SYNOPSYS INC. 
By MOUNTAIN VIEW, Calif., Feb. 20, 2013 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS), a global leader providing software, IP and services used to accelerate innovation in chips and electronic systems, today reported results for its first quarter of fiscal year 2013.
For the first quarter of fiscal year 2013, Synopsys reported revenue of $475.1 million, compared to $425.5 million for the first quarter of fiscal 2012, an increase of 11.7 percent.
"In the first fiscal quarter of 2013 our business, technology progress, and customer engagements were strong across the board," said Aart de Geus, chairman and co-CEO of Synopsys. "Semiconductor companies are aggressively pushing both technology and efficiency to develop differentiated products within very tight market windows, and Synopsys is a key partner in these quests. Because of our strong first fiscal quarter results, including the impact of the reinstatement of the federal R&D tax credit, and confidence in our business, we are raising our non-GAAP earnings per share target for the year."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the first quarter of fiscal 2013 was $69.9 million, or $0.45 per share, compared to $56.7 million, or $0.39 per share, for the first quarter of fiscal 2012. Due to our fiscal calendar, the first quarter of fiscal year 2012 included an extra week.
Non-GAAP Results
On a non-GAAP basis, net income for the first quarter of fiscal 2013 was $103.0 million, or $0.67 per share, compared to non-GAAP net income of $82.3 million, or $0.56 per share, for the first quarter of fiscal 2012. Reconciliation between GAAP and non-GAAP results is provided at the end of this press release. Due to our fiscal calendar, the first quarter of fiscal year 2012 included an extra week.
Fiscal first quarter GAAP and non-GAAP results included the impact of the reinstatement of the federal R&D tax credit for 2012 and 2013. The fiscal first quarter results include a retroactive benefit of $6 million for fiscal year 2012, as well as a $2 million current quarter impact.
Financial Targets
Synopsys also provided its financial targets for the second quarter and full fiscal year 2013. These targets do not include any impact of future acquisition-related activities. 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 2013 Targets:
-- Revenue: $490 million - $500 million
-- GAAP expenses: $409 million - $425 million
-- Non-GAAP expenses: $362 million - $372 million
-- Other income and expense: ($1) million - $1 million
-- Tax rate applied in non-GAAP net income calculations: 24 - 25 percent
-- Fully diluted outstanding shares: 154 million - 158 million
-- GAAP earnings per share: $0.38- $0.44
-- Non-GAAP earnings per share: $0.63 - $0.65
-- Revenue from backlog: approximately 90 percent
Full Fiscal Year 2013 Targets:
-- Revenue: $1.955 billion - $1.975 billion
-- Other income and expense: $1 million - $5 million
-- Tax rate applied in non-GAAP net income calculations: approximately 23
percent
-- Fully diluted outstanding shares: 155 million - 159 million
-- GAAP earnings per share: $1.44 - $1.56
-- Non-GAAP earnings per share: $2.35 - $2.40
-- Cash flow from operations: at least $350 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, including inventory fair value adjustments, (iv) other significant items, including facilities restructuring charges and the effect of benefits from tax settlements with tax authorities, 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 First Quarter Fiscal Year 2013 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 2013 Results
(unaudited and in thousands, except per share amounts)
Three Months Ended
January 31,
-----------
2013 2012
---- ----
GAAP net
income $69,922 $56,694
Adjustments:
Amortization
of
intangible
assets 32,403 16,909
Stock
compensation 17,701 16,248
Acquisition-
related
costs 1,836 1,235
Inventory
fair
value
adjustment 1,809 -
Facility
restructuring
charges (272) 470
Tax
adjustments (20,432) (9,226)
------- ------
Non-
GAAP
net
income $102,967 $82,330
======== =======
Three Months Ended
January 31,
-----------
2013 2012
---- ----
GAAP net
income
per
share $0.45 $0.39
Adjustments:
Amortization
of
intangible
assets 0.21 0.11
Stock
compensation 0.12 0.11
Acquisition-
related
costs 0.01 0.01
Inventory
fair
value
adjustment 0.01 -
Facility
restructuring
charges (0.00) 0.00
Tax
adjustments (0.13) (0.06)
Non-
GAAP
net
income
per
share $0.67 $0.56
===== =====
Shares
used in
calculation 154,531 147,113
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 Second Quarter Fiscal Year 2013 Targets
(in thousands, except per share amounts)
Range for Three Months
Ending April 30, 2013 (1)
Low High
--- ----
Target GAAP expenses $409,000 $425,000
Adjustments:
Estimated impact of
amortization of intangible
assets (31,000) (34,000)
Estimated impact of stock
compensation (16,000) (19,000)
Target non-GAAP expenses $362,000 $372,000
======== ========
Range for Three Months
Ending April 30, 2013 (1)
Low High
--- ----
Target GAAP earnings per
share $0.38 $0.44
Adjustments:
Estimated impact of
amortization of intangible
assets 0.22 0.20
Estimated impact of stock
compensation 0.12 0.10
Net non-GAAP tax
adjustments (0.09) (0.09)
Target non-GAAP earnings
per share $0.63 $0.65
===== =====
Shares used in non-GAAP
calculation (midpoint of
target range) 156,000 156,000
GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2013 Targets
Range for Fiscal Year
Ending October 31, 2013 (1)
Low High
--- ----
Target GAAP earnings per
share $1.44 $1.56
Adjustments:
Estimated impact of
amortization of intangible
assets 0.84 0.79
Estimated impact of stock
compensation 0.46 0.42
Acquisition-related costs 0.01 0.01
Inventory fair value
adjustment 0.01 0.01
Net non-GAAP tax
adjustments (0.41) (0.39)
Target non-GAAP earnings
per share $2.35 $2.40
===== =====
Shares used in non-GAAP
calculation (midpoint of
target range) 157,000 157,000
(1) Synopsys' second quarter and
fiscal year end on May 4, and
November 2, 2013, respectively.
