SYNOPSYS : Posts Financial Results for Second Quarter Fiscal Year 2010
05/19/2010| 04:20pm US/Eastern
Recommend:
MOUNTAIN VIEW, Calif., May 19 /PRNewswire-FirstCall/ -- Synopsys, Inc. (Nasdaq: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its second quarter of fiscal year 2010.
For the second quarter of fiscal 2010, Synopsys reported revenue of $338.1 million compared to $336.8 million for the second quarter of fiscal 2009.
"Synopsys again delivered solid results this quarter, " said Aart de Geus, chairman and CEO of Synopsys. "While the customer backdrop remains cautious, we continue to execute well on our strategy to address customer needs ranging from mainstream to the most advanced silicon design flows, all the way to the rapidly growing IP and systems space. This quarter we made particular progress in the latter, where we believe we have an especially promising outlook."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2010 was $39.5 million, or $0.26 per share, compared to $48.3 million, or $0.33 per share, for the second quarter of fiscal 2009.
Non-GAAP Results
On a non-GAAP basis, net income for the second quarter of fiscal 2010 was $61.9 million, or $0.41 per share, compared to non-GAAP net income of $65.9 million, or $0.45 per share, for the second quarter of fiscal 2009.
Financial Targets
Synopsys also provided its financial targets for the third 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.
Third Quarter of Fiscal Year 2010 Targets:
-- Revenue: $330 million - $338 million
-- GAAP expenses: $275 million - $292 million
-- Non-GAAP expenses: $251 million - $261 million
-- Other income and expense: $0 - $3 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: $0.21 - $0.27
-- Non-GAAP earnings per share: $0.36 - $0.38
-- Revenue from backlog: greater than 90 percent
Full-Year Fiscal Year 2010 Targets:
-- Revenue: $1.340 billion - $1.355 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: $1.56 - $1.75
-- Non-GAAP earnings per share: $1.52 - $1.62
-- Cash flow from operations: $205 million - $225 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) in-process research and development expenses, (iv) acquisition-related costs; (v) other significant items, including the effect of a tax benefit from a settlement with the Internal Revenue Service, and (vi) 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 Second 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 Second Quarter Fiscal Year 2010
Results
(unaudited and in thousands, except per share amounts)
Three Months
Ended Six Months Ended
April 30, April 30,
--------- ---------
2010 2009 2010 2009
---- ---- ---- ----
GAAP net income $39,549 $48,288 $172,335 $100,717
Adjustments:
Amortization of
intangible assets 11,814 10,620 22,464 22,428
Stock compensation 13,466 14,661 30,700 28,804
In-process
research and
development - - - 600
Acquisition-
related costs 6,120 - 7,166 -
Tax benefit from
IRS settlement - - (91,649) -
Tax effect (9,015) (7,666) (16,663) (15,050)
------ -------
Non-GAAP net income $61,934 $65,903 $124,353 $137,499
======= ======= ======== ========
Three Months
Ended Six Months Ended
April 30, April 30,
--------- ---------
2010 2009 2010 2009
---- ---- ---- ----
GAAP net income per
share $0.26 $0.33 $1.14 $0.70
Adjustments:
Amortization of
intangible assets 0.08 0.07 0.15 0.16
Stock compensation 0.09 0.10 0.20 0.19
In-process
research and
development - - - 0.01
Acquisition-
related costs 0.04 - 0.05 -
Tax benefit from
IRS settlement - - (0.61) -
Tax effect (0.06) (0.05) (0.11) (0.11)
Non-GAAP net
income per share $0.41 $0.45 $0.82 $0.95
===== ===== ===== =====
Shares used in
calculation 152,482 145,421 151,635 144,024
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 Third Quarter Fiscal Year
2010 Targets
(in thousands, except per share amounts)
Range for Three
Months
Ending July 31,
2010
----------------
Low High
--- ----
Target GAAP expenses $275,000 $292,000
Adjustment:
Estimated impact of amortization of
intangible assets (10,000) (13,000)
Estimated impact of stock compensation (14,000) (18,000)
Target non-GAAP expenses $251,000 $261,000
======== ========
Range for Three
Months
Ending July 31,
2010
----------------
Low High
--- ----
Target GAAP earnings per share $0.21 $0.27
Adjustment:
Estimated impact of amortization of
intangible assets 0.09 0.06
Estimated impact of stock compensation 0.12 0.09
Net non-GAAP tax effect (0.06) (0.04)
Target non-GAAP earnings per share $0.36 $0.38
