MOUNTAIN VIEW, Calif., May 20, 2015 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its second quarter of fiscal year 2015.

For the second quarter of fiscal year 2015, Synopsys reported revenue of $557.2 million, compared to $517.7 million for the second quarter of fiscal 2014, an increase of approximately 7.6 percent.

"Our fiscal second quarter results were very strong, and solidify our outlook for the full year," said Aart de Geus, chairman and co-CEO of Synopsys. "We see clear momentum with our new implementation and verification products in the early stages of a multi-year customer upgrade cycle. Our entry into the software quality and security space has opened up an opportunity to drive incremental growth in both familiar and new market segments and build on Synopsys' strengths."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2015 was $55.6 million, or $0.35 per share, compared to $63.3 million, or $0.40 per share, for the second quarter of fiscal 2014.

Non-GAAP Results

On a non-GAAP basis, net income for the second quarter of fiscal 2015 was $107.6 million, or $0.68 per share, compared to non-GAAP net income of $101.7 million, or $0.65 per share, for the second quarter of fiscal 2014. 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 third quarter and full fiscal year 2015. These targets do not include any impact of future acquisition-related activities or costs that may be incurred in fiscal year 2015. These targets constitute forward-looking statements 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 2015 Targets:


    --  Revenue: $550 million - $560 million
    --  GAAP expenses: $481 million - $501 million
    --  Non-GAAP expenses: $430 million - $440 million
    --  Other income and expense: $0 - $2 million
    --  Tax rate applied in non-GAAP net income calculations: 21 - 22 percent
    --  Fully diluted outstanding shares: 155 million - 159 million
    --  GAAP earnings per share: $0.23 - $0.30
    --  Non-GAAP earnings per share: $0.58 - $0.60

Full Fiscal Year 2015 Targets:


    --  Revenue: $2.210 billion - $2.235 billion
    --  Other income and expense: $6 million - $10 million
    --  Tax rate applied in non-GAAP net income calculations: 19 - 20 percent
    --  Fully diluted outstanding shares: 155 million - 159 million
    --  GAAP earnings per share: $1.39 - $1.49
    --  Non-GAAP earnings per share: $2.76 - $2.81
    --  Cash flow from operations: approximately $450 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) acquisition-related costs, (iv) other significant items, including 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 Second Quarter Fiscal Year 2015 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 2015 Results

                                  (unaudited and in thousands, except per share amounts)


                                                    Three Months Ended                       Six Months Ended

                                                         April 30,                               April 30,

                                                        2015                       2014                     2015        2014
                                                        ----                       ----                     ----        ----

    GAAP net income                                  $55,596                    $63,317                 $120,785    $131,013

    Adjustments:

    Amortization of intangible
     assets                                           32,048                     32,050                   64,356      60,181

    Stock compensation                                20,283                     18,824                   40,864      36,941

    Acquisition-related costs                          3,472                      4,374                    4,184       5,449

    Restructuring charges                                  -                         -                  15,336           -

    Legal and tax matters                                  -                   (2,040)                 (1,519)   (12,307)

    Tax adjustments                                  (3,840)                  (14,830)                (10,776)   (26,495)
                                                      ------                    -------                  -------     -------

    Non-GAAP net income                             $107,559                   $101,695                 $233,230    $194,782
                                                    ========                   ========                 ========    ========




                                                  Three Months Ended                    Six Months Ended

                                                       April 30,                            April 30,

                                                        2015                       2014                     2015        2014
                                                        ----                       ----                     ----        ----

    GAAP net income per share                          $0.35                      $0.40                    $0.77       $0.83

    Adjustments:

    Amortization of intangible
     assets                                             0.20                       0.20                     0.41        0.38

    Stock compensation                                  0.13                       0.12                     0.26        0.24

    Acquisition-related costs                           0.02                       0.03                     0.03        0.04

    Restructuring charges                                  -                         -                    0.10           -

    Legal and tax matters                                  -                    (0.01)                  (0.01)     (0.08)

    Tax adjustments                                   (0.02)                    (0.09)                  (0.08)     (0.17)

