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."
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.
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.
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
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