===== =====
Shares used in non-GAAP calculation
(midpoint of target range) 151,500 151,500
GAAP to Non-GAAP Reconciliation of Fiscal Year 2010 Targets
Range for Fiscal
Year
Ending October 31,
2010
-------------------
Low High
--- ----
Target GAAP earnings per share $1.56 $1.75
Adjustment:
Estimated impact of amortization of
intangible assets 0.33 0.26
Estimated impact of stock compensation 0.40 0.35
Acquisition-related costs 0.05 0.05
Tax benefit from IRS settlement (0.61) (0.61)
Net non-GAAP tax effect (0.21) (0.18)
Target non-GAAP earnings per share $1.52 $1.62
===== =====
Shares used in non-GAAP calculation
(midpoint of target range) 151,500 151,500
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 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 156545, beginning at 4:00 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 third quarter fiscal 2010 in August 2010. 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 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 third quarter fiscal 2010 earnings call in August 2010, 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 third quarter of fiscal 2010 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 second quarter fiscal 2010 in its quarterly report on Form 10-Q to be filed by June 10, 2010.
About Synopsys
Synopsys, Inc. (Nasdaq: SNPS) is a world leader in electronic design automation (EDA), supplying the global electronics market with the software, intellectual property (IP) and services used in semiconductor design, verification 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 65 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 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 July 31, 2010 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 2010 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 and settlements to increase or decrease an income tax asset or liability, (iii) integration and other acquisition-related costs including amortization of intangible assets and costs formerly capitalized but now expensed due to new accounting guidance related to business combinations, (iv) changes in the anticipated amount of employee stock 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 guidance, (viii) general economic conditions, and (ix) other risks as detailed in our SEC filings, including those described in the "Risk Factors" section in our latest Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2010. Furthermore, Synopsys' actual tax rates applied to income for the third quarter and fiscal year 2010 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 third quarter and fiscal year 2010 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.
SYNOPSYS, INC.
Unaudited Consolidated Statements of Operations (1)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
April 30, April 30,
------------------ ----------------
2010 2009 (2) 2010 2009 (2)
---- ------- ---- -------
Revenue:
Time-based license $288,672 $287,315 $561,147 $574,991
Upfront license 12,715 12,675 33,161 28,378
Maintenance and
service 36,719 36,845 73,965 73,221
------ ------ ------ ------
Total revenue 338,106 336,835 668,273 676,590
Cost of revenue:
License 44,930 42,292 86,144 84,115
Maintenance and
service 15,268 15,048 31,778 30,627
Amortization of
intangible assets 8,829 7,679 16,686 15,701
Total cost of
revenue 69,027 65,019 134,608 130,443
Gross margin 269,079 271,816 533,665 546,147
Operating expenses:
Research and
development 113,050 102,996 214,282 200,803
Sales and marketing 79,363 82,520 158,979 159,904
General and
administrative 28,713 28,691 54,566 55,873
In-process research
and development - - - 600
Amortization of
intangible assets 2,985 2,941 5,778 6,727
Total operating
expenses 224,111 217,148 433,605 423,907
Operating income 44,968 54,668 100,060 122,240
Other income, net 8,905 10,445 11,155 12,544
----- ------ ------ ------
Income before income
taxes 53,873 65,113 111,215 134,784
Provision (benefit)
for income taxes 14,324 16,825 (61,120) 34,067
Net income $39,549 $48,288 $172,335 $100,717
======= ======= ======== ========
Net income per
share:
Basic $0.27 $0.34 $1.17 $0.71
===== ===== ===== =====
Diluted $0.26 $0.33 $1.14 $0.70
===== ===== ===== =====
Shares used in
computing per share
amounts:
Basic 148,890 143,275 147,860 142,562
======= ======= ======= =======
Diluted 152,482 145,421 151,635 144,024
======= ======= ======= =======
(1) Synopsys' second quarter ended on the Saturday nearest April 30.
