SYNOPSYS INC. 
By MOUNTAIN VIEW, Calif., Dec. 4, 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 fourth quarter and fiscal year 2013.
For the fourth quarter of fiscal 2013, Synopsys reported revenue of $504.9 million, compared to $454.2 million for the fourth quarter of fiscal 2012. Revenue for fiscal year 2013 was $1.962 billion, an increase of 11.7 percent from $1.756 billion in fiscal 2012.
"Synopsys achieved excellent results in fiscal year 2013, and we are seeing strong product and customer momentum," said Aart de Geus, chairman and co-CEO of Synopsys. "Amid a landscape characterized by a mix of economic uncertainty and aggressive investment in designs, Synopsys is in a very strong competitive position, as many key customers rely on us to accelerate their differentiation and speed their time to market."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter of fiscal 2013 was $56.9 million, or $0.36 per share, compared to $29.1 million, or $0.19 per share, for the fourth quarter of fiscal 2012. GAAP net income for fiscal year 2013 was $247.8 million, or $1.58 per share, compared to $182.4 million, or $1.21 per share, for fiscal 2012.
Non-GAAP Results
On a non-GAAP basis, net income for the fourth quarter of fiscal 2013 was $88.3 million, or $0.56 per share, compared to non-GAAP net income of $72.4 million, or $0.47 per share, for the fourth quarter of fiscal 2012. Non-GAAP net income for fiscal 2013 was $381.4 million, or $2.44 per share, compared to non-GAAP net income of $315.5 million, or $2.10 per share, for fiscal 2012. 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 first quarter and full fiscal year 2014. These targets do not include any future acquisition costs that may be incurred in fiscal year 2014. 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 2014 Targets:
-- Revenue: $475 million - $485 million
-- GAAP expenses: $422 million - $444 million
-- Non-GAAP expenses: $377 million - $387 million
-- Other income and expense: $6 million - $8 million
-- Tax rate applied in non-GAAP net income calculations: approximately 24
percent
-- Fully diluted outstanding shares: 154 million - 158 million
-- GAAP earnings per share: $0.30 - $0.38
-- Non-GAAP earnings per share: $0.51 - $0.53
Full Fiscal Year 2014 Targets:
-- Revenue: $2.06 billion - $2.085 billion
-- Other income and expense: $7 million - $10 million
-- Tax rate applied in non-GAAP net income calculations: approximately 24
percent
-- Fully diluted outstanding shares: 154 million - 158 million
-- GAAP earnings per share: $1.69 - $1.82
-- Non-GAAP earnings per share: $2.55 - $2.60
-- Cash flow from operations: $425 million - $450 million
-- Revenue from beginning of year backlog: approximately 75 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 and the effect of 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 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 Fourth Quarter and Fiscal Year 2013 Results
(unaudited and in thousands, except per share amounts)
Three Months Twelve Months
Ended Ended
October 31, October 31,
----------- -----------
2013 2012 2013 2012
---- ---- ---- ----
GAAP net
income $56,890 $29,081 $247,800 $182,402
Adjustments:
Amortization
of
intangible
assets 30,546 28,355 127,503 99,859
Stock
compensation 17,791 17,336 67,511 71,414
Acquisition-
related
costs 1,286 7,861 5,276 43,600
Inventory
fair value
adjustment 2,720 919 6,432 919
Facility
restructuring
charges 31 - (178) 470
Tax
settlement
impacts 1,581 - (1,130) (36,882)
Tax
adjustments (22,557) (11,187) (71,797) (46,255)
------- ------- -------
Non-GAAP
net income $88,288 $72,365 $381,417 $315,527
======= ======= ======== ========
Three Months Twelve Months
Ended Ended
October 31, October 31,
----------- -----------
2013 2012 2013 2012
---- ---- ---- ----
GAAP net
income per
share $0.36 $0.19 $1.58 $1.21
Adjustments:
Amortization
of
intangible
assets 0.19 0.18 0.81 0.66
Stock
compensation 0.11 0.11 0.43 0.48
Acquisition-
related
costs 0.01 0.05 0.04 0.30
Inventory
fair value
adjustment 0.02 0.01 0.04 0.01
Facility
restructuring
charges 0.00 - (0.00) 0.00
Tax
settlement
impacts 0.01 - (0.01) (0.25)
Tax
adjustments (0.14) (0.07) (0.45) (0.31)
Non-GAAP
net income
per share $0.56 $0.47 $2.44 $2.10
===== ===== ===== =====
Shares used
in
calculation 157,039 153,271 156,601 150,280
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 2014 Targets
(in thousands, except per share amounts)
Range for
Three Months
Ending January
31, 2014 (1)
Low High
--- ----
Target GAAP expenses $422,000 $444,000
Adjustments:
Estimated impact of
amortization of
intangible assets (27,000) (35,000)