    Non-GAAP net income per
     share                                             $0.68                      $0.65                    $1.48       $1.24
                                                       =====                      =====                    =====       =====


    Shares used in calculation                       157,483                    157,082                  157,409     156,986

Reconciliation of Target Non-GAAP 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 2015 Targets

                                           (in thousands, except per share amounts)


                                                      Range for Three Months

                                                    Ending July 31, 2015 (1)

                                                               Low                                   High
                                                               ---                                   ----

    Target GAAP expenses                                               $481,000                            $501,000

    Adjustments:

          Estimated impact of
           amortization of
           intangible assets                                           (31,000)                           (36,000)

          Estimated impact of stock
           compensation                                                (20,000)                           (25,000)

    Target non-GAAP expenses                                           $430,000                            $440,000
                                                                       ========                            ========



                                                     Range for Three Months

                                                    Ending July 31, 2015 (1)

                                                               Low                                   High
                                                               ---                                   ----

    Target GAAP earnings per
     share                                                                $0.23                               $0.30

    Adjustments:

    Estimated impact of
     amortization of
     intangible assets                                                     0.23                                0.20

    Estimated impact of stock
     compensation                                                          0.16                                0.13

    Estimated impact of tax
     adjustments                                                         (0.04)                             (0.03)

    Target non-GAAP earnings
     per share                                                            $0.58                               $0.60
                                                                          =====                               =====


    Shares used in non-GAAP
     calculation (midpoint of
     target range)                                                      157,000                             157,000



                             GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2015 Targets


                                                      Range for Fiscal Year

                                                   Ending October 31, 2015 (1)

                                                               Low                                   High
                                                               ---                                   ----

    Target GAAP earnings per
     share                                                                $1.39                               $1.49

    Adjustments:

    Estimated impact of
     amortization of
     intangible assets                                                     0.85                                0.80

    Estimated impact of stock
     compensation                                                          0.59                                0.54

    Acquisition-related costs                                              0.03                                0.03

    Restructuring charges                                                  0.10                                0.10

    Legal and tax matters                                                (0.01)                             (0.01)

    Estimated net non-GAAP
     tax adjustments                                                     (0.19)                             (0.14)

    Target non-GAAP earnings
     per share                                                            $2.76                               $2.81
                                                                          =====                               =====


    Shares used in non-GAAP
     calculation (midpoint of
     target range)                                                      157,000                             157,000


    (1) Synopsys' third quarter and
     fiscal year end on August 1,
     2015 and October 31, 2015,
     respectively.

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 359327, beginning at 4:00 p.m. Pacific Time today. A webcast replay will also be available on the website from approximately 4:30 p.m. Pacific Time today through the time Synopsys announces its results for the third fiscal quarter in August 2015. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and co-chief executive officer, and Trac Pham, chief financial officer, on its website following the call. In addition, Synopsys makes additional information available in a financial supplement and corporate overview presentation, 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 and corporate overview presentation (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 co-chief executive officer and chief financial officer made during the call, the financial supplement, and corporate overview presentation will remain available on Synopsys' website through the date of the third quarter fiscal year 2015 earnings call in August 2015, 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 year 2015 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 2015 in its quarterly report on Form 10-Q to be filed by June 11, 2015.

About Synopsys

Synopsys, Inc. (Nasdaq:SNPS) is the Silicon to Software(TM) partner for innovative companies developing the electronic products and software applications we rely on every day. As the world's 15th largest software company, Synopsys has a long history of being a global leader in electronic design automation (EDA) and semiconductor IP, and is also a leader in software quality and security testing with its Coverity® solutions. Whether you're a system-on-chip (SoC) designer creating advanced semiconductors, or a software developer writing applications that require the highest quality and security, Synopsys has the solutions needed to deliver innovative, high-quality, secure products. Learn more at www.synopsys.com.

