Press Releases

Synopsys Posts Financial Results for First Quarter Fiscal Year 2010

MOUNTAIN VIEW, Calif., Feb. 17 /PRNewswire-FirstCall/ -- Synopsys, Inc. (Nasdaq: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its first quarter of fiscal year 2010.

For the first quarter of fiscal 2010, Synopsys reported revenue of $330.2 million compared to $339.8 million for the first quarter of fiscal 2009.  

"Synopsys started the year with solid momentum," said Aart de Geus, chairman and CEO of Synopsys.  "We met or exceeded our financial targets, and made a number of strategic moves that we believe will increase our total available market substantially in the long term."  

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the first quarter of fiscal 2010 was $132.8 million, or $0.88 per share, compared to $52.4 million, or $0.37 per share, for the first quarter of fiscal 2009.  Net income for the first quarter of fiscal 2010 includes a one-time $91.6 million, or $0.61 per share, tax benefit associated with the IRS settlement for fiscal years 2002-2004, announced on January 12, 2010.

Non-GAAP Results

On a non-GAAP basis, net income for the first quarter of fiscal 2010 was $62.4 million, or $0.41 per share, compared to non-GAAP net income of $71.6 million, or $0.50 per share, for the first quarter of fiscal 2009.

Financial Targets

Synopsys also provided its financial targets for the second quarter and full fiscal year 2010.  These targets do not include future acquisition-related expenses that may be incurred in fiscal 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.  

Second Quarter of Fiscal Year 2010 Targets:

  • Revenue: $331 million - $339 million
  • GAAP expenses: $278 million - $295 million
  • Non-GAAP expenses: $252 million - $262 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: $0.22 - $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: 149 million – 154 million
  • GAAP earnings per share: $1.55 - $1.74
  • 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) acquisition-related costs; (iv) other significant items, including the effect of a tax benefit from a settlement with the Internal Revenue Service, and (v) 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 First Quarter Fiscal Year 2010 Results

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

    
    
    
     GAAP to Non-GAAP Reconciliation of First Quarter Fiscal Year 2010 Results
               (unaudited and in thousands, except per share amounts)  
                                                              
                                               Three Months Ended 
                                                   January 31,    
                                                   -----------    
                                                2010          2009 
                                                ----          ---- 
    GAAP net income                         $132,786       $52,429 
    Adjustments:                                              
        Amortization of intangible assets     10,650        11,808 
        Stock compensation                    17,234        14,143 
        In-process research and development        -           600 
        Acquisition-related costs              1,046             - 
        Tax benefit from IRS settlement      (91,649)            - 
        Tax effect                            (7,648)       (7,384)
                                              ------        ------ 
    Non-GAAP net income                      $62,419       $71,596 
                                             =======       ======= 
                                                              
                                                              
                                                              
                                               Three Months Ended 
                                                   January 31,    
                                                   -----------    
                                                2010          2009 
                                                ----          ---- 
    GAAP net income per share                  $0.88         $0.37 
    Adjustments:                                              
        Amortization of intangible assets       0.07          0.08 
        Stock compensation                      0.11          0.09 
        In-process research and development        -          0.01 
        Acquisition-related costs               0.01             - 
        Tax benefit from IRS settlement        (0.61)            - 
        Tax effect                             (0.05)        (0.05)
                                               -----         ----- 
    Non-GAAP net income per share              $0.41         $0.50 
                                               =====         ===== 
                                                              
    Shares used in calculation               150,788       142,612 
    
    

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 2010   
                                     Targets                                
                    (in thousands, except per share amounts)                
                                                                            
                                              Range for Three Months      
                                               Ending April 30, 2010       
                                               ---------------------
                                                Low           High   
                                                ---           ----   
    Target GAAP expenses                    $278,000      $295,000 
    Adjustment:                                                        
           Estimated impact of amortization
            of intangible assets             (11,000)      (14,000)
           Estimated impact of stock
            compensation                     (15,000)      (19,000)
                                             -------       ------- 
    Target non-GAAP expenses                $252,000      $262,000 
                                            ========      ======== 
    
    
    
