SYNOPSYS INC. 
By MOUNTAIN VIEW, Calif., Aug. 21, 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 third quarter of fiscal year 2013.
For the third quarter of fiscal year 2013, Synopsys reported revenue of $482.9 million, compared to $443.7 million for the third quarter of fiscal year 2012, an increase of 8.8 percent.
"Synopsys continues to demonstrate broad strength and innovation in technology and customer relationships, as well as excellent execution and financial results," said Aart de Geus, chairman and co-CEO of Synopsys. "While our customers are dealing with yet another quarter of a relatively weak global economy, many have a sharp focus on new technology and continue to aggressively drive design activity. The result is high demand for advanced tools and IP, areas in which we continue to lead and have a track record of excellence."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal year 2013 was $52.3 million, or $0.33 per share, compared to $75.7 million, or $0.50 per share, for the third quarter of fiscal year 2012.
Non-GAAP Results
On a non-GAAP basis, net income for the third quarter of fiscal year 2013 was $86.5 million, or $0.55 per share, compared to non-GAAP net income of $82.3 million, or $0.55 per share, for the third quarter of fiscal year 2012.
Financial Targets
Synopsys also provided its financial targets for the fourth quarter and full fiscal year 2013. These targets do not include any future acquisition-related expenses that may be incurred in fiscal year 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.
Fourth Quarter of Fiscal Year 2013 Targets:
-- Revenue: $500 million - $510 million
-- GAAP expenses: $432 million - $449 million
-- Non-GAAP expenses: $386 million - $396 million
-- Other income and expense: ($1) million - $1 million
-- Tax rate applied in non-GAAP net income calculations: 23 percent - 24
percent
-- Fully diluted outstanding shares: 155 million - 159 million
-- GAAP earnings per share: $0.29 - $0.35
-- Non-GAAP earnings per share: $0.54 - $0.56
Full Fiscal Year 2013 Targets:
-- Revenue: $1.957 billion - $1.967 billion
-- Other income and expense: $8 million - $10 million
-- Tax rate applied in non-GAAP net income calculations: approximately 22
percent
-- Fully diluted outstanding shares: 155 million - 159 million
-- GAAP earnings per share: $1.51- $1.57
-- Non-GAAP earnings per share: $2.42 - $2.44
-- Cash flow from operations: approximately $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 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 Third 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 Third Quarter Fiscal Year 2013 Results
(Unaudited and in thousands, except per share amounts)
Three Months Nine Months
Ended Ended
July 31, July 31,
2013 2012 2013 2012
---- ---- ---- ----
GAAP net
income $52,297 $75,656 $190,910 $153,321
Adjustments:
Amortization
of
intangible
assets 32,281 25,991 96,957 71,504
Stock
compensation 16,490 17,223 49,719 54,078
Acquisition-
related
costs 162 3,655 3,990 35,738
Inventory
fair value
adjustment 1,903 - 3,712 -
Facility
restructuring
charges (239) - (209) 470
Benefit from
tax
settlements
(1) (2,711) (32,169) (2,711) (32,169)
Tax
adjustments (13,685) (8,023) (49,239) (39,781)
------- ------ -------
Non-GAAP
net income $86,498 $82,333 $293,129 $243,161
======= ======= ======== ========
Three Months Nine Months
Ended Ended
July 31, July 31,
2013 2012 2013 2012
---- ---- ---- ----
GAAP net
income per
share $0.33 $0.50 $1.22 $1.03
Adjustments:
Amortization
of
intangible
assets 0.21 0.17 0.62 0.48
Stock
compensation 0.10 0.12 0.32 0.36
Acquisition-
related
costs 0.00 0.02 0.03 0.24
Inventory
fair value
adjustment 0.01 - 0.02 -
Facility
restructuring
charges (0.00) - (0.00) (0.00)
Benefit from
tax
settlements(1) (0.02) (0.21) (0.02) (0.21)
Tax
adjustments (0.08) (0.05) (0.31) (0.27)
Non-GAAP
net income
per share $0.55 $0.55 $1.88 $1.63
===== ===== ===== =====
Shares used
in
calculation 157,056 150,644 156,215 149,095
(1) Tax settlements included 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 Fourth Quarter Fiscal
Year 2013 Targets
(in thousands, except per share amounts)
Range for Three
Months
Ending October
31, 2013 (1)
Low High
--- ----
Target GAAP
expenses $432,000 $449,000
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 $386,000 $396,000
======== ========
Range for Three
Months
Ending October
31, 2013 (1)
Low High
--- ----
Target GAAP
earnings per share $0.29 $0.35
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 $0.54 $0.56
===== =====
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 $1.51 $1.57
Adjustments:
Estimated impact of
amortization of
intangible assets 0.84 0.81
Estimated impact of
stock compensation 0.44 0.42
Acquisition-related
costs 0.03 0.03
Inventory fair value
adjustment 0.02 0.02
Facility
restructuring
charges 0.00 0.00
Benefit from tax
settlements (0.02) (0.02)
Net non-GAAP tax
adjustments (0.40) (0.39)
Target non-GAAP
earnings per share $2.42 $2.44
===== =====
Shares used in non-
GAAP calculation
(midpoint of target
range) 157,000 157,000
(1) Synopsys' fourth
quarter and fiscal year
end on November 2, 2013.