For presentation purposes, the Unaudited Consolidated Statements
of Operations refer to a calendar month end.
(2) For the three and six months ended April 30, 2009, Synopsys
reclassifed $3.3 million and $5.9 million from upfront license to
time-based licensed revenue to conform to the current year
presentation which had no impact on total revenue.
SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
April 30, October 31,
2010 2009
---------- ------------
ASSETS:
Current assets:
Cash and cash equivalents $669,431 $701,613
Short-term investments 409,023 466,713
------- -------
Total cash, cash equivalents and
short-term investments 1,078,454 1,168,326
Accounts receivable, net 149,654 127,010
Deferred income taxes 70,229 73,453
Income taxes receivable 36,294 51,191
Prepaid and other current assets 45,263 43,820
------ ------
Total current assets 1,379,894 1,463,800
Property and equipment, net 140,630 146,910
Goodwill 998,910 932,691
Intangible assets, net 119,806 96,810
Long-term deferred income taxes 270,365 205,396
Other long-term assets 95,731 93,247
Total assets $3,005,336 $2,938,854
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued
liabilities $186,802 $255,095
Accrued income taxes 28,024 5,508
Deferred revenue 505,771 553,990
------- -------
Total current liabilities 720,597 814,593
Long-term accrued income taxes 88,132 157,354
Other long-term liabilities 100,220 88,002
Long-term deferred revenue 38,226 34,739
------ ------
Total liabilities 947,175 1,094,688
Stockholders' equity:
Preferred stock, $0.01 par value:
2,000 shares authorized; none
outstanding - -
Common stock, $0.01 par value: 400,000
shares authorized; 149,802 and
146,945 shares outstanding,
respectively 1,498 1,469
Capital in excess of par value 1,512,888 1,500,166
Retained earnings 725,102 574,980
Treasury stock, at cost: 7,463 and
10,326 shares, respectively (165,266) (228,618)
Accumulated other comprehensive loss (16,061) (3,831)
------- ------
Total stockholders' equity 2,058,161 1,844,166
Total liabilities and stockholders'
equity $3,005,336 $2,938,854
========== ==========
(1) Synopsys' second quarter ended on the Saturday nearest April 30.
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)
Six Months Ended April
30,
----------------------
2010 2009
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $172,335 $100,717
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization and depreciation 50,219 49,728
Stock compensation 30,704 28,803
Allowance for doubtful accounts (742) 2,723
Write-down of long-term investments - 2,960
Gain on sale of investments (2,420) (324)
Deferred income taxes (38,549) 7,612
In-process research and development - 600
Net changes in operating assets and
liabilities, net of
acquired assets and liabilities:
Accounts receivable (20,626) (46,707)
Prepaid and other current assets 11,373 (3,047)
Other long-term assets (3,997) (617)
Accounts payable and other
liabilities (68,672) (105,639)
Accrued income taxes (48,157) (5,959)
Deferred revenue (45,235) (88,065)
------- -------
Net cash provided by (used in)
operating activities 36,233 (57,215)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
short-term investments 188,650 123,041
Purchases of short-term investments (131,748) (119,227)
Purchases of property and equipment (13,793) (14,734)
Cash paid for acquisitions, net of
cash acquired (130,872) (27,333)
Capitalization of software
development costs (1,415) (1,485)
Net cash used in investing activities (89,178) (39,738)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases (1,346) (984)
Issuances of common stock 73,210 26,652
Purchases of treasury stock (50,257) -
Net cash provided by financing
activities 21,607 25,668
Effect of exchange rate changes on
cash and cash equivalents (844) 52
Net change in cash and cash
equivalents (32,182) (71,233)
Cash and cash equivalents, beginning
of period 701,613 577,632
Cash and cash equivalents, end of
period $669,431 $506,399
======== ========
(1) Synopsys' second quarter ended on the Saturday nearest April 30.
For presentation purposes, the Unaudited Consolidated Statements of
Cash Flows refer to a calendar month end.
INVESTOR CONTACT:
Lisa L. Ewbank
Synopsys, Inc.
650-584-1901
EDITORIAL CONTACT:
Yvette Huygen
Synopsys, Inc.
650-584-4547
yvetteh@synopsys.com
SOURCE Synopsys, Inc.
Recommend :
