SYNOPSYS INC. 
By MOUNTAIN VIEW, Calif., May 22, 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 second quarter of fiscal year 2013.
For the second quarter of fiscal year 2013, Synopsys reported revenue of $499.3 million, compared to $432.6 million for the second quarter of fiscal 2012, an increase of 15 percent.
"Synopsys again delivered strong results in Q2, and as a result we are raising our operating cash flow and non-GAAP earnings per share targets for the year," said Aart de Geus, chairman and co-CEO of Synopsys. "The latest silicon technologies offer high value but also great technical challenges. Because of this, more and more customer executives are sharing with us where they are heading and how Synopsys can help them succeed, leading to robust demand and market momentum."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2013 was $68.7 million, or $0.44 per share, compared to $21.0 million, or $0.14 per share, for the second quarter of fiscal 2012. Net income for the second quarter of fiscal 2012 included $30.2 million of costs associated with the acquisition of Magma Design Automation.
Non-GAAP Results
On a non-GAAP basis, net income for the second quarter of fiscal 2013 was $103.7 million, or $0.66 per share, compared to non-GAAP net income of $78.5 million, or $0.53 per share, for the second quarter of fiscal 2012.
Financial Targets
Synopsys also provided its financial targets for the third quarter and full fiscal year 2013. These targets do not include any future acquisition-related expenses that may be incurred in fiscal 2013. These targets constitute forward-looking information and are based on current expectations. For a discussion of factors that could cause actual results to differ materially from these targets, see "Forward-Looking Statements" below.
Third Quarter of Fiscal Year 2013 Targets:
-- Revenue: $475 million - $485 million
-- GAAP expenses: $411 million - $428 million
-- Non-GAAP expenses: $365 million - $375 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: 155 million - 159 million
-- GAAP earnings per share: $0.28 - $0.34
-- Non-GAAP earnings per share: $0.53 - $0.55
-- Revenue from backlog: approximately 90 percent
Full Fiscal Year 2013 Targets:
-- Revenue: $1.955 billion - $1.975 billion
-- Other income and expense: $5 - $9 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: $1.48 - $1.56
-- Non-GAAP earnings per share: $2.37 - $2.42
-- Cash flow from operations: $375 million - $400 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, 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 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 Second Quarter Fiscal Year 2013 Results
(Unaudited and in thousands, except per share amounts)
Three Months Six Months
Ended Ended
April 30, April 30,
2013 2012 2013 2012
---- ---- ---- ----
GAAP net income $68,691 $20,971 $138,613 $77,665
Adjustments:
Amortization of
intangible
assets 32,273 28,604 64,676 45,513
Stock
compensation 15,529 20,602 33,229 36,851
Acquisition-
related costs 1,992 30,853 3,828 32,088
Inventory fair
value
adjustment - - 1,809 -
Facility
restructuring
charges 302 - 30 470
Tax adjustments (15,123) (22,532) (35,554) (31,759)
------- ------- ------- -------
Non-GAAP net
income $103,664 $78,498 $206,631 $160,828
======== ======= ======== ========
Three Months Six Months
Ended Ended
April 30, April 30,
2013 2012 2013 2012
---- ---- ---- ----
GAAP net income
per share $0.44 $0.14 $0.89 $0.52
Adjustments:
Amortization of
intangible
assets 0.21 0.19 0.42 0.31
Stock
compensation 0.10 0.14 0.22 0.25
Acquisition-
related costs 0.01 0.21 0.02 0.22
Inventory fair
value
adjustment - - 0.01 -
Facility
restructuring
charges 0.00 - 0.00 0.00
Tax adjustments (0.10) (0.15) (0.23) (0.22)
Non-GAAP net
income per
share $0.66 $0.53 $1.33 $1.08
===== ===== ===== =====
Shares used in
calculation 156,606 149,297 155,662 148,259
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 2013 Targets
