Press Releases

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

 

 

MOUNTAIN VIEW, Calif., Dec. 2 /PRNewswire-FirstCall/ -- Synopsys, Inc. (NASDAQ: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its fourth quarter and fiscal year ended October 31, 2009.

 

For the fourth quarter of fiscal 2009, Synopsys reported revenue of $338.3 million compared to $352.8 million for the fourth quarter of fiscal 2008. Revenue for fiscal year 2009 was $1.36 billion, an increase of two percent from $1.34 billion in fiscal 2008.

 

"Synopsys met or exceeded almost every goal we set at the beginning of the year, a notable accomplishment given the turbulence that characterized the economic environment," said Aart de Geus, chairman and CEO of Synopsys. "Looking forward into 2010, we intend to continue to control expenses, invest to accelerate our strong technology momentum, and focus on growing our customer relationships."

 

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter of fiscal 2009 was $19.5 million, or $0.13 per share, compared to $46.4 million, or $0.32 per share, for the fourth quarter of fiscal 2008. GAAP net income for fiscal year 2009 was $167.7 million, or $1.15 per share, compared to $190.0 million, or $1.29 per share, for 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 fourth quarter of fiscal 2009 was $49.5 million, or $0.33 per share, compared to non-GAAP net income of $62.7 million, or $0.43 per share, for the fourth quarter of fiscal 2008. Non-GAAP net income for fiscal year 2009 was $255.3 million, or $1.75 per share, compared to non-GAAP net income of $252.9 million, or $1.71 per share, for 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 first quarter and full fiscal year 2010. 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.

 

Note: in the second quarter of 2009, Synopsys reached a tentative settlement with the IRS that would resolve a dispute regarding its 2002-2004 returns, primarily associated with Synopsys' acquisition of Avant!. If approved, it is expected to result in a decrease in forecasted GAAP income tax expense in fiscal 2010 (for additional detail, refer to the Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2009). The targets below exclude this potential impact.

 

First Quarter of Fiscal Year 2010 Targets:

  • Revenue: $325 million - $333 million
  • GAAP expenses: $269 million - $286 million
  • Non-GAAP expenses: $245 million - $255 million
  • Other income and expense: $0 - $3 million
  • Tax rate applied in non-GAAP net income calculations: approximately 27 percent
  • Fully diluted outstanding shares: 148 million - 153 million
  • GAAP earnings per share: $0.23 - $0.28
  • Non-GAAP earnings per share: $0.38 - $0.40
  • Revenue from backlog: greater than 90 percent

 

 

Full-Year Fiscal Year 2010 Targets:

  • Revenue: approximately $1.33 billion - $1.35 billion
  • Other income and expense: $4 million - $8 million
  • Tax rate applied in non-GAAP net income calculations: approximately 27 percent
  • Fully diluted outstanding shares: 150 million - 155 million
  • GAAP earnings per share: $1.01 - $1.20
  • Non-GAAP earnings per share: $1.52 - $1.62
  • 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) stock 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 a facility restructuring charge, 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 Fourth Quarter and Full 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 Fourth Quarter and Fiscal
                              Year 2009 Results
           (unaudited and in thousands, except per share amounts)

                                 Three Months Ended  Twelve Months Ended
                                     October 31,         October 31,
                                   2009      2008      2009      2008
GAAP net income                  $19,528   $46,397  $167,681  $189,978
Adjustments:
  Amortization of intangible
   assets                         11,638     9,250    45,474    44,091
  Stock compensation              14,137    14,666    56,936    65,472
  In-process research and
   development                     1,200         -     2,200     4,800
  Facility restructuring charge    4,538         -     4,538         -
  Tax benefit from IRS settlement      -         -         -   (17,253)
  Tax effect                      (1,543)   (7,635)  (21,534)  (34,230)
Non-GAAP net income              $49,498   $62,678  $255,295  $252,858