Estimated impact of
stock compensation (18,000) (22,000)
Target non-GAAP
expenses $377,000 $387,000
======== ========
Range for
Three Months
Ending January
31, 2014 (1)
Low High
--- ----
Target GAAP earnings
per share $0.30 $0.38
Adjustments:
Estimated impact of
amortization of
intangible assets 0.22 0.17
Estimated impact of
stock compensation 0.14 0.12
Estimated impact of
tax settlement (0.06) (0.06)
Net non-GAAP tax
adjustments (0.09) (0.08)
Target non-GAAP
earnings per share $0.51 $0.53
===== =====
Shares used in non-
GAAP calculation
(midpoint of target
range) 156,000 156,000
GAAP to Non-GAAP Reconciliation of Full Fiscal Year
2014 Targets
Range for
Fiscal Year
Ending October
31, 2014 (1)
Low High
--- ----
Target GAAP earnings
per share $1.69 $1.82
Adjustments:
Estimated impact of
amortization of
intangible assets 0.74 0.69
Estimated impact of
stock compensation 0.53 0.48
Acquisition-related
costs - -
Inventory fair value
adjustment - -
Facility
restructuring
charges - -
Estimated impact of
tax settlement (0.06) (0.06)
Net non-GAAP tax
adjustments (0.35) (0.33)
Target non-GAAP
earnings per share $2.55 $2.60
===== =====
Shares used in non-
GAAP calculation
(midpoint of target
range) 156,000 156,000
(1) Synopsys' first quarter
and fiscal year end on
February 1, and November
1, 2014, 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 308548 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 2014 in February 2014. 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 2014 earnings call in February 2014, 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 2014 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 2013 in its annual report on Form 10-K to be filed by January 2, 2014.
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;
-- 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;
-- Synopsys' ability to realize the potential financial or strategic
benefits of acquisitions it completes 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;
-- 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 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, 2014; actual expenses, earnings per share, tax rate, and other projections on a GAAP and non-GAAP basis for fiscal year 2014; and cash flow from operations on a GAAP basis for fiscal year 2014 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 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) general economic conditions, and (x) 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 fiscal quarter ended July 31, 2013. Furthermore, Synopsys' actual tax rates applied to income for the first quarter and fiscal year 2014 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 2014 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
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 Twelve Months
Ended
October 31, October 31,
----------- -----------
2013 2012 2013 2012
---- ---- ---- ----
Revenue:
Time-
based
license $412,926 $367,038 $1,599,464 $1,449,300
Upfront 36,493 28,869 132,018 105,137
Maintenance
and
service 55,456 58,306 230,732 201,580
------ ------ ------- -------
Total
revenue 504,875 454,213 1,962,214 1,756,017
Cost of revenue:
License 72,992 60,082 268,910 232,811
Maintenance
and
service 21,264 19,430 80,338 78,607
Amortization
of
intangible
assets 24,853 23,012 104,304 81,255
Total
cost
of
revenue 119,109 102,524 453,552 392,673
Gross
margin 385,766 351,689 1,508,662 1,363,344
Operating expenses:
Research
and
development 175,057 153,568 669,197 581,628
Sales
and
marketing 114,913 111,385 425,982 415,629
General
and
administrative 39,089 41,903 143,791 157,459
Amortization
of
intangible
assets 5,693 5,343 23,199 18,604
Total
operating
expenses 334,752 312,199 1,262,169 1,173,320
Operating
income 51,014 39,490 246,493 190,024
Other
income,
net 8,043 3,242 29,173 11,111
----- ----- ------ ------
Income
before
income
taxes 59,057 42,732 275,666 201,135
Provision
for
income
taxes 2,167 13,651 27,866 18,733
Net
income $56,890 $29,081 $247,800 $182,402
======= ======= ======== ========
Net income per share:
Basic $0.37 $0.19 $1.62 $1.24
Diluted $0.36 $0.19 $1.58 $1.21
Shares used in computing
per share amounts:
Basic 154,369 150,149 153,319 146,887
======= ======= ======= =======
Diluted 157,039 153,271 156,601 150,280
======= ======= ======= =======
(1) Synopsys' fourth
quarter of fiscal 2013
and 2012 ended on
November 2, 2013 and
November 3, 2012,
respectively. For
presentation purposes, we
refer to periods ended
October 31. Synopsys'
first quarter of fiscal
2012 included an extra
week; its fiscal 2013 and
fiscal 2012 were 52-week
and 53-week years,
respectively.
SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
October 31, 2013 October 31, 2012
---------------- ----------------
ASSETS:
Cash and cash
equivalents $1,022,441 $700,382
Accounts receivable,
net 256,026 292,668
Deferred income taxes 92,058 74,712
Income taxes
receivable and
prepaid taxes 18,277 17,267
Prepaid and other
current assets 59,175 55,627
------ ------
Total current assets 1,447,977 1,140,656
Property and
equipment, net 197,600 191,243
Goodwill 1,975,971 1,976,987
Intangible assets, net 335,425 466,322
Long-term prepaid
taxes 7,935 9,429
Long-term deferred
income taxes 243,066 239,412
Other long-term assets 150,961 123,607
Total assets $4,358,935 $4,147,656
========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and
accrued liabilities $358,197 $383,093
Accrued income taxes 7,168 4,682
Deferred revenue 827,554 834,864
Short-term debt 30,000 30,000
------ ------
Total current
liabilities 1,222,919 1,252,639
Long-term accrued
income taxes 53,064 52,645
Long-term deferred
revenue 54,736 67,184
Long-term debt 75,000 105,000
Other long-term
liabilities 164,939 126,217
------- -------
Total liabilities 1,570,658 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;
154,169 and 150,899
shares outstanding,
respectively
1,542 1,509
Capital in excess of
par value 1,597,244 1,585,034
Retained earnings 1,324,854 1,098,694
Treasury stock, at
cost: 3,095 and 6,365
shares, respectively (106,668) (168,090)
Accumulated other
comprehensive loss (28,695) (15,461)
------- -------
Total stockholders'
equity excluding non-
controlling interest 2,788,277 2,501,686
Non-controlling
interest - 42,285
Total liabilities and
stockholders' equity $4,358,935 $4,147,656
========== ==========
(1) Synopsys' fourth
quarter of fiscal 2013
and 2012 ended on
November 2, 2013 and
November 3, 2012,
respectively. For
presentation purposes,
we refer to periods
ended October 31.
Synopsys' first quarter
of fiscal 2012 included
an extra week; its
fiscal 2013 and fiscal
2012 were 52-week and
53-week years,
respectively.
SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows (1)
(in thousands)
Twelve Months Ended October 31,
-------------------------------
2013 2012
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $247,800 $182,402
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation 187,404 156,840
Stock compensation 67,511 71,414
Allowance for doubtful accounts 102 3,754
Write-down of long-term investments - 452
Gain on sale of investments (868) (650)
Deferred income taxes (676) 12,850
Net changes in operating assets and liabilities, net of
acquired assets and liabilities:
Accounts receivable 37,590 (53,395)
Prepaid and other current assets (12,063) 15,199
Other long-term assets (27,468) (10,231)
Accounts payable and other liabilities (1,135) 42,960
Income taxes (2,306) (43,113)
Deferred revenue 814 107,586
--- -------
Net cash provided by operating activities 496,705 486,068
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of short-term investments - 166,132
Purchases of short-term investments - (18,179)
Proceeds from sales of long-term investments 989 506
Proceeds from sale of property and equipment 2,000 -
Purchases of property and equipment (65,459) (54,191)
Cash paid for acquisitions, net of cash acquired - (970,089)
Capitalization of software development costs (3,609) (3,302)
Net cash used in investing activities (66,079) (879,123)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases (3,913) (6,252)
Proceeds from credit facility and term loan - 250,000
Acquisition of non-controlling interest (44,004) -
Repayment of debts (30,712) (136,156)
Issuances of common stock 131,914 175,896
Purchases of treasury stock (145,017) (40,000)
Other (6,253) -
Net cash (used in) provided by financing activities (97,985) 243,488
Effect of exchange rate changes on cash and cash equivalents (10,582) (5,128)
------- ------
Net change in cash and cash equivalents 322,059 (154,695)
Cash and cash equivalents, beginning of the year 700,382 855,077
------- -------
Cash and cash equivalents, end of the period $1,022,441 $700,382
========== ========
(1) Synopsys' fourth
quarter of fiscal 2013 and
2012 ended on November 2,
2013 and November 3, 2012,
respectively. For
presentation purposes, we
refer to periods ended
October 31. Synopsys'
first quarter of fiscal
2012 included an extra
week; its fiscal 2013 and
fiscal 2012 were 52-week
and 53-week years,
respectively.
SOURCE Synopsys, Inc.
