News Releases

Synopsys Posts Financial Results for Fourth Quarter and Fiscal Year 2011
Q4 2011 Financial Highlights
- Revenue: $390.5 million
- GAAP earnings per share: $0.27
- Non-GAAP earnings per share: $0.45
FY 2011 Financial Highlights
- Revenue: $1.536 billion
- GAAP earnings per share: $1.47
- Non-GAAP earnings per share: $1.80
- Cash flow from operations: $440.3 million
- Ending cash balance: $1.0 billion

 

MOUNTAIN VIEW, Calif., Nov. 30, 2011 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS), a world leader in software and IP used in the design, verification and manufacture of electronic components and systems, today reported results for its fourth quarter and fiscal year 2011.

For the fourth quarter of fiscal 2011, Synopsys reported revenue of $390.5 million, compared to $375.5 million for the fourth quarter of fiscal 2010.  Revenue for fiscal year 2011 was $1.536 billion, an increase of 11.2 percent from $1.38 billion in fiscal 2010.

"Synopsys had an outstanding fiscal 2011, with double-digit revenue and non-GAAP earnings per share growth," said Aart de Geus, chairman and CEO of Synopsys.  "Our customers continue to drive design aggressively, even in the context of economic uncertainty.  Our combination of advanced technology and support expertise is helping to solve the most pressing technical challenges.  Synopsys' financial strength and predictable business model support an objective of double-digit non-GAAP earnings per share growth in fiscal 2012."

GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter of fiscal 2011 was $39.9 million, or $0.27 per share, compared to $25.4 million, or $0.17 per share, for the fourth quarter of fiscal 2010.  GAAP net income for fiscal year 2011 was $221.4 million, or $1.47 per share, compared to $237.1 million, or $1.56 per share, for fiscal 2010.

Non-GAAP Results
On a non-GAAP basis, net income for the fourth quarter of fiscal 2011 was $65.3 million, or $0.45 per share, compared to non-GAAP net income of $59.9 million, or $0.39 per share, for the fourth quarter of fiscal 2010.  Non-GAAP net income for fiscal 2011 was $270.3 million, or $1.80 per share, compared to non-GAAP net income of $242.4 million, or $1.60 per share, for fiscal 2010.  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 2012.  These targets do not include any impact of future acquisition-related activities.  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. 

First Quarter of Fiscal Year 2012 Targets:

  • Revenue: $412 million - $420 million
  • GAAP expenses: $340 million - $357 million
  • Non-GAAP expenses: $310 million - $320 million
  • Other income and expense: $0 - $2 million
  • Tax rate applied in non-GAAP net income calculations: 24 – 25 percent
  • Fully diluted outstanding shares: 145 million - 149 million
  • GAAP earnings per share: $0.33 - $0.38
  • Non-GAAP earnings per share: $0.51 - $0.53
  • Revenue from backlog: greater than 90 percent

Note: The first quarter of fiscal 2012 includes an extra week.

Full Fiscal Year 2012 Targets:

  • Revenue: $1.640 billion - $1.665 billion
  • Other income and expense: $0 million - $4 million
  • Tax rate applied in non-GAAP net income calculations: 25 – 26 percent
  • Fully diluted outstanding shares: 145 million - 149 million
  • GAAP earnings per share: $1.28 - $1.44
  • Non-GAAP earnings per share: $1.93 - $1.99
  • Cash flow from operations: approximately $300 million
  • Revenue from backlog: greater than 80 percent

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) the amortization of acquired intangible assets, (ii) the impact of stock compensation, (iii) acquisition-related costs, (iv) other significant items, including the effect of tax benefits from settlements with the Internal Revenue Service, and (v) the income tax effect of non-GAAP pre-tax adjustments as well as unusual or infrequent tax adjustments; 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 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 Fiscal Year 2011 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 2011 Results

(unaudited and in thousands, except per share amounts)

 

 

Three Months Ended

 

Twelve Months Ended

 