                                  Three Months Ended   Twelve Months Ended
                                      October 31,         October 31,
                                    2009      2008      2009      2008
GAAP net income per share          $0.13     $0.32     $1.15     $1.29
Adjustments:
  Amortization of intangible
   assets                           0.08      0.06      0.31      0.30
  Stock compensation                0.09      0.10      0.39      0.44
  In-process research and
   development                      0.01         -      0.02      0.03
  Facility restructuring charge     0.03         -      0.03         -
  Tax benefit from IRS settlement      -         -         -     (0.12)
  Tax effect                       (0.01)    (0.05)    (0.15)    (0.23)
Non-GAAP net income per share      $0.33     $0.43     $1.75     $1.71

Shares used in calculation       149,332   145,638   145,857   147,672


 

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 First Quarter Fiscal Year 2010 Targets
                  (in thousands, except per share amounts)

                                             Range for Three Months
                                             Ending January 31, 2010
                                              Low              High
Target GAAP expenses                       $269,000          $286,000
Adjustment:
  Estimated impact of amortization of
   intangible assets                        (10,000)          (13,000)
  Estimated impact of stock compensation    (14,000)          (18,000)
Target non-GAAP expenses                   $245,000          $255,000


                                              Range for Three Months
                                              Ending January 31, 2010
                                               Low               High
Target GAAP earnings per share                $0.23             $0.28
Adjustment:
  Estimated impact of amortization of
   intangible assets                           0.09              0.07
  Estimated impact of stock compensation       0.12              0.09
  Net non-GAAP tax effect                     (0.06)            (0.04)
Target non-GAAP earnings per share            $0.38             $0.40

Shares used in non-GAAP calculation
 (midpoint of target range)                 150,500           150,500



        GAAP to Non-GAAP Reconciliation of Fiscal Year 2010 Targets

                                               Range for Fiscal Year
                                              Ending October 31, 2010
                                               Low               High
Target GAAP earnings per share                $1.01             $1.20
Adjustment:
  Estimated impact of amortization of
   intangible assets                           0.33              0.26
  Estimated impact of stock compensation       0.39              0.34
  Net non-GAAP tax effect                     (0.21)            (0.18)
Target non-GAAP earnings per share            $1.52             $1.62

Shares used in non-GAAP calculation
 (midpoint of target range)                 152,500           152,500

 

 

 

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 122503, beginning at 4:00 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 first quarter fiscal 2010 in February 2010. 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 first quarter fiscal 2010 earnings call in February 2010, 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 first quarter of fiscal 2010 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 fourth quarter and full fiscal year in its Annual Report on Form 10-K to be filed by December 30, 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 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 January 31, 2010 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 2010 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 stock 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 guidance, including new guidance related to business combinations, (viii) general economic conditions, and (ix) other risks as detailed in our SEC filings, including those described in the "Risk Factors" section in our latest Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2009. Furthermore, Synopsys' actual tax rates applied to income for the first quarter and fiscal year 2010 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 first quarter and fiscal year 2010 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     Twelve Months Ended
                                October 31,            October 31,
                              2009       2008        2009       2008
Revenue:
  Time-based license       $285,102    $290,515  $1,138,551  $1,125,845
  Upfront license            16,180      26,090      69,473      71,383
  Maintenance and service    36,996      36,200     152,021     139,723
      Total revenue         338,278     352,805   1,360,045   1,336,951
Cost of revenue:
  License                    47,332      45,213     175,620     171,974
  Maintenance and service    17,331      15,440      65,368      63,596
  Amortization of
   intangible assets          8,509       6,215      32,662      23,326
     Total cost of revenue   73,172      66,868     273,650     258,896
Gross margin                265,106     285,937   1,086,395   1,078,055
Operating expenses:
  Research and development  114,116     102,564     419,908     394,747
  Sales and marketing        86,247      87,706     324,124     334,779
  General and administrative 35,492      27,328     119,100     103,852
  In-process research and
   development                1,200           -       2,200       4,800
  Amortization of
   intangible assets          3,129       3,035      12,812      20,765
     Total operating
      expenses              240,184     220,633     878,144     858,943
Operating income             24,922      65,304     208,251     219,112
Other income, net             6,891     (9,584)      24,819        (156)
Income before income taxes   31,813      55,720     233,070     218,956
Provision for income taxes   12,285       9,323      65,389      28,978
Net income                  $19,528     $46,397    $167,681    $189,978

Net income per share:
  Basic                       $0.13       $0.33       $1.17       $1.33
  Diluted                     $0.13       $0.32       $1.15       $1.29