(in thousands, except per share amounts)
Range for
Three Months
Ending July
31, 2013 (1)
Low High
--- ----
Target GAAP expenses $411,000 $428,000
Adjustments:
Estimated impact of
amortization of
intangible assets (30,000) (34,000)
Estimated impact of
stock compensation (16,000) (19,000)
Target non-GAAP
expenses $365,000 $375,000
======== ========
Range for
Three Months
Ending July
31, 2013 (1)
Low High
--- ----
Target GAAP earnings
per share $0.28 $0.34
Adjustments:
Estimated impact of
amortization of
intangible assets 0.22 0.19
Estimated impact of
stock compensation 0.12 0.10
Net non-GAAP tax
adjustments (0.09) (0.08)
Target non-GAAP
earnings per share $0.53 $0.55
===== =====
Shares used in non-
GAAP calculation
(midpoint of target
range) 157,000 157,000
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 $1.48 $1.56
Adjustments:
Estimated impact of
amortization of
intangible assets 0.84 0.80
Estimated impact of
stock compensation 0.45 0.42
Acquisition-related
costs 0.02 0.02
Inventory fair value
adjustment 0.01 0.01
Facility
restructuring
charges 0.00 0.00
Net non-GAAP tax
adjustments (0.43) (0.39)
Target non-GAAP
earnings per share $2.37 $2.42
===== =====
Shares used in non-
GAAP calculation
(midpoint of target
range) 157,000 157,000
(1) Synopsys' third quarter and fiscal year end on
August 3, 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 293128, beginning at 4:00 p.m. Pacific Time today. A webcast replay will also be available on the website from approximately 5:30 p.m. Pacific Time today through the time Synopsys announces its results for the third quarter fiscal 2013 in August 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 third quarter fiscal year 2013 earnings call in August 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 third 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 second quarter fiscal 2013 in its quarterly report on Form 10-Q to be filed by June 13, 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 July 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) 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 January 31, 2013. Furthermore, Synopsys' actual tax rates applied to income for the third 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 third 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, 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 Six Months
Ended April Ended April
30, 30,
-------------- -----------
2013 2012 2013 2012
---- ---- ---- ----
Revenue:
Time-
based
license $413,491 $363,580 $799,450 $719,474
Upfront 24,779 22,333 55,568 50,845
Maintenance
and
service 60,987 46,648 119,376 87,738
------ ------ ------- ------
Total
revenue 499,257 432,561 974,394 858,057
Cost of revenue:
License 61,569 57,592 126,061 115,314
Maintenance
and
service 19,766 19,215 39,821 37,959
Amortization
of
intangible
assets 26,398 23,699 52,914 37,087
Total
cost
of
revenue 107,733 100,506 218,796 190,360
Gross
margin 391,524 332,055 755,598 667,697
Operating
expenses:
Research
and
development 169,962 151,230 327,472 284,105
Sales
and
marketing 103,930 108,836 205,688 204,240
General
and
administrative 32,254 49,948 70,192 83,787
Amortization
of
intangible
assets 5,875 4,905 11,762 8,426
Total
operating
expenses 312,021 314,919 615,114 580,558
Operating
income 79,503 17,136 140,484 87,139
Other
income
(expense),
net 7,204 6,353 17,953 10,179
----- ----- ------ ------
Income
before
income
taxes 86,707 23,489 158,437 97,318
Provision
(benefit)
for
income
taxes 18,016 2,518 19,824 19,653
Net
income $68,691 $20,971 $138,613 $77,665
======= ======= ====== =======
Net income per
share:
Basic $0.45 $0.14 $0.91 $0.54
Diluted $0.44 $0.14 $0.89 $0.52
Shares used in
computing per
share amounts:
Basic 153,515 145,948 152,496 144,877
======= ======= ======= =======
Diluted 156,606 149,297 155,662 148,259
======= ======= ======= =======
(1) Synopsys' second quarter of fiscal 2013 ended on May 4, 2013.
