Ending October 31, 2009
                                                      Low              High
    Target GAAP earnings per share                   $1.11             $1.27
    Adjustment:
      Estimated impact of amortization of intangible
       assets                                         0.33              0.29
      Estimated impact of share-based compensation    0.38              0.37
      Net non-GAAP tax effect                        (0.22)            (0.21)
    Target non-GAAP earnings per share               $1.60             $1.72

    Shares used in non-GAAP calculation (midpoint
     of target range)                              146,500           146,500


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 http://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 985197, beginning at 5:30 p.m. Pacific Time today. A webcast replay will also be available on the website from approximately 5:30 p.m. Pacific Time today through the time Synopsys announces its results for the second quarter fiscal 2009 in May 2009. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and chief executive officer, and Brian Beattie, chief financial officer, on its website following the call. In addition, Synopsys makes additional financial information available in a financial supplement 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 (available in the Investor Relations section of Synopsys' website at http://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 chief executive officer and chief financial officer made during the call and the financial supplement will remain available on Synopsys' website through the date of the second quarter earnings call in May 2009, 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 2009 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 in its Quarterly Report on Form 10-Q to be filed by March 12, 2009.

About Synopsys

Synopsys, Inc. is the world leader in electronic design automation (EDA), supplying the global electronics market with the software, intellectual property (IP) and services used in semiconductor design and manufacturing. Synopsys' comprehensive, integrated portfolio of implementation, verification, IP, manufacturing and field-programmable gate array (FPGA) solutions helps address the key challenges designers and manufacturers face today, such as power and yield management, software-to- silicon verification and time-to-results. These technology-leading solutions help give Synopsys customers a competitive edge in bringing the best products to market quickly while reducing costs and schedule risk. Synopsys is headquartered in Mountain View, California, and has more than 60 offices located throughout North America, Europe, Japan, Asia and India. Visit Synopsys online at http://www.synopsys.com/.

Forward-Looking Statements

The statements made in this press release regarding projected financial results in the sections entitled "Financial Targets," and "Reconciliation of Target Operating Results" and certain statements made in the earnings conference call are forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those described by these statements due to a number of uncertainties, including, but not limited to:

    * continued downturn and uncertainty in the global economy in general, and
      weakness in the semiconductor and electronics industries;
    * failure of customers to pay license fees as scheduled;
    * lower-than-expected research and development spending by semiconductor
      and electronic systems companies;
    * competition in the market for Synopsys' products and services;
    * lower-than-anticipated new IC design starts;
    * lower-than-anticipated purchases or delays in purchases of software or
      consulting services by Synopsys' customers, including delays in the
      renewal, or non-renewal, of Synopsys' license arrangements with major
      customers;
    * changes in the mix of time-based licenses and upfront licenses;
    * lower-than-expected orders; and
    * difficulties in the integration of the products and operations of
      acquired companies or assets into Synopsys' products and operations.

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, 2009 and actual expenses, earnings per share, tax rate, cash flow from operations and other projections on a GAAP and non-GAAP basis for fiscal year 2009 could differ materially from the targets stated under "Financial Targets" above for a number of reasons, including, but not limited to, (i) a determination by Synopsys that any portion of its goodwill or intangible assets have become impaired, (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 to increase or decrease an income tax asset or liability, (iii) integration and other acquisition-related expenses including amortization of intangible assets associated with future acquisitions, if any, (iv) changes in the anticipated amount of employee share-based compensation expense recognized on 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 pronouncements, (viii) general economic conditions, and (ix) other risks as detailed in our SEC filings, including those described in the "Risk Factors" section in our Annual Report on Form 10-K for the fiscal year ended October 31, 2008. Furthermore, Synopsys' actual tax rates applied to income for the second quarter and fiscal year 2009 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 2009 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 or the financial supplement whether as a result of new information, future events or otherwise, unless otherwise required by law.

Synopsys is a registered trademark of Synopsys, Inc. Any other trademarks mentioned in this release are the property of their respective owners.

     INVESTOR CONTACT:
     Lisa L. Ewbank
     Synopsys, Inc.
     650-584-1901

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



                                SYNOPSYS, INC.
             Unaudited Consolidated Statements of Operations (1)
                   (in thousands, except per share amounts)

                                                Three Months Ended January 31,
                                                    2009              2008
    Revenue:
      Time-based license                          $285,052          $267,860
      Upfront license                               18,327            12,521
      Maintenance and service                       36,376            35,084
          Total revenue                            339,755           315,465
    Cost of revenue:
      License                                       41,823            40,398
      Maintenance and service                       15,579            15,879
      Amortization of intangible assets              8,022             5,033
         Total cost of revenue                      65,424            61,310
    Gross margin                                   274,331           254,155
    Operating expenses:
      Research and development                      97,807            92,514
      Sales and marketing                           77,384            77,370
      General and administrative                    27,182            23,841
      In-process research and development              600               -
      Amortization of intangible assets              3,786             6,591
         Total operating expenses                  206,759           200,316
    Operating income                                67,572            53,839
    Other income, net                                2,099             6,330
    Income before income taxes                      69,671            60,169
    Provision for income taxes                      17,242            13,724
    Net income                                     $52,429           $46,445

    Net income per share:
      Basic                                          $0.37             $0.32
      Diluted                                        $0.37             $0.31

    Shares used in computing per share amounts:
      Basic                                        141,865           146,001
      Diluted                                      142,612           150,683

    (1) Synopsys' first quarter ended on the Saturday nearest January 31.
        For presentation purposes, the Unaudited Consolidated Statements of
        Operations refer to a calendar month end.