Shares used in computing
 per share amounts:
  Basic                     145,730     142,684     143,752     143,258
  Diluted                   149,332     145,638     145,857     147,672

(1)  Synopsys' fourth quarter ended on the Saturday nearest October 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)

                                          October 31,      October 31,
                                             2009             2008
ASSETS:
Current assets:
  Cash and cash equivalents                $701,613         $577,632
  Short-term investments                    466,713          373,669
           Total cash, cash equivalents
            and short-term investments    1,168,326          951,301
  Accounts receivable, net                  127,010          147,365
  Deferred income taxes                      73,453          133,609
  Income taxes receivable                    51,191           49,859
  Other current assets                       43,820           40,156
          Total current assets            1,463,800        1,322,290
Property and equipment, net                 146,910          145,087
Goodwill                                    932,691          899,640
Intangible assets, net                       96,810          114,760
Long-term deferred income taxes             205,396          177,386
Other long-term assets                       93,247           83,315
           Total assets                  $2,938,854       $2,742,478

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
  Accounts payable and accrued
   liabilities                             $255,095         $289,769
  Accrued income taxes                        5,508           14,496
  Deferred revenue                          553,990          604,718
           Total current liabilities        814,593          908,983
Long-term accrued income taxes              157,354          152,745
Other long-term liabilities                  88,002           76,970
Long-term deferred revenue                   34,739           75,409
           Total liabilities              1,094,688        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; 146,945 and 141,786
   shares outstanding, respectively           1,469            1,418
  Capital in excess of par value          1,500,166        1,471,031
  Retained earnings                         574,980          434,057
  Treasury stock, at cost: 10,326 and
   15,485 shares, respectively            (228,618)         (342,856)
  Accumulated other comprehensive loss      (3,831)          (35,279)
           Total stockholders' equity     1,844,166        1,528,371
           Total liabilities and
            stockholders' equity         $2,938,854       $2,742,478

(1)  Synopsys' fourth quarter ended on the Saturday nearest October 31.
     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)

                                        Twelve Months Ended October 31,
                                             2009             2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                 $167,681          $189,978
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Amortization and depreciation             101,453            97,143
  Stock compensation                         56,934            65,474
  Allowance for doubtful accounts             2,461               135
  Write-down of long-term investments         7,158             1,115
  (Gain) loss on sale of investments           (716)           (1,404)
  Deferred income taxes                      25,942           (12,249)
  In-process research and development         2,200             4,800
  Net changes in operating assets and
   liabilities, net of acquired assets
   and liabilities:
    Accounts receivable                      22,830            (8,571)
    Prepaid and other current assets         11,416           (22,338)
    Other long-term assets                  (12,248)           13,275
    Accounts payable and other
   liabilities                              (30,657)            3,834
    Accrued income taxes                    (21,140)           (6,960)
    Deferred revenue                        (96,606)            6,856
  Net cash provided by operating
   activities                               236,708           331,088

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sales and maturities of
   short-term investments                   290,709           597,902
  Purchases of short-term investments      (386,431)         (564,978)
  Proceeds from sales of long-term
   investments                                    -                77
  Purchases of long-term investments           (771)           (7,694)
  Purchases of property and equipment       (36,748)          (38,869)
  Cash paid for acquisitions, net of cash
   acquired                                 (53,358)         (184,650)
  Capitalization of software development
   costs                                     (2,852)           (2,874)
  Net cash (used in) investing
   activities                              (189,451)         (201,086)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on capital leases       (2,212)           (2,970)
  Proceeds from credit facilities             1,279                 -
  Payment on credit facility                 (1,533)                -
  Issuances of common stock                  71,918            79,181
  Purchases of treasury stock                     -          (220,053)
  Net cash provided by (used in)
   financing activities                      69,452          (143,842)
Effect of exchange rate changes on cash
 and cash equivalents                         7,272            12,145
Net change in cash and cash equivalents     123,981            (1,695)
Cash and cash equivalents, beginning of
 period                                     577,632           579,327
Cash and cash equivalents, end of
 period                                    $701,613          $577,632

(1)  Synopsys' fourth quarter ended on the Saturday nearest October 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/