Synopsys Posts Financial Results for Second Quarter Fiscal Year 2014

Q2 2014 Financial Highlights

(PRNewswire) —  Synopsys, Inc. (Nasdaq: SNPS), a global leader providing software, IP and services used to accelerate innovation in chips and electronic systems, today reported results for its second quarter of fiscal year 2014.

For the second quarter of fiscal year 2014, Synopsys reported revenue of $517.7 million, compared to $499.3 million for the second quarter of fiscal 2013, an increase of 3.7 percent.  

"Our fiscal second quarter results were very strong, driven by robust business in all key areas," said Aart de Geus, chairman and co-CEO of Synopsys.  "In addition, we introduced several important new products, including IC Compiler II, a game-changer in digital design, and we completed the acquisition of Coverity, bringing us into the emerging market of software quality, test and security."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2014 was $63.3 million, or $0.40 per share, compared to $68.7 million, or $0.44 per share, for the second quarter of fiscal 2013.

Non-GAAP Results

On a non-GAAP basis, net income for the second quarter of fiscal 2014 was $101.7 million, or $0.65 per share, compared to non-GAAP net income of $103.7 million, or $0.66 per share, for the second quarter of fiscal 2013. 

Financial Targets

Synopsys also provided its financial targets for the third quarter and full fiscal year 2014.  These targets do not include any future acquisition-related expenses that may be incurred in fiscal 2014.  These targets constitute forward-looking information and are based on current expectations.  For a discussion of factors that could cause actual results to differ materially from these targets, see "Forward-Looking Statements" below. 

Third Quarter of Fiscal Year 2014 Targets:

  • Revenue: $515 million - $525 million
  • GAAP expenses: $450.5 million - $471 million
  • Non-GAAP expenses: $400 million - $410 million
  • Other income and expense: ($1) million - $1 million
  • Tax rate applied in non-GAAP net income calculations: approximately 20 percent
  • Fully diluted outstanding shares: 155 million - 159 million
  • GAAP earnings per share: $0.30 - $0.38
  • Non-GAAP earnings per share: $0.60 - $0.62

Full Fiscal Year 2014 Targets:

  • Revenue: $2.05 billion - $2.075 billion
  • Other income and expense: $10 million - $12 million
  • Tax rate applied in non-GAAP net income calculations: approximately 21 percent
  • Fully diluted outstanding shares: 155 million - 159 million
  • GAAP earnings per share: $1.55 - $1.68
  • Non-GAAP earnings per share: $2.45 - $2.50
  • Cash flow from operations: $450 million - $475 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) the amortization of acquired intangible assets, (ii) the impact of stock compensation, (iii) acquisition-related costs, including inventory fair value adjustments, (iv) other significant items, including facilities restructuring charges and the effect of tax and legal settlements, 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 Second Quarter Fiscal Year 2014 Results

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

 

GAAP to Non-GAAP Reconciliation of Second Quarter Fiscal Year 2014 Results

(unaudited and in thousands, except per share amounts)










Three Months Ended


Six Months Ended


April 30,


April 30,


2014


2013


2014


2013

GAAP net income

$   63,317


$   68,691


$ 131,013


$ 138,613

Adjustments:








Amortization of intangible assets

32,050


32,273


60,181


64,676

Stock compensation

18,824


15,529


36,941


33,229

Acquisition-related costs

4,374


1,992


5,449


3,828

Inventory fair value adjustment

-


-


-


1,809

Facility restructuring charges

-


302


-


30

Tax and other settlements

(2,040)


-


(12,307)


-

Tax adjustments

(14,830)


(15,123)


(26,495)


(35,554)

Non-GAAP net income 

$ 101,695


$ 103,664


$ 194,782


$ 206,631


























Three Months Ended


Six Months Ended


April 30,


April 30,


2014


2013


2014


2013

GAAP net income per share

$       0.40


$       0.44


$       0.83


$       0.89

Adjustments:








Amortization of intangible assets

0.20


0.21


0.38


0.42

Stock compensation

0.12


0.10


0.24


0.22

Acquisition-related costs

0.03


0.01


0.04


0.02

Inventory fair value adjustment

-


-


-


0.01

Facility restructuring charges

-


0.00


-


0.00

Tax and other settlements

(0.01)


-


(0.08)


-

Tax adjustments

(0.09)


(0.10)


(0.17)


(0.23)

Non-GAAP net income per share

$       0.65


$       0.66


$       1.24


$       1.33









Shares used in calculation

157,082


156,606


156,986


155,662


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