Press Releases

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

 

 

MOUNTAIN VIEW, Calif., Aug. 19 /PRNewswire-FirstCall/ -- Synopsys, Inc. (NASDAQ: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its third quarter ended July 31, 2009.

 

For the third quarter of fiscal 2009, Synopsys reported revenue of $345.2 million compared to $344.1 million for the third quarter of fiscal 2008.

 

"Synopsys again made excellent progress towards delivering on our year's objectives," said Aart de Geus, chairman and CEO of Synopsys. "We are actively working with customers to help them successfully navigate the economic recovery, and are positioning ourselves for even greater strength in the future."

 

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal 2009 was $47.4 million, or $0.32 per share, compared to $57.7 million, or $0.39 per share, for the third quarter of fiscal 2008, which included a $17.3 million tax benefit associated with the settlement of an IRS tax issue for fiscal years 2000 and 2001.

 

Non-GAAP Results

On a non-GAAP basis, net income for the third quarter of fiscal 2009 was $68.3 million, or $0.47 per share, compared to non-GAAP net income of $64.5 million, or $0.44 per share, for the third 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 fourth 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.

 

Fourth Quarter of Fiscal Year 2009 Targets:

  • Revenue: $335 million - $343 million
  • GAAP expenses: $297 million - $313 million
  • Non-GAAP expenses: $272 million - $282 million
  • Other income and expense: $0 - $3 million
  • Tax rate applied in non-GAAP net income calculations: approximately 26 percent
  • Fully diluted outstanding shares: 146 million - 149 million
  • GAAP earnings per share: $0.14 - $0.21
  • Non-GAAP earnings per share: $0.29 - $0.33
  • Revenue from backlog: greater than 90 percent

 

 

Full-Year Fiscal Year 2009 Targets:

  • Revenue: approximately $1.357 billion - $1.365 billion
  • Other income and expense: $11 million - $14 million
  • Tax rate applied in non-GAAP net income calculations: approximately 27 percent
  • Fully diluted outstanding shares: 144 million - 146.5 million
  • GAAP earnings per share: $1.16 - $1.23
  • Non-GAAP earnings per share: $1.71 - $1.75
  • Cash flow from operations: $190 million - $210 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 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; (iii) other significant items, including the effect of a tax benefit from a settlement with the Internal Revenue Service, and (iv) the income tax effect of 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 Third 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 Third Quarter Results
             (Unaudited and in thousands, except per share amounts)

                                     Three Months Ended  Nine Months Ended
                                          July 31,           July 31,
                                          --------           --------
                                        2009     2008      2009      2008
                                        ----     ----      ----      ----
    GAAP net income                  $47,436  $57,749  $148,153  $143,581
    Adjustments:
        Amortization of intangible
         assets                       11,408   10,810    33,836    34,841
        Share-based compensation      13,995   17,321    42,799    50,806
        In-process research and
         development                     400    4,800     1,000     4,800
        Tax benefit from IRS
         settlement                        -  (17,253)        -   (17,253)
        Tax effect                    (4,941)  (8,923)  (19,991)  (26,595)
                                      ------   ------   -------   -------
    Non-GAAP net income              $68,298  $64,504  $205,797  $190,180
                                     =======  =======  ========  ========


                                     Three Months Ended  Nine Months Ended
                                          July 31,           July 31,
                                          --------           --------
                                        2009     2008      2009      2008
                                        ----     ----      ----      ----
    GAAP earnings per share            $0.32    $0.39     $1.02     $0.97
    Adjustments:
        Amortization of intangible
         assets                         0.08     0.07      0.23      0.24
        Share-based compensation        0.10     0.12      0.30      0.34
        In-process research and
         development                    0.00     0.03      0.01      0.03
        Tax benefit from IRS
         settlement                        -    (0.12)        -     (0.12)
        Tax effect                     (0.03)   (0.05)    (0.14)    (0.17)
                                       -----    -----     -----     -----
    Non-GAAP earnings per share        $0.47    $0.44     $1.42     $1.29
                                       =====    =====     =====     =====

    Shares used in calculation       146,063  147,486   144,699   147,760

 

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

                                                       Range for Three Months
                                                       Ending October 31, 2009
                                                       -----------------------
                                                            Low      High
                                                            ---      ----
    Target GAAP expenses                                 $297,000  $313,000
    Adjustment:
           Estimated impact of amortization of intangible
            assets                                        (11,000)  (13,000)
           Estimated impact of share-based compensation   (14,000)  (18,000)
                                                          -------   -------
    Target non-GAAP expenses                             $272,000  $282,000
                                                         ========  ========