Forward-Looking Statements

This press release and our upcoming earnings results conference call contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Any statements that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include but are not limited to: sections of this press release entitled "Financial Targets" and "Reconciliation of Target Non-GAAP Operating Results"; and statements regarding Synopsys' business, acquisitions (including the expected closing of our pending acquisition of Codenomicon OY), products, technologies, business model, new markets, customer demand for our technology, and projected financial results and business objectives. These statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in our forward-looking statements. Accordingly, we caution stockholders and prospective investors not to place undue reliance on these statements. Such risks, uncertainties and factors include, but are not limited to:


    --  continued uncertainty in the global economy and its potential impact on
        the semiconductor and electronics industries;
    --  uncertainty in the growth of the semiconductor and electronics industry,
        and consolidation among our customers;
    --  increased competition in the market for Synopsys' products and services
        including through consolidation in the industry;
    --  changes in demand for Synopsys' products due to fluctuations in demand
        for its customers' products;
    --  Synopsys' ability to realize the potential financial or strategic
        benefits of acquisitions it completes, including its acquisition of
        Coverity, Inc., and challenges in entering new markets in which Synopsys
        is not experienced and in the integration of the products and operations
        of acquired companies or assets into Synopsys' products and operations,
        including possible delays in customer orders, potential loss of
        customers, key employees, partners or vendors, customer demand and
        support obligations for product offerings, and disruption of ongoing
        business operations and diversion of management attention;
    --  Synopsys' ability to consummate the pending acquisition of Codenomicon
        OY in a timely manner or at all, including the satisfaction of the
        conditions precedent to consummation of the acquisition;
    --  adverse changes in the relationships between Synopsys and key
        participants in the complex semiconductor ecosystem, including major
        foundries and intellectual property providers;
    --  litigation;
    --  lower-than-anticipated new IC design starts;
    --  lower-than-anticipated purchases or delays in purchases of products or
        consulting services by Synopsys' customers, including delays in the
        renewal, or non-renewal, of Synopsys' license arrangements with major
        customers;
    --  changes in accounting principles or standards or in the way they are
        applied;
    --  changes in the mix of time-based licenses and upfront licenses;
    --  variability in the timing of revenue recognition due to factors such as
        payment terms and the timing and value of contract renewals and
        professional services projects;
    --  lower-than-expected orders; and
    --  failure of customers to pay license fees as scheduled.

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, 2015; actual expenses, earnings per share, tax rate, and other projections on a GAAP and non-GAAP basis for fiscal year 2015; and cash flow from operations on a GAAP basis for fiscal year 2015 could differ materially from the targets stated under "Financial Targets" above for a number of reasons, including, but not limited to, (i) integration and other acquisition-related costs, (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) a determination by Synopsys that any portion of its goodwill or intangible assets has become impaired, (iv) changes in the anticipated amount of employee stock-based compensation expense recognized in 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) fluctuations in foreign currency exchange rates, (ix) litigation, (x) general economic conditions, and (xi) other risks as detailed in Synopsys' SEC filings, including those described in the "Risk Factors" section in its Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2015. Furthermore, Synopsys' actual tax rates applied to income for the third quarter and fiscal year 2015 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 2015 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, the financial supplement, or the corporate overview presentation, whether as a result of new information, future events or otherwise, unless otherwise required by law.



                                                 SYNOPSYS, INC.

                              Unaudited Consolidated Statements of Operations (1)

                                    (in thousands, except per share amounts)



                                                     Three Months Ended                   Six Months Ended

                                                         April 30,                        April 30,
                                                        ---------                       ---------

                                                          2015                     2014                  2015     2014
                                                          ----                     ----                  ----     ----

    Revenue:

      Time-based license                              $447,844                 $424,185              $878,870 $824,331

      Upfront license                                   44,313                   36,297                90,793   70,269

      Maintenance and
       service                                          65,047                   57,215               129,584  102,048
                                                        ------                   ------               -------  -------

          Total revenue                                557,204                  517,697             1,099,247  996,648

    Cost of revenue:

      License                                           70,350                   67,302               141,134  130,127

      Maintenance and
       service                                          29,010                   21,109                56,993   41,380

      Amortization of
       intangible assets                                25,612                   25,674                51,478   48,427

         Total cost of
          revenue                                      124,972                  114,085               249,605  219,934