                                              Range for Three Months      
                                               Ending April 30, 2010       
                                               ---------------------
                                                Low           High   
                                                ---           ----   
    Target GAAP earnings per share             $0.22         $0.28 
    Adjustment:                                                             
        Estimated impact of amortization
          of intangible assets                  0.09          0.07 
        Estimated impact of stock
         compensation                           0.13          0.10 
        Net non-GAAP tax effect                (0.06)        (0.05)
                                               -----         ----- 
    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             $1.55         $1.74 
    Adjustment:                                                             
        Estimated impact of amortization
         of intangible assets                   0.33          0.26 
        Estimated impact of stock
         compensation                           0.45          0.40 
        Acquisition-related costs               0.01          0.01 
        Tax benefit from IRS settlement        (0.61)        (0.61)
        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)              151,500       151,500 
    

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 145658, 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 second quarter fiscal 2010 in May 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 second quarter fiscal 2010 earnings call in May 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 second 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 first quarter fiscal 2010 in its quarterly report on Form 10-Q to be filed by March 11, 2010.

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; 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, 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 costs including amortization of intangible assets and costs formerly capitalized but now expensed due to new accounting guidance related to business combinations, (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, (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 Annual Report on Form 10-K for the fiscal year ended October 31, 2009.  Furthermore, Synopsys' actual tax rates applied to income for the second 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 second 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 January 31,      
                                              -------------------
                                              2010        2009 (2)
                                              ----        --------
    Revenue:                                                     
      Time-based license                    $272,475      $287,676
      Upfront license                         20,446        15,703
      Maintenance and service                 37,246        36,376
                                              ------        ------
          Total revenue                      330,167       339,755
    Cost of revenue:                                             
      License                                 41,214        41,823
      Maintenance and service                 16,510        15,579
      Amortization of intangible assets        7,857         8,022
                                               -----         -----
         Total cost of revenue                65,581        65,424
                                              ------        ------
    Gross margin                             264,586       274,331
    Operating expenses:                                          
      Research and development               101,232        97,807
      Sales and marketing                     79,616        77,384
      General and administrative              25,853        27,182
      In-process research and development          -           600
      Amortization of intangible assets        2,793         3,786
                                               -----         -----
         Total operating expenses            209,494       206,759
                                             -------       -------
    Operating income                          55,092        67,572
    Other income, net                          2,250         2,099
                                               -----         -----
    Income before income taxes                57,342        69,671
    (Benefit) provision for income taxes     (75,444)       17,242
                                             -------        ------
    Net income                              $132,786       $52,429
                                            ========       =======
                                                                 
    Net income per share:                                        
      Basic                                    $0.90         $0.37
                                               =====         =====
      Diluted                                  $0.88         $0.37
                                               =====         =====
                                                                 
    Shares used in computing per share
     amounts:                  
      Basic                                  146,830       141,865
                                             =======       =======
      Diluted                                150,788       142,612
                                             =======       =======
                                                                 
    (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. 
    
    (2)  For the three months ended January 31, 2009, Synopsys reclassified 
         $2.6 million from upfront license to time-based licensed revenue to 
         conform to the current year presentation which had no impact on total
         revenue. 
    
    
    
                                 SYNOPSYS, INC.                            
                   Unaudited Consolidated Balance Sheets (1)               
                    (in thousands, except par value amounts)               
                                                                           
                                            January 31,  October 31, 
                                               2010         2009    
                                           -----------  ----------- 
    ASSETS:                                                                
    Current assets:                                                        
      Cash and cash equivalents             $626,490      $701,613 
      Short-term investments                 465,853       466,713 
                                             -------       ------- 
               Total cash, cash
                equivalents and
                short-term investments     1,092,343     1,168,326 
      Accounts receivable, net               142,493       127,010 
      Deferred income taxes                   74,285        73,453 
      Income taxes receivable                 41,806        51,191 
      Prepaid and other current assets        47,594        43,820 
                                              ------        ------ 
               Total current assets        1,398,521     1,463,800 
    Property and equipment, net              143,371       146,910 
    Goodwill                                 934,226       932,691 
    Intangible assets, net                    89,538        96,810 
    Long-term deferred income taxes          251,762       205,396 
    Other long-term assets                    92,347        93,247 
                                              ------        ------ 
               Total assets               $2,909,765    $2,938,854 
                                          ==========    ========== 
                                                                           
