Press Releases

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

 

 

 

MOUNTAIN VIEW, Calif., May 20 /PRNewswire-FirstCall/ -- Synopsys, Inc. (NASDAQ: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its second quarter ended April 30, 2009.

 

For the second quarter of fiscal 2009, Synopsys reported revenue of $336.8 million, a 3.8 percent increase compared to $324.6 million for the second quarter of fiscal 2008.

 

"Synopsys continues to execute well in an environment that still shows signs of economic stress," said Aart de Geus, chairman and CEO of Synopsys. "Customers are choosing Synopsys for its strong technology, global support, continued investment in the future, and financial strength."

 

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2009 was $48.3 million, or $0.33 per share, compared to $39.4 million, or $0.27 per share, for the second quarter of fiscal 2008.

 

Non-GAAP Results

On a non-GAAP basis, net income for the second quarter of fiscal 2009 was $65.9 million, or $0.45 per share, compared to non-GAAP net income of $59.7 million, or $0.41 per share, for the second 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 third 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.

 

Third Quarter of Fiscal Year 2009 Targets:

 

  • Revenue: $342 million - $350 million
  • GAAP expenses: $284.5 million - $300 million
  • Non-GAAP expenses: $261 million - $271 million
  • Other income and expense: $0 - $3 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: $0.26 - $0.31
  • Non-GAAP earnings per share: $0.40 - $0.42
  • Revenue from backlog: greater than 90 percent

     

 

 

Full-Year Fiscal Year 2009 Targets:

 

  • Revenue: approximately $1.35 billion - $1.38 billion
  • Other income and expense: $14 million - $18 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 - $1.26
  • Non-GAAP earnings per share: $1.62 - $1.72
  • Cash flow from operations: $170 million - $190 million (excludes potential impact of a tentative settlement with the Internal Revenue Service, described below)

     

 

 

 

In the second quarter, the Company reached a tentative settlement with the IRS that would resolve a dispute regarding its 2002-2004 returns, primarily associated with the acquisition of Avant!. The tentative settlement is subject to further approval by the government. If approved, we do not expect a material impact to the Company's income statement. However, we do expect it to result in a cash payment to the IRS of approximately $50 million, most likely within the next 12 months. If the tentative settlement is approved, this payment would be fully offset by tax reductions in future years.

 

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 Second 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 Second Quarter Results
            (Unaudited and in thousands, except per share amounts)

                               Three Months Ended  Six Months Ended

                                     April 30,          April 30,
                                    ---------          ---------
                                   2009     2008      2009      2008
                                   ----     ----      ----      ----
    GAAP net income             $48,288  $39,387  $100,717   $85,832
    Adjustments:
        Amortization of
         intangible assets       10,620   12,407    22,428    24,031
        Share-based
         compensation            14,661   17,841    28,804    33,485
        In-process research and
         development                  -        -       600         -
        Tax effect               (7,666)  (9,975)  (15,050)  (17,672)
                                 ------   ------   -------   -------
    Non-GAAP net income         $65,903  $59,660  $137,499  $125,676
                                =======  =======  ========  ========



                                Three Months Ended  Six Months Ended
                                      April 30,          April 30,
                                   -------------      --------------
                                   2009     2008      2009      2008
                                   ----     ----      ----      ----
    GAAP earnings
     per share                    $0.33    $0.27     $0.70     $0.58
    Adjustments:
        Amortization of
         intangible assets         0.07     0.09      0.16      0.16
        Share-based
         compensation              0.10     0.12      0.19      0.23
        In-process research and
         development                  -        -      0.01         -
        Tax effect                (0.05)   (0.07)    (0.11)    (0.12)
                                  -----    -----     -----     -----
    Non-GAAP earnings
     per share                    $0.45    $0.41     $0.95     $0.85
                                  =====    =====     =====     =====

    Shares used in calculation  145,421  145,271   144,024   147,801 

 

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 Third Quarter Fiscal Year 2009 Targets
                     (in thousands, except per share amounts)

                                                           Range for Three
                                                               Months
                                                           Ending July 31,
                                                                2009
                                                         ------------------
                                                            Low      High
                                                         --------  --------
    Target GAAP expenses                                 $284,500  $300,000
    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                             $261,000  $271,000
                                                         ========  ========


