SYNOPSYS INC. 
By MOUNTAIN VIEW, Calif., Dec. 5, 2012 /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 fourth quarter and fiscal year 2012.
For the fourth quarter of fiscal 2012, Synopsys reported revenue of $454.2 million, compared to $390.5 million for the fourth quarter of fiscal 2011. Revenue for fiscal year 2012 was $1.756 billion, an increase of 14.3 percent from $1.536 billion in fiscal 2011.
"Synopsys delivered very strong fiscal 2012 results with double-digit revenue and non-GAAP earnings per share growth. Simultaneously we also completed a significant number of important acquisitions during the year," said Aart de Geus, chairman and co-CEO of Synopsys. "Electronic design automation solutions are more critical than ever, as semiconductor companies face significant technical challenges while racing to design highly complex chips and systems. Synopsys is particularly well-positioned heading into 2013, based on our technology leadership, significant customer demand, and our predictable business model."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter of fiscal 2012 was $29.1 million, or $0.19 per share, compared to $39.9 million, or $0.27 per share, for the fourth quarter of fiscal 2011. GAAP net income for fiscal year 2012 was $182.4 million, or $1.21 per share, compared to $221.4 million, or $1.47 per share, for fiscal 2011. Net income for fiscal 2012 included $43.6 million of acquisition-related costs, plus higher amortization of intangibles than in the previous year primarily due to acquisitions. 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 fourth quarter of fiscal 2012 was $72.4 million, or $0.47 per share, compared to non-GAAP net income of $65.3 million, or $0.45 per share, for the fourth quarter of fiscal 2011. Non-GAAP net income for fiscal 2012 was $315.5 million, or $2.10 per share, compared to non-GAAP net income of $270.3 million, or $1.80 per share, for fiscal 2011. 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.
Financial Targets
Synopsys also provided its financial targets for the first 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.
First Quarter of Fiscal Year 2013 Targets:
-- Revenue: $468 million - $478 million
-- GAAP expenses: $403 million - $419 million
-- Non-GAAP expenses: $356 million - $366 million
-- Other income and expense: ($2) million - $0 million
-- Tax rate applied in non-GAAP net income calculations: 25 - 26 percent
-- Fully diluted outstanding shares: 153 million - 157 million
-- GAAP earnings per share: $0.30 - $0.35
-- Non-GAAP earnings per share: $0.54 - $0.56
-- Revenue from backlog: greater than 90 percent
Full Fiscal Year 2013 Targets:
-- Revenue: $1.955 billion - $1.975 billion
-- Other income and expense: ($4) million - $0 million
-- Tax rate applied in non-GAAP net income calculations: 25 - 26 percent
-- Fully diluted outstanding shares: 155 million - 159 million
-- GAAP earnings per share: $1.32 - $1.46
-- Non-GAAP earnings per share: $2.26 - $2.31
-- Cash flow from operations: at least $350 million
-- Revenue from backlog: approximately 80 percent
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 Fourth Quarter and Fiscal Year 2012 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 Fourth Quarter and Fiscal Year 2012 Results
(unaudited and in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
October 31, October 31,
2012 2011 2012 2011
---- ---- ---- ----
GAAP net income $29,081 $39,942 $182,402 $221,364
Adjustments:
Amortization of
intangible assets 28,355 16,852 99,859 69,420
Stock compensation 17,336 14,984 71,414 56,414
Acquisition-related costs 7,861 963 43,600 1,231
Inventory fair value
adjustments 919 - 919 -
Facility restructuring
charges - - 470 -
Benefit from tax
settlements(1) - - (36,882) (32,782)
Tax adjustments (11,187) (7,414) (46,255) (45,374)
------- ------ -------
Non-GAAP net income $72,365 $65,327 $315,527 $270,273
======= ======= ======== ========
Three Months Ended Twelve Months Ended
October 31, October 31,
2012 2011 2012 2011
---- ---- ---- ----
GAAP net income per share $0.19 $0.27 $1.21 $1.47
Adjustments:
Amortization of
intangible assets 0.18 0.12 0.66 0.46
Stock compensation 0.11 0.10 0.48 0.38
Acquisition-related costs 0.05 0.01 0.30 0.01
Inventory fair value
adjustments 0.01 - 0.01 -
Facility restructuring
charges - - 0.00 -
Benefit from tax
settlements(1) - - (0.25) (0.22)
Tax adjustments (0.07) (0.05) (0.31) (0.30)
Non-GAAP net income per
share $0.47 $0.45 $2.10 $1.80
===== ===== ===== =====
Shares used in
calculation 153,271 146,350 150,280 150,367
(1) Tax settlements
included estimated
interest.
