Synopsys Posts Financial Results for First Quarter Fiscal Year 2010

MOUNTAIN VIEW, Calif., Feb. 17 — (PRNewswire) — 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  
        
        
 

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