    Gross margin                                       432,232                  403,612               849,642  776,714

    Operating expenses:

      Research and
       development                                     188,315                  178,043               369,925  345,586

      Sales and marketing                              120,579                  114,784               226,748  220,576

      General and
       administrative                                   40,975                   40,575                77,329   74,808

      Amortization of
       intangible assets                                 6,436                    6,376                12,878   11,754

      Restructuring
       charges                                               -                       -               15,336        -

         Total operating
          expenses                                     356,305                  339,778               702,216  652,724

    Operating income                                    75,927                   63,834               147,426  123,990

    Other income
     (expense), net                                      7,957                    4,225                13,073   15,253
                                                         -----                    -----                ------   ------

    Income before
     income taxes                                       83,884                   68,059               160,499  139,243

    Provision (benefit)
     for income taxes                                   28,288                    4,742                39,714    8,230
                                                        ------

    Net income                                         $55,596                  $63,317              $120,785 $131,013
                                                       =======                  =======              ======== ========


    Net income per share:

      Basic                                              $0.36                    $0.41                 $0.78    $0.85

      Diluted                                            $0.35                    $0.40                 $0.77    $0.83


    Shares used in computing per share amounts:

      Basic                                            154,515                  154,572               154,486  154,319
                                                       =======                  =======               =======  =======

      Diluted                                          157,483                  157,082               157,409  156,986
                                                       =======                  =======               =======  =======


    (1)  Synopsys' second quarter
     for fiscal year 2015 and 2014
     ended on May 2, 2015 and May 3,
     2014, respectively. For
     presentation purposes, we refer
     to closest calendar month end.


                                                                SYNOPSYS, INC.

                                                   Unaudited Consolidated Balance Sheets (1)

                                                   (in thousands, except par value amounts)


                                                              April 30, 2015                 October 31, 2014
                                                              --------------                 ----------------

    ASSETS:

    Current assets:

      Cash and cash equivalents                                                  $868,845                       $985,762

      Short-term investments                                                      136,579                              -
                                                                                  -------                            ---

              Total cash, cash equivalents and
               short-term investments                                           1,005,424                        985,762

      Accounts receivable, net                                                    338,407                        326,727

      Deferred income taxes                                                        81,303                        111,449

      Income taxes receivable and prepaid
       taxes                                                                       33,004                         26,496

      Prepaid and other current assets                                             86,837                         54,301
                                                                                   ------                         ------

              Total current assets                                              1,544,975                      1,504,735

    Property and equipment, net                                                   258,199                        249,098

    Goodwill                                                                    2,251,845                      2,255,708

    Intangible assets, net                                                        302,656                        365,030

    Long-term prepaid taxes                                                         3,789                         17,645

    Long-term deferred income taxes                                               210,373                        208,156

    Other long-term assets                                                        184,330                        175,127

               Total assets                                                    $4,756,167                     $4,775,499
                                                                               ==========                     ==========


    LIABILITIES AND STOCKHOLDERS' EQUITY:

    Current liabilities:

      Accounts payable and accrued
       liabilities                                                               $301,101                       $397,113

      Accrued income taxes                                                          6,361                         31,404

      Deferred revenue                                                            827,576                        928,242

      Short-term debt                                                             190,000                         30,000
                                                                                  -------                         ------

               Total current liabilities                                        1,325,038                      1,386,759

    Long-term accrued income taxes                                                 39,796                         50,952

    Long-term deferred revenue                                                     98,806                         77,646

    Long-term debt                                                                 30,000                         45,000

    Other long-term liabilities                                                   197,529                        158,972
                                                                                  -------                        -------

               Total liabilities                                                1,691,169                      1,719,329

    Stockholders' equity:

      Preferred stock, $0.01 par value:
       2,000 shares authorized; none
       outstanding                                                                      -                             -

      Common stock, $0.01 par value:
       400,000 shares authorized; 155,054
       and 155,965 shares outstanding,
       respectively

                                                                                    1,551                          1,560

      Capital in excess of par value                                            1,603,397                      1,614,603