October 31,

 

October 31,

 

2011

 

2010

 

2011

 

2010

GAAP net income

$ 39,942

 

$ 25,401

 

$ 221,364

 

$ 237,063

Adjustments:

 

 

 

 

 

 

 

Amortization of intangible assets

16,852

 

14,610

 

69,420

 

47,685

Stock compensation

14,984

 

14,775

 

56,414

 

59,989

Acquisition-related costs

963

(1)

10,814

 

1,231

(1)

20,650

Facility restructuring charge

-

 

123

 

-

 

1,238

Tax benefit from IRS settlement

-

 

-

 

(32,782)

 

(94,344)

Tax adjustments

(7,414)

 

(5,870)

 

(45,374)

 

(29,892)

Non-GAAP net income

$ 65,327

 

$ 59,853

 

$ 270,273

 

$ 242,389

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

October 31,

 

October 31,

 

2011

 

2010

 

2011

 

2010

GAAP net income per share

$     0.27

 

$     0.17

 

$       1.47

 

$       1.56

Adjustments:

 

 

 

 

 

 

 

Amortization of intangible assets

0.12

 

0.09

 

0.46

 

0.31

Stock compensation

0.10

 

0.10

 

0.38

 

0.40

Acquisition-related costs

0.01

(1)

0.07

 

0.01

(1)

0.14

Facility restructuring charge

-

 

0.00

 

-

 

0.01

Tax benefit from IRS settlement

-

 

-

 

(0.22)

 

(0.62)

Tax adjustments

(0.05)

 

(0.04)

 

(0.30)

 

(0.20)

Non-GAAP net income per share

$     0.45

 

$     0.39

 

$       1.80

 

$       1.60

 

 

 

 

 

 

 

 

Shares used in calculation

146,350

 

151,978

 

150,367

 

151,911

 

(1)

Included changes to the fair value of contingent consideration related to a prior year acquisition.



 

 

 

Reconciliation of Target Non-GAAP 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 2012 Targets

(in thousands, except per share amounts)

 

 

 Range for Three Months 

 

Ending January 31, 2012 (1)

 

Low

 

High

Target GAAP expenses

$      340,000

 

$      357,000

Adjustments:

 

 

 

       Estimated impact of amortization of intangible assets

(16,000)

 

(19,000)

       Estimated impact of stock compensation

(14,000)

 

(18,000)

Target non-GAAP expenses

$      310,000

 

$      320,000

 

 

 

 

 

Range for Three Months

 

Ending January 31, 2012 (1)

 

Low

 

High

Target GAAP earnings per share

$            0.33

 

$            0.38

Adjustments:

 

 

 

Estimated impact of amortization of intangible assets

0.13

 

0.11

Estimated impact of stock compensation

0.12

 

0.10

Net non-GAAP tax adjustments 

(0.07)

 

(0.06)

Target non-GAAP earnings per share

$            0.51

 

$            0.53

 

 

 

 

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

147,000

 

147,000

 

 

 

 

GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2012 Targets

 

 

 

 

 

Range for Fiscal Year

 

Ending October 31, 2012

 

Low

 

High

Target GAAP earnings per share

$            1.28

 

$            1.44

Adjustments:

 

 

 

Estimated impact of amortization of intangible assets

0.48

 

0.41

Estimated impact of stock compensation

0.47

 

0.40

Net non-GAAP tax adjustments

(0.30)

 

(0.26)

Target non-GAAP earnings per share

$            1.93

 

$            1.99

 

 

 

 

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

147,000

 

147,000

 

(1)

Synopsys' first quarter of fiscal 2012 has an extra week ending February 4, 2012.  For presentation purposes, the first quarter forecast refers to a calendar month ending

January 31, 2012.

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 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 223781 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 2012 in February 2012.  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 year 2012 earnings call in February 2012, 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 2012 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 fiscal 2011 in its annual report on Form 10-K to be filed by December 29, 2011.