                                                           Range for Three
                                                                Months
                                                           Ending July 31,
                                                                 2009
                                                           -----------------
                                                             Low       High
                                                           ------    -------
    Target GAAP earnings per share                          $0.26     $0.31
    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                      $0.40     $0.42
                                                            =====     =====

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




           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     $1.26
    Adjustment:
        Estimated impact of amortization of intangible
         assets                                              0.32      0.28
        Estimated impact of share-based compensation         0.41      0.39
        In-process research and development                  0.01      0.01
        Net non-GAAP tax effect                             (0.23)    (0.22)
                                                            -----     -----
    Target non-GAAP earnings per share                      $1.62     $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 999158, 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 third quarter fiscal 2009 in August 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 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 third quarter earnings call in August 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 third 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 second quarter in its Quarterly Report on Form 10-Q to be filed by June 11, 2009.

 

About Synopsys

Synopsys, Inc. (NASDAQ: SNPS) is a 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;
  • the terms of a final settlement, if any, with the IRS regarding the 2002-2004 returns, 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 July 31, 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 and settlements 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 Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2009. Furthermore, Synopsys' actual tax rates applied to income for the third 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 third 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  Six Months Ended
                                      April 30,        April 30,
                                 ----------------- -----------------
                                   2009     2008     2009     2008
                                   ----     ----     ----     ----
    Revenue:
      Time-based license         $283,996 $278,220 $569,048 $546,080
      Upfront license              15,994   12,214   34,321   24,735
      Maintenance and service      36,845   34,119   73,221   69,203
                                   ------   ------   ------   ------
          Total revenue           336,835  324,553  676,590  640,018
    Cost of revenue:
      License                      42,292   41,709   84,115   82,107
      Maintenance and service      15,048   16,167   30,627   32,046
      Amortization of
       intangible assets            7,679    5,816   15,701   10,849
                                    -----    -----   ------   ------
         Total cost of revenue     65,019   63,692  130,443  125,002
                                   ------   ------  -------  -------
    Gross margin                  271,816  260,861  546,147  515,016
    Operating expenses:
      Research and development    102,996   95,275  200,803  187,789
      Sales and marketing          82,520   82,887  159,904  160,257
      General and
       administrative              28,691   26,171   55,873   50,012
      In-process research and
       development                      -        -      600        -
      Amortization of
       intangible assets            2,941    6,591    6,727   13,182
                                    -----    -----    -----   ------
         Total operating
          expenses                217,148  210,924  423,907  411,240
                                  -------  -------  -------  -------
    Operating income               54,668   49,937  122,240  103,776
    Other income, net              10,445      151   12,544    6,481
                                   ------      ---   ------    -----
    Income before income taxes     65,113   50,088  134,784  110,257
    Provision for income taxes     16,825   10,701   34,067   24,425
                                   ------   ------   ------   ------
    Net income                    $48,288  $39,387 $100,717  $85,832
                                  =======  ======= ========  =======

    Net income per share:
      Basic                         $0.34    $0.28    $0.71    $0.60
                                    =====    =====    =====    =====
      Diluted                       $0.33    $0.27    $0.70    $0.58
                                    =====    =====    =====    =====

    Shares used in computing per
     share amounts:
      Basic                       143,275  141,844  142,562  143,926
                                  =======  =======  =======  =======
      Diluted                     145,421  145,271  144,024  147,801
                                  =======  =======  =======  =======

    (1)  Synopsys' second quarter ended on the Saturday nearest April 30.  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)