      Retained earnings                                                         1,643,207                      1,551,592

      Treasury stock, at cost: 2,210 and
       1,299 shares, respectively                                                (94,627)                      (49,496)

      Accumulated other comprehensive loss                                       (88,530)                      (62,089)
                                                                                  -------                        -------

               Total stockholders' equity                                       3,064,998                      3,056,170

               Total liabilities and stockholders'
                equity                                                         $4,756,167                     $4,775,499
                                                                               ==========                     ==========


    (1)  Synopsys' second quarter
     for fiscal year 2015 and fiscal
     year 2014 ended on May 2, 2015
     and November 1, 2014,
     respectively. For presentation
     purposes, we refer to the
     closest calendar month end.


                                        SYNOPSYS, INC.

                      Unaudited Consolidated Statements of Cash Flows (1)

                                        (in thousands)


                                                                         Six Months Ended April 30,
                                                                        --------------------------

                                                                               2015                       2014
                                                                               ----                       ----

    CASH FLOWS FROM OPERATING ACTIVITIES:

    Net income                                                             $120,785                   $131,013

    Adjustments to reconcile net income to net cash provided by
     operating activities:

    Amortization and depreciation                                           102,051                     91,585

    Stock compensation                                                       40,864                     36,941

    Allowance for doubtful accounts                                             600                      (250)

    (Gain) loss on sale of investments                                         (17)                   (6,529)

    Deferred income taxes                                                    27,636                      9,266

    Net changes in operating assets and liabilities, net of acquired
     assets and liabilities:

    Accounts receivable                                                    (16,491)                  (59,577)

    Prepaid and other current assets                                       (34,584)                   (4,557)

    Other long-term assets                                                 (13,359)                  (13,756)

    Accounts payable and accrued
     liabilities                                                           (62,142)                  (83,135)

    Income taxes                                                           (27,077)                  (15,021)

    Deferred revenue                                                       (70,530)                  (48,069)
                                                                            -------                    -------

    Net cash provided by operating
     activities                                                              67,736                     37,911


    CASH FLOWS FROM INVESTING ACTIVITIES:

    Proceeds from sales and maturities of
     short-term investments                                                  17,721                          -

    Purchases of short-term investments                                   (154,744)                         -

    Proceeds from sales of long-term
     investments                                                                  -                     7,304

    Purchases of property and equipment                                    (43,979)                  (29,901)

    Cash paid for acquisitions and
     intangible assets, net of cash
     acquired                                                               (2,303)                 (367,965)

    Capitalization of software development
     costs                                                                  (1,865)                   (1,875)

    Other                                                                       900                          -

    Net cash used in investing activities                                 (184,270)                 (392,437)


    CASH FLOWS FROM FINANCING ACTIVITIES:

    Proceeds from credit facility                                           250,000                    200,000

    Repayment of debt                                                     (105,424)                  (15,497)

    Issuances of common stock                                                54,006                     53,326

    Purchase of equity forward contract                                    (36,000)                         -

    Purchases of treasury stock                                           (144,000)                  (79,747)

    Other                                                                     (116)                     (706)

    Net cash provided by financing
     activities                                                              18,466                    157,376

    Effect of exchange rate changes on cash
     and cash equivalents                                                  (18,849)                   (3,658)

    Net change in cash and cash equivalents                               (116,917)                 (200,808)

    Cash and cash equivalents, beginning of
     the year                                                               985,762                  1,022,441

    Cash and cash equivalents, end of the
     period                                                                $868,845                   $821,633
                                                                           ========                   ========


    (1)  Synopsys' second quarter
     for fiscal year 2015 and 2014
     ended on May 2, 2015 and May 3,
     2014, respectively. For
     presentation purposes, we refer
     to the closest calendar month
     end.

INVESTOR CONTACT:
Lisa L. Ewbank
Synopsys, Inc.
650-584-1901
Synopsys-ir@synopsys.com

EDITORIAL CONTACT:
Yvette Huygen
Synopsys, Inc.
650-584-4547
yvetteh@synopsys.com

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SOURCE Synopsys, Inc.