                                                       Range for Three Months
                                                       Ending October 31, 2009
                                                       -----------------------
                                                             Low       High
                                                             ---       ----
    Target GAAP earnings per share                          $0.14     $0.21
    Adjustment:
        Estimated impact of amortization of intangible
         assets                                              0.09      0.07
        Estimated impact of share-based compensation         0.12      0.09
        Net non-GAAP tax effect                             (0.06)    (0.04)
                                                            -----     -----
    Target non-GAAP earnings per share                      $0.29     $0.33
                                                            =====     =====

    Shares used in non-GAAP calculation (midpoint of
     target range)                                        147,500   147,500


           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                          $1.16     $1.23
    Adjustment:
        Estimated impact of amortization of intangible
         assets                                              0.33      0.32
        Estimated impact of share-based compensation         0.43      0.40
        In-process research and development                  0.01      0.01
        Net non-GAAP tax effect                             (0.22)    (0.21)
                                                            -----     -----
    Target non-GAAP earnings per share                      $1.71     $1.75
                                                            =====     =====

    Shares used in non-GAAP calculation (midpoint of
     target range)                                        145,250   145,250


 

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 109824, 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 fourth quarter and fiscal 2009 in December 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 fourth quarter and fiscal 2009 earnings call in December 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 fourth 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 third quarter in its Quarterly Report on Form 10-Q to be filed by September 10, 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, verification 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 65 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 October 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 April 30, 2009. Furthermore, Synopsys' actual tax rates applied to income for the fourth 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 fourth 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   Nine Months Ended
                                      July 31,             July 31,
                                 ------------------  -----------------
                                     2009     2008       2009     2008
                                     ----     ----       ----     ----
    Revenue:
      Time-based license         $284,401 $289,250   $853,449 $835,330
      Upfront license              18,972   20,558     53,293   45,293
      Maintenance and service      41,804   34,320    115,025  103,523
                                   ------   ------    -------  -------
          Total revenue           345,177  344,128  1,021,767  984,146
    Cost of revenue:
      License                      44,173   44,654    128,288  126,761
      Maintenance and service      17,410   16,110     48,037   48,156
      Amortization of intangible
       assets                       8,452    6,262     24,153   17,111
                                    -----    -----     ------   ------
         Total cost of revenue     70,035   67,026    200,478  192,028
                                   ------   ------    -------  -------
    Gross margin                  275,142  277,102    821,289  792,118
    Operating expenses:
      Research and development    104,989  104,394    305,792  292,183
      Sales and marketing          77,973   86,816    237,877  247,073
      General and administrative   27,735   26,512     83,608   76,524
      In-process research and
       development                    400    4,800      1,000    4,800
      Amortization of intangible
       assets                       2,956    4,548      9,683   17,730
                                    -----    -----      -----   ------
         Total operating
          expenses                214,053  227,070    637,960  638,310
                                  -------  -------    -------  -------
    Operating income               61,089   50,032    183,329  153,808
    Other income, net               5,384    2,947     17,928    9,428
                                    -----    -----     ------    -----
    Income before income taxes     66,473   52,979    201,257  163,236
    Provision (benefit) for
     income taxes                  19,037   (4,770)    53,104   19,655
                                   ------   ------     ------   ------
    Net income                    $47,436  $57,749   $148,153 $143,581
                                  =======  =======   ======== ========

    Net income per share:
      Basic                         $0.33    $0.41      $1.04    $1.00
                                    =====    =====      =====    =====
      Diluted                       $0.32    $0.39      $1.02    $0.97
                                    =====    =====      =====    =====

    Shares used in computing per
     share amounts:
      Basic                       144,138  142,536    143,093  143,450
                                  =======  =======    =======  =======
      Diluted                     146,063  147,486    144,699  147,760
                                  =======  =======    =======  =======

    (1)  Synopsys' third quarter ended on the Saturday nearest July 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)

