MOUNTAIN VIEW, Calif., Feb. 18 /PRNewswire-FirstCall/ -- Synopsys, Inc. (NASDAQ: SNPS), a world leader in software and IP for semiconductor design and manufacturing, today reported results for its first quarter ended January 31, 2009.
For the first quarter of fiscal 2009, Synopsys reported revenue of $339.8 million, a 7.7 percent increase compared to $315.5 million for the first quarter of fiscal 2008.
"Synopsys' first quarter was characterized by solid financial performance, continued technology momentum and visible customer success," said Aart de Geus, chairman and CEO of Synopsys. "While the recession has clearly deepened and we have seen signs of customer stress, we believe that Synopsys is well positioned to help our customers weather the storm, and to emerge an even stronger company as a result."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the first quarter of fiscal 2009 was $52.4 million, or $0.37 per share, compared to $46.4 million, or $0.31 per share, for the first quarter of fiscal 2008.
Non-GAAP Results
On a non-GAAP basis, net income for the first quarter of fiscal 2009 was $71.6 million, or $0.50 per share, compared to non-GAAP net income of $66.0 million, or $0.44 per share, for the first quarter of fiscal 2008.
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 second quarter and full fiscal year 2009. 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 2009 Targets:
* Revenue: $332 million - $340 million
* GAAP expenses: $280.5 million - $296 million
* Non-GAAP expenses: $257 million - $267 million
* Other income and expense: $0 - $3 million
* Tax rate applied in non-GAAP net income calculations: approximately 27
percent
* Fully diluted outstanding shares: 142 million - 147 million
* GAAP earnings per share: $0.25 - $0.30
* Non-GAAP earnings per share: $0.39 - $0.41
* Revenue from backlog: greater than 90 percent
Full-Year Fiscal Year 2009 Targets:
* Revenue: approximately $1.37 billion - $1.40 billion
* Other income and expense: $6 million - $10 million
* Tax rate applied in non-GAAP net income calculations: approximately 27
percent
* Fully diluted outstanding shares: 144 million - 149 million
* GAAP earnings per share: $1.11 - $1.27
* Non-GAAP earnings per share: $1.60 - $1.72
* 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) share-based compensation; (ii) the amortization of acquired intangible assets and in- process research and development charges; and (iii) the income tax effect of the 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 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 First Quarter Results
(Unaudited and in thousands, except per share amounts)
Three Months Ended
January 31,
2009 2008
GAAP net income $52,429 $46,445
Adjustments:
Amortization of intangible assets 11,808 11,624
Share-based compensation 14,143 15,644
In-process research and development 600 -
Tax effect (7,384) (7,697)
Non-GAAP net income $71,596 $66,016
Three Months Ended
January 31,
2009 2008
GAAP earnings per share $0.37 $0.31
Adjustments:
Amortization of intangible assets 0.08 0.08
Share-based compensation 0.09 0.10
In-process research and development 0.01 -
Tax effect (0.05) (0.05)
Non-GAAP earnings per share $0.50 $0.44
Shares used in calculation 142,612 150,683
Reconciliation of Target 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 Second Quarter Fiscal Year 2009 Targets
(in thousands, except per share amounts)
Range for Three Months
Ending April 30, 2009
Low High
Target GAAP expenses $280,500 $296,000
Adjustment:
Estimated impact of amortization of
intangible assets (10,500) (14,000)
Estimated impact of share-based
compensation (13,000) (15,000)
Target non-GAAP expenses $257,000 $267,000
Range for Three Months
Ending April 30, 2009
Low High
Target GAAP earnings per share $0.25 $0.30
Adjustment:
Estimated impact of amortization of
intangible assets 0.10 0.07
Estimated impact of share-based
compensation 0.10 0.09
Net non-GAAP tax effect (0.06) (0.05)
Target non-GAAP earnings per share $0.39 $0.41
Shares used in non-GAAP calculation (midpoint
of target range) 144,500 144,500
GAAP to Non-GAAP Reconciliation of Fiscal Year 2009 Targets
Range for Fiscal Year
Ending October 31, 2009
Low High
Target GAAP earnings per share $1.11 $1.27
Adjustment:
Estimated impact of amortization of intangible
assets 0.33 0.29
Estimated impact of share-based compensation 0.38 0.37
Net non-GAAP tax effect (0.22) (0.21)
Target non-GAAP earnings per share $1.60 $1.72
Shares used in non-GAAP calculation (midpoint
of target range) 146,500 146,500
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 http://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 985197, beginning at 5:30 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 second quarter fiscal 2009 in May 2009. 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 http://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 second quarter earnings call in May 2009, 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 second quarter of fiscal 2009 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 the first quarter in its Quarterly Report on Form 10-Q to be filed by March 12, 2009.
About Synopsys
Synopsys, Inc. (NASDAQ: SNPS) is the world leader in electronic design automation (EDA), supplying the global electronics market with the software, intellectual property (IP) and services used in semiconductor design 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, software-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 60 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 Operating Results" 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:
* continued downturn and uncertainty in the global economy in general, and
weakness in the semiconductor and electronics industries;
* failure of customers to pay license fees as scheduled;
* lower-than-expected research and development spending by semiconductor
and electronic systems companies;
* competition in the market for Synopsys' products and services;
* 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
* difficulties in the integration of the products and operations of
acquired companies or assets into Synopsys' products and operations.