For presentation purposes, we refer to a calendar month ending April
30. Synopsys' first quarter of fiscal 2012 includes an extra week.
SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
April 30, 2013 October 31, 2012
-------------- ----------------
ASSETS:
Cash and cash
equivalents $681,018 $700,382
Accounts receivable,
net 251,682 292,668
Deferred income taxes 74,558 74,712
Income taxes
receivable and
prepaid taxes 20,178 17,267
Prepaid and other
current assets 78,933 55,627
------ ------
Total current assets 1,106,369 1,140,656
Property and
equipment, net 195,315 191,243
Goodwill 1,980,012 1,976,987
Intangible assets, net 397,219 466,322
Long-term prepaid
taxes 9,702 9,429
Long-term deferred
income taxes 270,037 239,412
Other long-term assets 140,234 123,607
Total assets $4,098,888 $4,147,656
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and
accrued liabilities $277,114 $383,093
Accrued income taxes 13,926 4,682
Deferred revenue 691,882 834,864
Short-term debt 30,000 30,000
------ ------
Total current
liabilities 1,012,922 1,252,639
Long-term accrued
income taxes 57,468 52,645
Long-term deferred
revenue 62,840 67,184
Long-term debt 90,000 105,000
Other long-term
liabilities 176,726 126,217
------- -------
Total liabilities 1,399,956 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;
153,605 and 150,899
shares outstanding,
respectively 1,535 1,509
Capital in excess of
par value 1,599,164 1,585,034
Retained earnings 1,231,378 1,098,694
Treasury stock, at
cost: 3,659 and 6,365
shares, respectively (105,138) (168,090)
Accumulated other
comprehensive loss (28,007) (15,461)
------- -------
Total stockholders'
equity excluding non-
controlling interest 2,698,932 2,501,686
Non-controlling
interest - 42,285
Total liabilities and
stockholders' equity $4,098,888 $4,147,656
========== ==========
(1) Synopsys' second quarter of fiscal 2013 ended on May 4, 2013. For presentation
purposes, we refer to a calendar month ending April 30. Synopsys' first quarter of
fiscal 2012 includes an extra week.
SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows (1)
(in thousands)
Six Months Ended
April 30,
----------------
2013 2012
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $138,613 $77,665
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation 94,154 74,862
Stock compensation 33,229 36,855
Allowance for doubtful accounts 901 452
Gain on sale of investments (101) (349)
Deferred income taxes 8,225 10,033
Net changes in operating assets and liabilities, net of acquired assets and liabilities:
Accounts receivable 39,287 (11,516)
Prepaid and other current assets (27,502) (3,442)
Other long-term assets (16,524) (8,128)
Accounts payable and other liabilities (97,569) (48,393)
Income taxes (2,574) (8,436)
Deferred revenue (127,847) (32,147)
-------- -------
Net cash provided by operating activities 42,292 87,456
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 222 -
Purchases of property and equipment (29,426) (19,585)
Proceeds from sale of property and equipment 2,000 -
Cash paid for acquisitions, net of cash acquired - (564,528)
Capitalization of software development costs (1,787) (1,539)
Net cash used in investing activities (28,991) (437,699)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases (784) (1,888)
Proceeds from credit facility and term loan - 250,000
Acquisition of non-controlling interest (44,004) -
Repayment of debts (15,237) (21,156)
Issuances of common stock 75,193 111,180
Purchases of treasury stock (34,998) (40,000)
Other (1,130) -
Net cash (used in) provided by financing activities (20,960) 298,136
Effect of exchange rate changes on cash and cash equivalents (11,705) (6,376)
Net change in cash and cash equivalents (19,364) (58,483)
Cash and cash equivalents, beginning of the year 700,382 855,077
Cash and cash equivalents, end of the period $681,018 $796,594
======== ========
(1) Synopsys' second quarter of fiscal 2013 ended on May 4, 2013. For presentation purposes, we refer to a calendar month ending April 30.
Synopsys' first quarter of fiscal 2012 includes an extra week.
SOURCE Synopsys, Inc.