For presentation purposes, the
periods refer to the closest
calendar month end.
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 281739, 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 second quarter fiscal 2013 in May 2013. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and co-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 co-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 fiscal year 2013 earnings call in May 2013, 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 2013 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 fiscal 2013 in its quarterly report on Form 10-Q to be filed by March 14, 2013.
About Synopsys
Synopsys, Inc. (Nasdaq: SNPS) accelerates innovation in the global electronics market. As a leader in electronic design automation (EDA) and semiconductor IP, its software, IP and services help engineers address their design, verification, system and manufacturing challenges. Since 1986, engineers around the world have been using Synopsys technology to design and create billions of chips and systems. Learn more 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 Non-GAAP Operating Results," and certain other statements, including statements regarding customer demand for our technology and predictable business model, are forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. In addition, 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 and its potential impact on
the semiconductor and electronics industries;
-- uncertainty in the growth of the semiconductor and electronics industry;
-- Synopsys' ability to realize the potential financial or strategic
benefits of acquisitions it completes, including the recent acquisitions
of Magma Design Automation, SpringSoft, and EVE, and the difficulties in
the integration of the products and operations of acquired companies or
assets into Synopsys' products and operations, including 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;
-- increased competition in the market for Synopsys' products and services
including through consolidation in the industry and among our customers;
-- changes in demand for Synopsys' products due to fluctuations in demand
for its customers' products;
-- 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 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
-- 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 April 30, 2013; actual expenses, earnings per share, tax rate, and other projections on a GAAP and non-GAAP basis for fiscal year 2013; and cash flow from operations on a GAAP basis for fiscal year 2013 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 have become impaired, (iv) changes in the anticipated amount of employee stock-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 guidance, (viii) fluctuations in foreign currency exchange rates, (ix) general economic conditions, and (x) other risks as detailed in Synopsys' SEC filings, including those described in the "Risk Factors" section in its latest Annual Report on Form 10-K for the fiscal year ended October 31, 2012. Furthermore, Synopsys' actual tax rates applied to income for the second quarter and fiscal year 2013 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 2013 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.
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
SYNOPSYS, INC.
Unaudited Consolidated Statements of Operations (1)
(in thousands, except per share amounts)
Three Months Ended January
31,
----------------------------
2013 2012
---- ----
Revenue:
Time-based
license $385,959 $355,894
Upfront 30,789 28,512
Maintenance
and service 58,389 41,090
------ ------
Total revenue 475,137 425,496
Cost of
revenue:
License 64,492 57,722
Maintenance
and service 20,055 18,744
Amortization
of intangible
assets 26,516 13,388
Total cost of
revenue 111,063 89,854
Gross margin 364,074 335,642
Operating
expenses:
Research and
development 157,510 132,875
Sales and
marketing 101,758 95,404
General and
administrative 37,938 33,839
Amortization
of intangible
assets 5,887 3,521
Total
operating
expenses 303,093 265,639
Operating
income 60,981 70,003
Other income
(expense),
net 10,749 3,826
------ -----
Income before
income taxes 71,730 73,829
Provision
(benefit) for
income taxes 1,808 17,135
Net income $69,922 $56,694
======= =======
Net income per
share:
Basic $0.46 $0.39
Diluted $0.45 $0.39
Shares used in
computing per
share
amounts:
Basic 151,477 143,882
======= =======
Diluted 154,531 147,113
======= =======
(1) Synopsys' first quarter of
fiscal 2013 ended on February
2, 2013. Its first quarter of
fiscal 2012 included an extra
week, and ended on February 4,
2012. For presentation
purposes, we refer to periods
ended January 31.
SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
January 31, 2013 October 31, 2012
---------------- ----------------
ASSETS:
Cash and cash equivalents $550,365 $700,382
Accounts receivable, net 270,217 292,668
Deferred income taxes 74,644 74,712
Income taxes receivable and
prepaid taxes 22,867 17,267
Prepaid and other current
assets 81,689 55,627
------ ------
Total current assets 999,782 1,140,656
Property and equipment, net 193,051 191,243
Goodwill 1,971,654 1,976,987
Intangible assets, net 430,797 466,322
Long-term prepaid taxes 8,557 9,429
Long-term deferred income taxes 281,887 239,412
Other long-term assets 134,818 123,607
Total assets $4,020,546 $4,147,656
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current liabilities:
Short-term debt $30,000 $30,000
Accounts payable and accrued
liabilities 223,456 383,093
Accrued income taxes 10,682 4,682
Deferred revenue 757,874 834,864
------- -------
Total current liabilities 1,022,012 1,252,639
Long-term debt 97,500 105,000
Long-term accrued income taxes 51,890 52,645
Other long-term liabilities 172,361 126,217
Long-term deferred revenue 74,624 67,184
------ ------
Total liabilities 1,418,387 1,603,685
Stockholders' equity:
Preferred stock, $0.01 par
value: 2,000 shares
authorized; none outstanding - -
Common stock, $0.01 par value:
400,000 shares authorized;
151,970 and 150,899 shares
outstanding, respectively 1,519 1,509
Capital in excess of par value 1,589,035 1,585,034
Retained earnings 1,167,623 1,098,694
Treasury stock, at cost: 5,295
and 6,365 shares, respectively (139,819) (168,090)
Accumulated other comprehensive
loss (16,199) (15,461)
------- -------
Total stockholders' equity
excluding non-controlling
interest 2,602,159 2,501,686
Non-controlling interest - 42,285
Total liabilities and
stockholders' equity $4,020,546 $4,147,656
========== ==========
(1) Synopsys' first quarter of
fiscal 2013 ended on February
2, 2013. Its first quarter of
fiscal 2012 included an extra
week, and ended on February 4,
2012. For presentation
purposes, we refer to periods
ended January 31.
SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows (1)
(in thousands)
Three Months Ended
January 31,
-------------------
2013 2012
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $69,922 $56,694
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Amortization and
depreciation 47,064 31,965
Stock compensation 17,700 16,250
Allowance for doubtful
accounts 2,083 497
Deferred income taxes (4,900) 14,533
Net changes in operating
assets and liabilities,
net of
acquired assets and
liabilities:
Accounts receivable 20,341 (11,102)
Prepaid and other current
assets (23,329) (8,972)
Other long-term assets (10,484) (3,457)
Accounts payable and other
liabilities (152,207) (93,558)
Income taxes (1,597) (5,161)
Deferred revenue (56,031) (37,007)
------- -------
Net cash used in operating
activities (91,438) (39,318)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from sales and
maturities of short-term
investments - 34,039
Purchases of short-term
investments - (18,179)
Purchases of property and
equipment (13,980) (11,016)
Cash paid for
acquisitions, net of cash
acquired - (5,623)
Capitalization of software
development costs (825) (735)
Net cash used in investing
activities (14,805) (1,514)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on
capital leases (409) (1,081)
Acquisition of non-
controlling interest (44,004) -
Repayment of acquired debt (7,619) -
Issuances of common stock 15,615 41,106
Purchase of equity forward
contract - (20,000)
Purchases of treasury
stock - (20,000)
Net cash (used in)
provided by financing
activities (36,417) 25
Effect of exchange rate
changes on cash and cash
equivalents (7,357) (2,931)
Net change in cash and
cash equivalents (150,017) (43,738)
Cash and cash equivalents,
beginning of the year 700,382 855,077
Cash and cash equivalents,
end of the period $550,365 $811,339
======== ========
(1) Synopsys' first quarter of
fiscal 2013 and 2012 ended on
February 2, 2013 and February 4,
2012, respectively. For
presentation purposes, we refer
to periods ended January 31.
Synopsys' first quarter of fiscal
2012 included an extra week.
SOURCE Synopsys, Inc.