In addition, Synopsys' actual expenses, earnings per share and tax rate on a GAAP and non-GAAP basis for the fiscal quarter ending April 30, 2009 and actual expenses, earnings per share, tax rate, cash flow from operations and other projections on a GAAP and non-GAAP basis for fiscal year 2009 could differ materially from the targets stated under "Financial Targets" above for a number of reasons, including, but not limited to, (i) a determination by Synopsys that any portion of its goodwill or intangible assets have become impaired, (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 to increase or decrease an income tax asset or liability, (iii) integration and other acquisition-related expenses including amortization of intangible assets associated with future acquisitions, if any, (iv) changes in the anticipated amount of employee share-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 pronouncements, (viii) general economic conditions, and (ix) other risks as detailed in our SEC filings, including those described in the "Risk Factors" section in our Annual Report on Form 10-K for the fiscal year ended October 31, 2008. Furthermore, Synopsys' actual tax rates applied to income for the second quarter and fiscal year 2009 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 second quarter and fiscal year 2009 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 January 31,
2009 2008
Revenue:
Time-based license $285,052 $267,860
Upfront license 18,327 12,521
Maintenance and service 36,376 35,084
Total revenue 339,755 315,465
Cost of revenue:
License 41,823 40,398
Maintenance and service 15,579 15,879
Amortization of intangible assets 8,022 5,033
Total cost of revenue 65,424 61,310
Gross margin 274,331 254,155
Operating expenses:
Research and development 97,807 92,514
Sales and marketing 77,384 77,370
General and administrative 27,182 23,841
In-process research and development 600 -
Amortization of intangible assets 3,786 6,591
Total operating expenses 206,759 200,316
Operating income 67,572 53,839
Other income, net 2,099 6,330
Income before income taxes 69,671 60,169
Provision for income taxes 17,242 13,724
Net income $52,429 $46,445
Net income per share:
Basic $0.37 $0.32
Diluted $0.37 $0.31
Shares used in computing per share amounts:
Basic 141,865 146,001
Diluted 142,612 150,683
(1) Synopsys' first quarter ended on the Saturday nearest January 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)
January 31, October 31,
2009 2008
ASSETS:
Current assets:
Cash and cash equivalents $470,165 $577,632
Short-term investments 372,116 373,669
Total cash, cash equivalents and short-
term investments 842,281 951,301
Accounts receivable, net 150,083 147,365
Deferred income taxes 136,533 133,609
Income taxes receivable 49,534 49,859
Other current assets 42,936 40,156
Total current assets 1,221,367 1,322,290
Property and equipment, net 141,152 145,087
Goodwill 917,794 899,640
Intangible assets, net 109,870 114,760
Long-term deferred income taxes 168,070 177,386
Other long-term assets 78,405 83,315
Total assets $2,636,658 $2,742,478
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued liabilities $182,608 $289,769
Accrued income taxes 9,395 14,496
Deferred revenue 547,343 604,718
Total current liabilities 739,346 908,983
Long-term accrued income taxes 154,679 152,745
Deferred compensation and other
liabilities 76,882 76,970
Long-term deferred revenue 61,636 75,409
Total liabilities 1,032,543 1,214,107
Stockholders' equity:
Preferred stock, $0.01 par value: 2,000
shares authorized; none outstanding - -
Common stock, $0.01 par value: 400,000
shares authorized; 142,010 and 141,786
shares outstanding, respectively 1,420 1,418
Capital in excess of par value 1,482,555 1,471,031
Retained earnings 485,175 434,057
Treasury stock, at cost: 15,261
and 15,485 shares, respectively (337,892) (342,856)
Accumulated other comprehensive
income (loss) (27,143) (35,279)
Total stockholders' equity 1,604,115 1,528,371
Total liabilities and stockholders'
equity $2,636,658 $2,742,478
(1) Synopsys' first and fourth quarter ended on the Saturday nearest
January 31 and October 31, respectively. 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)
Three Months Ended January 31,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $52,429 $46,445
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization and depreciation 25,418 25,333
Share-based compensation 14,143 15,644
Allowance for doubtful accounts 1,490 -
Write-down of long-term investments 2,960 -
(Gain) loss on sale of investments (172) 200
Deferred income taxes 8,340 (1,858)
Net change in deferred gains and losses on
cash flow hedges 3,648 2,104
In-process research and development 600 -
Net changes in operating assets and
liabilities, net of acquired assets and
liabilities:
Accounts receivable (2,911) (17,077)
Other current assets (2,009) (1,185)
Other long-term assets 407 (488)
Accounts payable and accrued liabilities (101,970) (81,102)
Accrued income taxes (5,771) 2,754
Deferred revenue (79,456) (42,969)
Deferred compensation and other
liabilities 928 1,018
Net cash used in operating activities (81,926) (51,181)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
short-term investments 64,047 150,523
Purchases of short-term investments (60,059) (173,675)
Purchases of long-term investments - (1,500)
Purchases of property and equipment (8,258) (9,726)
Cash paid for acquisitions and intangible
assets (27,333) -
Capitalization of software development
costs (720) (704)
Net cash used in investing activities (32,323) (35,082)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases (492) -
Issuances of common stock 1,152 12,097
Purchases of treasury stock - (82,865)
Net cash provided by (used in) financing
activities 660 (70,768)
Effect of exchange rate changes on cash and
cash equivalents 6,122 5,759
Net change in cash and cash equivalents (107,467) (151,272)
Cash and cash equivalents, beginning
of period 577,632 579,327
Cash and cash equivalents, end of period $470,165 $428,055
(1) Synopsys' first quarter ended on the Saturday nearest January 31.
For presentation purposes, the Unaudited Consolidated Statements
of Cash Flows refer to a calendar month end.
Web site: http://www.synopsys.com/