                                         April 30, 2009  October 31, 2008
                                         --------------  ----------------
    ASSETS:
    Current assets:
      Cash and cash equivalents                $506,399          $577,632
      Short-term investments                    370,448           373,669
                                                -------           -------
               Total cash, cash
                equivalents and
                short-term
                investments                     876,847           951,301
      Accounts receivable, net                  189,115           147,365
      Deferred income taxes                     131,290           133,609
      Income taxes receivable                    47,651            49,859
      Other current assets                       50,094            40,156
                                                 ------            ------
              Total current
               assets                         1,294,997         1,322,290
    Property and equipment, net                 136,799           145,087
    Goodwill                                    917,287           899,640
    Intangible assets, net                       99,343           114,760
    Long-term deferred
     income taxes                               165,600           177,386
    Other long-term assets                       82,025            83,315
                                                 ------            ------
               Total assets                  $2,696,051        $2,742,478
                                             ==========        ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY:
    Current liabilities:
      Accounts payable and
       accrued liabilities                     $176,233          $289,769
      Accrued income taxes                        9,256            14,496
      Deferred revenue                          540,609           604,718
                                                -------           -------
               Total current
                liabilities                     726,098           908,983
    Long-term accrued
     income taxes                               151,816           152,745
    Deferred compensation and
     other liabilities                           76,335            76,970
    Long-term deferred revenue                   47,856            75,409
                                                 ------            ------
               Total liabilities              1,002,105         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; 144,122 and
       141,786 shares
       outstanding,
       respectively                               1,441             1,418
      Capital in excess of
       par value                              1,487,096         1,471,031
      Retained earnings                         522,129           434,057
      Treasury stock, at cost:
       13,149 and 15,485 shares,
       respectively                            (291,129)         (342,856)
      Accumulated other
       comprehensive income
       (loss)                                   (25,591)          (35,279)
                                                -------           -------
               Total
                stockholders'
                equity                        1,693,946         1,528,371
                                              ---------         ---------
               Total liabilities and
                stockholders' equity         $2,696,051        $2,742,478
                                             ==========        ==========

    (1) Synopsys' second and fourth quarter ended on the Saturday nearest
        April 30 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)

                                                   Six Months Ended
                                                      April 30,
                                                 ------------------
                                                   2009      2008
                                                 -------    -------
      CASH FLOWS FROM OPERATING
       ACTIVITIES:
      Net income                                 $100,717   $85,832
      Adjustments to reconcile net income
       to net cash provided by operating
          activities:
            Amortization and depreciation          49,728    50,244
            Share-based compensation               28,803    33,486
            Allowance for doubtful accounts         2,723       429
            Write-down of long-term investments     2,960       394
            (Gain) loss on sale of investments       (324)   (1,192)
            Deferred income taxes                   7,612     3,523
            Net change in deferred gains and
             losses on cash flow hedges             2,664     7,495
            In-process research and development       600         -
            Net changes in operating assets and
             liabilities, net of
             acquired assets and liabilities:
                Accounts receivable               (46,707)  (46,982)
                Prepaid and other current assets   (7,521)  (10,300)
                Other long-term assets                248      (368)
                Accounts payable and accrued
                 liabilities                     (104,225)  (69,502)
                Accrued income taxes               (5,959)   (2,873)
                Deferred revenue                  (88,065)  (67,309)
                Deferred compensation and other
                 liabilities                         (469)      980
                                                     ----       ---
            Net cash (used in) operating
             activities                           (57,215)  (16,143)

      CASH FLOWS FROM INVESTING ACTIVITIES:
            Proceeds from sales and
             maturities of short-term
             investments                          123,041   419,181
            Purchases of short-term investments  (119,227) (253,699)
            Proceeds from sales of long-term
             investments                                -        77
            Purchases of long-term investments          -    (6,694)
            Purchases of property and equipment   (14,734)  (19,498)
            Cash paid for acquisitions            (27,333)        -
            Capitalization of software
             development costs                     (1,485)   (1,408)
                                                   ------    ------
            Net cash (used in) provided by
             investing activities                 (39,738)  137,959

      CASH FLOWS FROM FINANCING ACTIVITIES:
            Principal payments on capital leases     (984)   (1,452)
            Issuances of common stock              26,652    36,949
            Purchases of treasury stock                 -  (170,052)
                                                      ---  --------
            Net cash provided by (used in)
             financing activities                  25,668  (134,555)
      Effect of exchange rate changes
       on cash and cash equivalents                    52     8,301
                                                      ---     -----
      Net change in cash and cash
       equivalents                                (71,233)   (4,438)
      Cash and cash equivalents,
       beginning of period                        577,632   579,327
                                                  -------   -------
      Cash and cash equivalents, end of
       period                                    $506,399  $574,889
                                                 ========  ========

    (1)  Synopsys' second quarter ended on the Saturday nearest April 30.
         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/