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, system-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 70 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 Non-GAAP Operating Results," financial objectives, 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:

  • uncertainty in the growth of the semiconductor and electronics industry;
  • changes in demand for Synopsys' products due to fluctuations in demand for its customers' products;
  • Synopsys' ability to realize the potential financial or strategic benefits of acquisitions and the difficulties in the integration of the products and operations of acquired companies or assets into Synopsys' products and operations;
  • continued uncertainty in the global economy and its potential impact on the semiconductor and electronics industries;
  • increased competition in the market for Synopsys' products and services including through consolidation in the industry and among our customers;
  • 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
  • failure of customers to pay license fees as scheduled.

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, 2012, actual expenses, earnings per share, tax rate, and other projections on a GAAP and non-GAAP basis for fiscal year 2012, and cash flow from operations on a GAAP basis for fiscal year 2012 could differ materially from the targets stated under "Financial Targets" above for a number of reasons, including, but not limited to, (i) 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, as well as changes in the fair value of contingent consideration related to prior acquisitions, (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) a determination by Synopsys that any portion of its goodwill or intangible assets have become impaired, (iv) changes in the anticipated amount of employee stock-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 guidance, (viii) general economic conditions, and (ix) other risks as detailed in Synopsys' SEC filings, including those described in the "Risk Factors" section in its latest Quarterly Report on Form 10-Q for the third fiscal quarter ended July 31, 2011.  Furthermore, Synopsys' actual tax rates applied to income for the first quarter and fiscal year 2012 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 2012 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 October 31,

 

Twelve Months Ended October 31,

 

2011

 

2010

 

2011

 

2010

Revenue:

 

 

 

 

 

 

 

  Time-based license

$ 323,824

 

$ 310,708

 

$ 1,260,342

 

$ 1,158,418

  Upfront license

19,969

 

20,807

 

90,531

 

68,618

  Maintenance and service

46,741

 

43,944

 

184,770

 

153,625

      Total revenue

390,534

 

375,459

 

1,535,643

 

1,380,661

Cost of revenue:

 

 

 

 

 

 

 

  License

51,632

 

50,105

 

205,390

 

180,245

  Maintenance and service

20,445

 

18,271

 

80,241

 

64,746

  Amortization of intangible assets

13,308

 

11,367

 

54,819

 

36,103

     Total cost of revenue

85,385

 

79,743

 

340,450

 

281,094

Gross margin

305,149

 

295,716

 

1,195,193

 

1,099,567

Operating expenses:

 

 

 

 

 

 

 

  Research and development

125,415

 

129,298

 

491,871

 

449,229

  Sales and marketing

93,500

 

96,968

 

363,118

 

339,759

  General and administrative

26,373

 

32,950

 

112,760

 

114,887

  Amortization of intangible assets 

3,544

 

3,243

 

14,601

 

11,582

     Total operating expenses

248,832

 

262,459

 

982,350

 

915,457

Operating income

56,317

 

33,257

 

212,843

 

184,110

Other (expense) income, net

(2,762)

 

6,439

 

6,270

 

14,548

Income before income taxes

53,555

 

39,696

 

219,113

 

198,658

Provision (benefit) for income taxes

13,613

 

14,295

 

(2,251)

 

(38,405)

Net income

$   39,942

 

$   25,401

 

$    221,364

 

$    237,063

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

  Basic

$       0.28

 

$       0.17

 

$          1.51

 

$          1.60

  Diluted

$       0.27

 

$       0.17

 

$          1.47

 

$          1.56

 

 

 

 

 

 

 

 

Shares used in computing per share amounts:

 

 

 

 

 

 

 

  Basic

143,855

 

148,229

 

146,573

 

148,013

  Diluted

146,350

 

151,978

 

150,367

 

151,911

 

(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, 2011

 

October 31, 2010

ASSETS:

 

 

 

Current assets:

 

 

 

  Cash and cash equivalents

$             855,077

 