                                SYNOPSYS, INC.
                  Unaudited Consolidated Balance Sheets (1)
                   (in thousands, except par value amounts)

                                                 January 31,       October 31,
                                                     2009              2008
    ASSETS:
    Current assets:
      Cash and cash equivalents                   $470,165           $577,632
      Short-term investments                       372,116            373,669
        Total cash, cash equivalents and short-
         term investments                          842,281            951,301
      Accounts receivable, net                     150,083            147,365
      Deferred income taxes                        136,533            133,609
      Income taxes receivable                       49,534             49,859
      Other current assets                          42,936             40,156
        Total current assets                     1,221,367          1,322,290
    Property and equipment, net                    141,152            145,087
    Goodwill                                       917,794            899,640
    Intangible assets, net                         109,870            114,760
    Long-term deferred income taxes                168,070            177,386
    Other long-term assets                          78,405             83,315
        Total assets                            $2,636,658         $2,742,478

    LIABILITIES AND STOCKHOLDERS' EQUITY:
    Current liabilities:
      Accounts payable and accrued liabilities    $182,608           $289,769
      Accrued income taxes                           9,395             14,496
      Deferred revenue                             547,343            604,718
        Total current liabilities                  739,346            908,983
    Long-term accrued income taxes                 154,679            152,745
    Deferred compensation and other
     liabilities                                    76,882             76,970
    Long-term deferred revenue                      61,636             75,409
      Total liabilities                          1,032,543          1,214,107
    Stockholders' equity:
      Preferred stock, $0.01 par value: 2,000
       shares authorized; none outstanding               -                  -
      Common stock, $0.01 par value: 400,000
       shares authorized; 142,010 and 141,786
       shares outstanding, respectively              1,420              1,418
      Capital in excess of par value             1,482,555          1,471,031
      Retained earnings                            485,175            434,057
      Treasury stock, at cost: 15,261
       and 15,485 shares, respectively            (337,892)          (342,856)
      Accumulated other comprehensive
       income (loss)                               (27,143)           (35,279)
        Total stockholders' equity               1,604,115          1,528,371
        Total liabilities and stockholders'
         equity                                 $2,636,658         $2,742,478

    (1) Synopsys' first and fourth quarter ended on the Saturday nearest
        January 31 and October 31, respectively.  For presentation purposes,
        the Unaudited Consolidated Balance Sheets refer to a calendar month
        end.



                                SYNOPSYS, INC.
             Unaudited Consolidated Statements of Cash Flows (1)
                                (in thousands)

                                                Three Months Ended January 31,
                                                    2009              2008
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                     $52,429           $46,445
    Adjustments to reconcile net income to net
     cash provided by operating activities:
      Amortization and depreciation                 25,418            25,333
      Share-based compensation                      14,143            15,644
      Allowance for doubtful accounts                1,490               -
      Write-down of long-term investments            2,960               -
      (Gain) loss on sale of investments              (172)              200
      Deferred income taxes                          8,340            (1,858)
      Net change in deferred gains and losses on
       cash flow hedges                              3,648             2,104
      In-process research and development              600               -
      Net changes in operating assets and
       liabilities, net of acquired assets and
       liabilities:
        Accounts receivable                         (2,911)          (17,077)
        Other current assets                        (2,009)           (1,185)
        Other long-term assets                         407              (488)
        Accounts payable and accrued liabilities  (101,970)          (81,102)
        Accrued income taxes                        (5,771)            2,754
        Deferred revenue                           (79,456)          (42,969)
        Deferred compensation and other
         liabilities                                   928             1,018
      Net cash used in operating activities        (81,926)          (51,181)

    CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from sales and maturities of
       short-term investments                       64,047           150,523
      Purchases of short-term investments          (60,059)         (173,675)
      Purchases of long-term investments               -              (1,500)
      Purchases of property and equipment           (8,258)           (9,726)
      Cash paid for acquisitions and intangible
       assets                                      (27,333)              -
      Capitalization of software development
       costs                                          (720)             (704)
      Net cash used in investing activities        (32,323)          (35,082)

    CASH FLOWS FROM FINANCING ACTIVITIES:
      Principal payments on capital leases            (492)              -
      Issuances of common stock                      1,152            12,097
      Purchases of treasury stock                      -             (82,865)
      Net cash provided by (used in) financing
       activities                                      660           (70,768)
    Effect of exchange rate changes on cash and
     cash equivalents                                6,122             5,759
    Net change in cash and cash equivalents       (107,467)         (151,272)
    Cash and cash equivalents, beginning
     of period                                     577,632           579,327
    Cash and cash equivalents, end of period      $470,165          $428,055

    (1) Synopsys' first quarter ended on the Saturday nearest January 31.
        For presentation purposes, the Unaudited Consolidated Statements
        of Cash Flows refer to a calendar month end.

SOURCE: Synopsys, Inc.

Web site: http://www.synopsys.com/