    LIABILITIES AND STOCKHOLDERS' EQUITY:                                  
    Current liabilities:                                                   
      Accounts payable and accrued
       liabilities                          $182,159      $255,095 
      Accrued income taxes                    33,590         5,508 
      Deferred revenue                       507,435       553,990 
                                             -------       ------- 
               Total current liabilities     723,184       814,593 
    Long-term accrued income taxes            88,553       157,354 
    Other long-term liabilities               87,851        88,002 
    Long-term deferred revenue                39,434        34,739 
                                              ------        ------ 
               Total liabilities             939,022     1,094,688 
    Stockholders' equity:                                                  
      Preferred stock, $0.01 par value:
       2,000 shares authorized; none
       outstanding                                 -             - 
      Common stock, $0.01 par value:
       400,000 shares authorized;
       146,544 and 146,945 shares
       outstanding, respectively               1,465         1,469 
      Capital in excess of par value       1,511,099     1,500,166 
      Retained earnings                      705,216       574,980 
      Treasury stock, at cost: 10,727
       and 10,326 shares, respectively      (236,935)     (228,618)
      Accumulated other comprehensive loss   (10,102)       (3,831)
                                             -------        ------ 
               Total stockholders' equity  1,970,743     1,844,166 
                                           ---------     --------- 
               Total liabilities and
                stockholders' equity      $2,909,765    $2,938,854 
                                          ==========    ========== 
                                                                           
    (1)  Synopsys' first quarter ended on the Saturday nearest January 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)                          
                                                                       
                                                 Three Months  
                                               Ended January 31,      
                                              ------------------- 
                                              2010           2009 
                                              ----           ---- 
      CASH FLOWS FROM OPERATING ACTIVITIES:                            
      Net income                            $132,786       $52,429 
      Adjustments to reconcile net income
       to net cash provided by operating  
       activities:                                                  
            Amortization and depreciation     25,652        25,418 
            Stock compensation                17,234        14,143 
            Allowance for doubtful accounts     (357)        1,490 
            Write-down of long-term
             investments                           -         2,960 
            Gain on sale of investments         (112)         (172)
            Deferred income taxes            (51,676)        8,340 
            In-process research and
             development                           -           600 
            Net changes in operating assets
             and liabilities, net of    
             acquired assets and liabilities:                         
                Accounts receivable          (14,836)       (2,911)
                Prepaid and other current
                 assets                        6,184        (2,009)
                Other long-term assets        (1,128)        3,181 
                Accounts payable and other                            
                 liabilities                 (73,497)     (100,168)
                Accrued income taxes         (41,428)       (5,771)
                Deferred revenue             (44,239)      (79,456)
                                             -------       ------- 
            Net cash used in operating
             activities                      (45,417)      (81,926)
                                                                       
      CASH FLOWS FROM INVESTING ACTIVITIES:                            
            Proceeds from sales and
             maturities of short-term
             investments                      57,362        64,047 
            Purchases of short-term
             investments                     (58,638)      (60,059)
            Purchases of property and
             equipment                        (8,037)       (8,258)
            Cash paid for acquisitions,
             net of cash acquired             (3,127)      (27,333)
            Capitalization of software
             development costs                  (720)         (720)
                                                ----          ---- 
            Net cash used in investing
             activities                      (13,160)      (32,323)
                                                                       
      CASH FLOWS FROM FINANCING ACTIVITIES:                            
            Principal payments on capital
             leases                             (744)         (492)
            Issuances of common stock          8,133         1,152 
            Purchases of treasury stock      (25,257)            - 
                                             -------           --- 
            Net cash (used in) provided by                             
             financing activities            (17,868)          660 
      Effect of exchange rate changes on
       cash and cash equivalents               1,322         6,122 
                                               -----         ----- 
      Net change in cash and cash
       equivalents                           (75,123)     (107,467)
      Cash and cash equivalents,
       beginning of period                   701,613       577,632 
                                             -------       ------- 
      Cash and cash equivalents,
       end of period                        $626,490      $470,165 
                                            ========      ======== 
                                                                       
    (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.