                                               July 31,   October 31,
                                                 2009         2008
                                               --------   -----------
    ASSETS:
    Current assets:
      Cash and cash equivalents                 $622,281     $577,632
      Short-term investments                     460,258      373,669
                                                 -------      -------
               Total cash, cash equivalents
                and short-term investments     1,082,539      951,301
      Accounts receivable, net                   136,760      147,365
      Deferred income taxes                      136,073      133,609
      Income taxes receivable                     44,091       49,859
      Other current assets                        49,494       40,156
                                                  ------       ------
               Total current assets            1,448,957    1,322,290
    Property and equipment, net                  144,928      145,087
    Goodwill                                     933,560      899,640
    Intangible assets, net                       102,676      114,760
    Long-term deferred income taxes              160,090      177,386
    Other long-term assets                        87,533       83,315
                                                  ------       ------
               Total assets                   $2,877,744   $2,742,478
                                              ==========   ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY:
    Current liabilities:
      Accounts payable and accrued liabilities  $221,249     $289,769
      Accrued income taxes                        13,051       14,496
      Deferred revenue                           581,792      604,718
                                                 -------      -------
               Total current liabilities         816,092      908,983
    Long-term accrued income taxes               168,008      152,745
    Deferred compensation and other liabilities   93,939       76,970
    Long-term deferred revenue                    36,787       75,409
                                                  ------       ------
               Total liabilities               1,114,826    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; 144,295 and
       141,786 shares outstanding,
       respectively                                1,442        1,418
      Capital in excess of par value           1,488,013    1,471,031
      Retained earnings                          568,639      434,057
      Treasury stock, at cost: 12,976 and
       15,485 shares, respectively              (287,305)    (342,856)
      Accumulated other comprehensive loss        (7,871)     (35,279)
                                                  ------      -------
               Total stockholders' equity      1,762,918    1,528,371
                                               ---------    ---------
               Total liabilities and
                stockholders' equity          $2,877,744   $2,742,478
                                              ==========   ==========

    (1)  Synopsys' third and fourth quarter ended on the Saturday nearest
         July 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)

                                                 Nine Months Ended July 31,
                                                 --------------------------
                                                       2009      2008
                                                       ----      ----
      CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                    $148,153  $143,581
      Adjustments to reconcile net income to net
       cash provided by operating activities:

            Amortization and depreciation             74,581    73,535
            Share-based compensation                  42,799    50,807
            Allowance for doubtful accounts            2,735       429
            Write-down of long-term investments        6,333       394
            (Gain) loss on sale of investments          (610)   (1,347)
            Deferred income taxes                     15,801    18,852
            Net change in deferred gains and
             losses on cash flow hedges               17,949     5,169
            In-process research and development        1,000     4,800
            Net changes in operating assets and
             liabilities, net of acquired assets
             and liabilities:
                Accounts receivable                   10,690    (8,761)
                Prepaid and other current assets      10,315   (11,277)
                Other long-term assets                   981        64
                Accounts payable and accrued
                 liabilities                         (87,473)  (26,767)
                Accrued income taxes                  (4,778)  (33,974)
                Deferred revenue                     (62,723)    2,626
                Deferred compensation and other
                 liabilities                            (504)   (2,928)
                                                        ----    ------
            Net cash provided by operating
             activities                              175,249   215,203

      CASH FLOWS FROM INVESTING ACTIVITIES:
            Proceeds from sales and maturities of
             short-term investments                  223,994   512,797
            Purchases of short-term investments     (310,323) (436,144)
            Proceeds from sales of long-term
             investments                                   -        77
            Purchases of long-term investments          (671)   (7,694)
            Purchases of property and equipment      (24,634)  (26,500)
            Cash paid for acquisitions, net of
             cash acquired                           (48,248) (181,018)
            Capitalization of software development
             costs                                    (2,228)   (2,114)
                                                      ------    ------
            Net cash used in investing activities   (162,110) (140,596)

      CASH FLOWS FROM FINANCING ACTIVITIES:
            Principal payments on capital leases      (1,675)   (1,453)
            Proceeds from credit facilities            1,279         -
            Payment on credit facility                  (260)        -
            Issuances of common stock                 28,237    56,600
            Purchases of treasury stock                    -  (170,052)
                                                       -----  --------
            Net cash provided by (used in)
             financing activities                     27,581  (114,905)
      Effect of exchange rate changes on cash and
       cash equivalents                                3,929     6,460
                                                       -----     -----
      Net change in cash and cash equivalents         44,649   (33,838)
      Cash and cash equivalents, beginning of
       period                                        577,632   579,327
                                                     -------   -------
      Cash and cash equivalents, end of period      $622,281  $545,489
                                                    ========  ========

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


 

 

 

SOURCE Synopsys, Inc.

SOURCE: Synopsys, Inc.

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