Synopsys Posts Financial Results for Fourth Quarter and Fiscal Year 2014

Q4 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 fourth quarter and fiscal year 2014.

For the fourth quarter of fiscal 2014, Synopsys reported revenue of $539.0 million, compared to $504.9 million for the fourth quarter of fiscal 2013. Revenue for fiscal year 2014 was $2.057 billion, an increase of 4.9 percent from $1.962 billion in fiscal 2013.

"Fiscal 2014 was a very good, very significant year for Synopsys," said Aart de Geus, chairman and co-CEO of Synopsys. "We delivered solid financial results, and built a strong foundation for 2015. We released game-changing new products that will drive a multi-year upgrade cycle. And we broadened our total addressable market to include the higher-growth software quality, test and security space. We look forward to another year of solid financial execution and operational performance."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter of fiscal 2014 was $62.5 million, or $0.39 per share, compared to $56.9 million, or $0.36 per share, for the fourth quarter of fiscal 2013. GAAP net income for fiscal year 2014 was $259.1 million, or $1.64 per share, compared to $247.8 million, or $1.58 per share, for fiscal 2013.

Non-GAAP Results

On a non-GAAP basis, net income for the fourth quarter of fiscal 2014 was $100.9 million, or $0.64 per share, compared to non-GAAP net income of $88.3 million, or $0.56 per share, for the fourth quarter of fiscal 2013. Non-GAAP net income for fiscal 2014 was $398.9 million, or $2.53 per share, compared to non-GAAP net income of $381.4 million, or $2.44 per share, for fiscal 2013. 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 2015. These targets do not include any future acquisition costs that may be incurred in fiscal year 2015. 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 2015 Targets:

  • Revenue: $535 million - $545 million
  • GAAP expenses: $482 million - $505 million
  • Non-GAAP expenses: $415 million - $425 million
  • Other income and expense: $0 million - $2 million
  • Tax rate applied in non-GAAP net income calculations: approximately 22 percent
  • Fully diluted outstanding shares: 155 million - 159 million
  • GAAP earnings per share: $0.18 - $0.25
  • Non-GAAP earnings per share: $0.61 - $0.63

Full Fiscal Year 2015 Targets:

  • Revenue: $2.185 billion - $2.225 billion
  • Other income and expense: $2 million - $6 million
  • Tax rate applied in non-GAAP net income calculations: approximately 22 percent
  • Fully diluted outstanding shares: 155 million - 159 million
  • GAAP earnings per share: $1.22 - $1.35
  • Non-GAAP earnings per share: $2.67 - $2.72
  • Cash flow from operations: approximately $450 million
  • Revenue from beginning of year backlog: approximately 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, including inventory fair value adjustments, (iv) other significant items, including facilities restructuring charges and certain accruals for legal and tax matters, 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 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 Fourth Quarter Fiscal Year 2014 Results

(unaudited and in thousands, except per share amounts)










Three Months Ended


Twelve Months Ended


October 31,


October 31,


2014


2013


2014


2013

GAAP net income

$   62,455


$ 56,890


$ 259,124


$ 247,800

Adjustments:








Amortization of intangible assets

33,129


30,546


126,119


127,503

Stock compensation

21,100


17,791


79,440


67,511

Acquisition-related costs

379


1,286


5,864


5,276

Inventory fair value adjustment

-


2,720


-


6,432

Legal and tax matters

(1,482)


1,612


(16,770)


(1,308)

Tax adjustments

(14,634)


(22,557)


(54,897)


(71,797)

Non-GAAP net income 

$ 100,947


$ 88,288


$ 398,880


$ 381,417


























Three Months Ended


Twelve Months Ended


October 31,


October 31,


2014


2013


2014


2013

GAAP net income per share

$       0.39


$     0.36


$       1.64


$       1.58

Adjustments:








Amortization of intangible assets

0.21


0.19


0.80


0.81

Stock compensation

0.14


0.11


0.51


0.43

Acquisition-related costs

0.00


0.01


0.04


0.04

Inventory fair value adjustment

-


0.02


-


0.04

Legal and tax matters

(0.01)


0.01


(0.11)


(0.01)

Tax adjustments

(0.09)


(0.14)


(0.35)


(0.45)

Non-GAAP net income per share

$       0.64


$     0.56


$       2.53


$       2.44









Shares used in calculation

158,477


157,039


157,710


156,601


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