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 First Quarter Fiscal Year
2013 Targets
(in thousands, except per share amounts)
Range for Three Months
Ending January 31,
2013 (1)
Low High
--- ----
Target
GAAP
expenses $403,000 $419,000
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 $356,000 $366,000
======== ========
Range for Three Months
Ending January 31,
2013 (1)
Low High
--- ----
Target
GAAP
earnings
per
share $0.30 $0.35
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 (0.10) (0.09)
Target
non-
GAAP
earnings
per
share $0.54 $0.56
===== =====
Shares
used
in
non-
GAAP
calculation
(midpoint
of
target
range) 155,000 155,000
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 $1.32 $1.46
Adjustments:
Estimated
impact
of
amortization
of
intangible
assets 0.83 0.78
Estimated
impact
of
stock
compensation 0.48 0.43
Net
non-
GAAP
tax
adjustments (0.37) (0.36)
Target
non-
GAAP
earnings
per
share $2.26 $2.31
===== =====
Shares
used
in
non-
GAAP
calculation
(midpoint
of
target
range) 157,000 157,000
(1) Synopsys' first quarter and
fiscal year end on February 2,
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 271818 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 first quarter fiscal 2013 in February 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 first quarter fiscal year 2013 earnings call in February 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 first 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 fourth quarter and fiscal 2012 in its annual report on Form 10-K to be filed by January 2, 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, 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;
-- 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 January 31, 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) general economic conditions, and (ix) other risks as detailed in Synopsys' SEC filings, including those described in the "Risk Factors" section in its latest Quarterly Report on Form 10-Q for the third quarter ended July 31, 2012. Furthermore, Synopsys' actual tax rates applied to income for the first 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 first 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.
SYNOPSYS, INC.
Unaudited Consolidated Statements of Operations (1)
(in thousands, except per share amounts)
Three Months Ended October 31, Years Ended October 31,
------------------------------ -----------------------
2012 2011 2012 2011
---- ---- ---- ----
Revenue:
Time-based
license $367,038 $323,824 $1,449,300 $1,260,342
Upfront license 28,869 19,969 105,137 90,531
Maintenance and
service 58,306 46,741 201,580 184,770
------ ------ ------- -------
Total revenue 454,213 390,534 1,756,017 1,535,643
Cost of revenue:
License 60,082 51,632 232,811 205,390
Maintenance and
service 19,430 20,445 78,607 80,241
Amortization of
intangible assets 23,012 13,308 81,255 54,819
Total cost of
revenue 102,524 85,385 392,673 340,450
Gross margin 351,689 305,149 1,363,344 1,195,193
Operating
expenses:
Research and
development 153,568 125,415 581,628 491,871
Sales and
marketing 111,385 93,500 415,629 363,118
General and
administrative 41,903 26,373 157,459 112,760
Amortization of
intangible assets 5,343 3,544 18,604 14,601
Total operating
expenses 312,199 248,832 1,173,320 982,350
Operating income 39,490 56,317 190,024 212,843
Other income
(expense), net 3,242 (2,762) 11,111 6,270
----- ------ ------ -----
Income before
income taxes 42,732 53,555 201,135 219,113
Provision
(benefit) for
income taxes 13,651 13,613 18,733 (2,251)
Net income $29,081 $39,942 $182,402 $221,364
======= ======= ======== ========
Net income per
share:
Basic $0.19 $0.28 $1.24 $1.51
Diluted $0.19 $0.27 $1.21 $1.47
Shares used in
computing per
share amounts:
Basic 150,149 143,855 146,887 146,573
======= ======= ======= =======
Diluted 153,271 146,350 150,280 150,367
======= ======= ======= =======
(1) Synopsys' fourth quarter of
fiscal 2012 and 2011 ended on
November 3, 2012 and October
29, 2011, respectively. For
presentation purposes, we refer
to periods ended October 31.
Synopsys' first quarter of
fiscal 2012 included an extra
week; its fiscal 2012 and
fiscal 2011 were 53-week and
52-week years, respectively.
SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
October 31, 2012 October 31, 2011
---------------- ----------------
ASSETS:
Cash and cash equivalents $700,382 $855,077
Short-term investments - 148,997
--- -------
Total cash, cash
equivalents and short-
term investments 700,382 1,004,074
Accounts receivable, net 292,668 203,124
Deferred income taxes 74,712 58,536
Income taxes receivable and
prepaid taxes 17,267 25,545
Prepaid and other current
assets 55,627 46,776
------ ------
Total current assets 1,140,656 1,338,055
Property and equipment, net 191,243 159,517
Goodwill 1,976,987 1,289,286
Intangible assets, net 466,322 196,031
Long-term prepaid taxes 9,429 1,510
Long-term deferred income
taxes 239,412 281,056
Other long-term assets 123,607 103,389
Total assets $4,147,656 $3,368,844
========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Current liabilities:
Short-term debt $30,000 $ -
Accounts payable and
accrued liabilities 383,093 302,176
Accrued income taxes 4,682 4,589
Deferred revenue 834,864 703,555
------- -------
Total current liabilities 1,252,639 1,010,320
Long-term debt 105,000 -
Long-term accrued income
taxes 52,645 92,940
Other long-term liabilities 126,217 108,076
Long-term deferred revenue 67,184 56,208
------ ------
Total liabilities 1,603,685 1,267,544
Stockholders' equity:
Preferred stock, $0.01 par
value: 2,000 shares
authorized; none
outstanding - -
Common stock, $0.01 par
value: 400,000 shares
authorized; 150,899 and
143,308 shares
outstanding, respectively 1,509 1,433
Capital in excess of par
value 1,585,034 1,521,327
Retained earnings 1,098,694 957,517
Treasury stock, at cost:
6,365and 13,956 shares,
respectively (168,090) (358,032)
Accumulated other
comprehensive loss (15,461) (20,945)
------- -------
Total stockholders' equity
excluding non-controlling
interest 2,501,686 2,101,300
Non-controlling interest 42,285 -
Total liabilities and
stockholders' equity $4,147,656 $3,368,844
========== ==========
(1) Synopsys' fiscal 2012 and
fiscal 2011 ended on November
3, 2012 and October 29, 2011,
respectively. For presentation
purposes, we refer to periods
ended October 31. Synopsys'
first quarter of fiscal 2012
included an extra week; its
fiscal 2012 and fiscal 2011
were 53-week and 52-week years,
respectively.
SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows (1)
(in thousands)
Years Ended October 31,
-----------------------
2012 2011
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $182,402 $221,364
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Amortization and
depreciation 156,840 128,550
Stock compensation 71,414 56,414
Allowance for doubtful
accounts 3,754 1,058
Write-down of long-term
investments 452 999
Gain on sale of
investments (650) (936)
Deferred income taxes 12,850 22,278
Net changes in operating
assets and liabilities,
net of
acquired assets and
liabilities:
Accounts receivable (53,395) (18,974)
Prepaid and other current
assets 15,199 (13,445)
Other long-term assets (10,231) (4,248)
Accounts payable and
other liabilities 42,960 (7,408)
Income taxes (43,113) (58,377)
Deferred revenue 107,586 113,041
------- -------
Net cash provided by
operating activities 486,068 440,316
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from sales and
maturities of short-
term investments 166,132 136,983
Purchases of short-term
investments (18,179) (127,385)
Proceeds from sales of
long-term investments 506 2,828
Purchases of property and
equipment (54,191) (57,345)
Cash paid for
acquisitions, net of
cash acquired (970,089) (41,015)
Capitalization of
software development
costs (3,302) (2,885)
Net cash used in
investing activities (879,123) (88,819)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on
capital leases (6,252) (4,628)
Proceeds from credit
facility and term loan 250,000 -
Repayment of debt (136,156) -
Issuances of common stock 175,896 162,180
Purchase of equity
forward contract - (33,335)
Purchases of treasury
stock (40,000) (401,836)
Net cash provided by
(used in) financing
activities 243,488 (277,619)
Effect of exchange rate
changes on cash and cash
equivalents (5,128) 5,792
Net change in cash and
cash equivalents (154,695) 79,670
Cash and cash
equivalents, beginning
of the year 855,077 775,407
Cash and cash
equivalents, end of the
period $700,382 $855,077
======== ========
(1) Synopsys' fourth quarter of
fiscal 2012 and 2011 ended on
November 3, 2012 and October
29, 2011, respectively. For
presentation purposes, we refer
to periods ended October 31.
Synopsys' first quarter of
fiscal 2012 included an extra
week; its fiscal 2012 and
fiscal 2011 were 53-week and
52-week years, respectively.
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.