$             775,407

  Short-term investments

148,997

 

163,154

           Total cash, cash equivalents and short-term investments

1,004,074

 

938,561

  Accounts receivable, net

203,124

 

181,102

  Deferred income taxes

58,536

 

73,465

  Income taxes receivable

25,545

 

18,425

  Prepaid and other current assets

46,776

 

36,202

          Total current assets

1,338,055

 

1,247,755

Property and equipment, net

159,517

 

148,580

Goodwill

1,289,286

 

1,265,843

Intangible assets, net

196,031

 

249,656

Long-term deferred income taxes

281,056

 

268,759

Other long-term assets

103,389

 

105,948

           Total assets

$          3,367,334

 

$          3,286,541

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY:

 

 

 

Current liabilities:

 

 

 

  Accounts payable and accrued liabilities

$             302,176

 

$             312,850

  Accrued income taxes

3,079

 

8,349

  Deferred revenue

703,555

 

600,569

           Total current liabilities

1,008,810

 

921,768

Long-term accrued income taxes

92,940

 

128,603

Other long-term liabilities

108,076

 

101,885

Long-term deferred revenue

56,208

 

34,103

           Total liabilities

1,266,034

 

1,186,359

Stockholders' equity:

 

 

 

  Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding

-

 

-

  Common stock, $0.01 par value: 400,000 shares authorized; 143,308 and

 

 

 

      148,479 shares outstanding, respectively

1,433

 

1,485

  Capital in excess of par value

1,521,327

 

1,541,383

  Retained earnings

957,517

 

770,674

  Treasury stock, at cost: 13,956 and 8,786 shares, respectively

(358,032)

 

(197,586)

  Accumulated other comprehensive loss 

(20,945)

 

(15,774)

           Total stockholders' equity

2,101,300

 

2,100,182

           Total liabilities and stockholders' equity

$          3,367,334

 

$          3,286,541

 

(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, 

 

2011

 

2010

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$221,364

 

$237,063

Adjustments to reconcile net income to net cash provided by operating

 

 

 

    activities:

 

 

 

Amortization and depreciation

128,550

 

101,201

Stock compensation

56,414

 

59,988

Allowance for doubtful accounts 

1,058

 

(899)

Write-down of long-term investments

999

 

468

Gain on sale of investments

(936)

 

(3,995)

Deferred income taxes

22,278

 

38,356

Net changes in operating assets and liabilities, net of 

 

 

 

acquired assets and liabilities:

 

 

 

Accounts receivable

(18,974)

 

(16,202)

Prepaid and other current assets

(13,445)

 

4,638

Other long-term assets

(4,248)

 

(5,923)

Accounts payable and other liabilities

(7,408)

 

10,566

Income taxes

(58,377)

 

(94,052)

Deferred revenue

113,041

 

9,827

Net cash provided by operating activities

440,316

 

341,036

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Proceeds from sales and maturities of short-term investments

136,983

 

547,686

Purchases of short-term investments

(127,385)

 

(243,515)

Proceeds from sales of long-term investments

2,828

 

-

Purchases of property and equipment

(57,345)

 

(39,223)

Cash paid for acquisitions, net of cash acquired

(41,015)

 

(500,829)

Capitalization of software development costs

(2,885)

 

(2,852)

Net cash used in investing activities

(88,819)

 

(238,733)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Principal payments on capital leases

(4,628)

 

(3,692)

Issuances of common stock

162,180

 

145,329

Purchase of equity forward contract

(33,335)

 

-

Purchases of treasury stock

(401,836)

 

(184,699)

Net cash used in financing activities

(277,619)

 

(43,062)

Effect of exchange rate changes on cash and cash equivalents

5,792

 

14,553

Net change in cash and cash equivalents

79,670

 

73,794

Cash and cash equivalents, beginning of the year

775,407

 

701,613

Cash and cash equivalents, end of the year

$855,077

 

$775,407

 

(1)

Synopsys' fiscal year 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.