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 299801, 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 fourth quarter and fiscal year 2013 in December 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 fourth quarter and fiscal year 2013 earnings call in December 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 fourth 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 third quarter fiscal 2013 in its quarterly report on Form 10-Q to be filed by September 12, 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 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 Oct. 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 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 Apr. 30, 2013. Furthermore, Synopsys' actual tax rates applied to income for the fourth 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 fourth 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 July 31, Nine Months Ended July 31,
--------------------------- --------------------------
2013 2012 2013 2012
---- ---- ---- ----
Revenue:
Time-based
license $387,088 $362,788 $1,186,538 $1,082,262
Upfront 39,957 25,423 95,525 76,268
Maintenance
and service 55,900 55,536 175,276 143,274
------ ------ ------- -------
Total
revenue 482,945 443,747 1,457,339 1,301,804
Cost of revenue:
License 69,857 57,415 195,918 172,729
Maintenance
and service 19,253 21,218 59,074 59,177
Amortization
of
intangible
assets 26,537 21,156 79,451 58,243
Total cost
of revenue 115,647 99,789 334,443 290,149
Gross margin 367,298 343,958 1,122,896 1,011,655
Operating expenses:
Research and
development 166,668 143,955 494,140 428,060
Sales and
marketing 105,381 100,004 311,069 304,244
General and
administrative 34,510 31,769 104,702 115,556
Amortization
of
intangible
assets 5,744 4,835 17,506 13,261
Total
operating
expenses 312,303 280,563 927,417 861,121
Operating
income 54,995 63,395 195,479 150,534
Other income
(expense),
net 3,177 (2,310) 21,130 7,869
----- ------ ------ -----
Income
before
income
taxes 58,172 61,085 216,609 158,403
Provision
(benefit)
for income
taxes 5,875 (14,571) 25,699 5,082
Net income $52,297 $75,656 $190,910 $153,321
======= ======= ======== ========
Net income per share:
Basic $0.34 $0.51 $1.25 $1.05
Diluted $0.33 $0.50 $1.22 $1.03
Shares used in computing per share amounts:
Basic 153,915 147,801 152,969 145,827
======= ======= ======= =======
Diluted 157,056 150,644 156,215 149,095
======= ======= ======= =======
(1) Synopsys' third
quarter of fiscal 2013
ended on August 3, 2013.
For presentation
purposes, we refer to a
calendar month ending
July 31. Synopsys' first
quarter of fiscal 2012
includes an extra week.
SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
July 31, 2013 October 31, 2012
------------- ----------------
ASSETS:
Cash and cash
equivalents $892,370 $700,382
Accounts receivable,
net 278,878 292,668
Deferred income taxes 77,509 74,712
Income taxes receivable
and prepaid taxes 18,352 17,267
Prepaid and other
current assets 62,975 55,627
------ ------
Total current assets 1,330,084 1,140,656
Property and equipment,
net 194,198 191,243
Goodwill 1,976,964 1,976,987
Intangible assets, net 364,005 466,322
Long-term prepaid taxes 8,644 9,429
Long-term deferred
income taxes 270,745 239,412
Other long-term assets 143,832 123,607
Total assets $4,288,472 $4,147,656
========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and
accrued liabilities $321,103 $383,093
Accrued income taxes 16,189 4,682
Deferred revenue 804,390 834,864
Short-term debt 30,000 30,000
------ ------
Total current
liabilities 1,171,682 1,252,639
Long-term accrued
income taxes 45,855 52,645
Long-term deferred
revenue 67,605 67,184
Long-term debt 82,500 105,000
Other long-term
liabilities 184,700 126,217
------- -------
Total liabilities 1,552,342 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; 154,348
and 150,899 shares
outstanding,
respectively
1,543 1,509
Capital in excess of
par value 1,581,340 1,585,034
Retained earnings 1,283,068 1,098,694
Treasury stock, at
cost: 2,916 and 6,365
shares, respectively (89,650) (168,090)
Accumulated other
comprehensive loss (40,171) (15,461)
------- -------
Total stockholders'
equity excluding non-
controlling interest 2,736,130 2,501,686
Non-controlling
interest - 42,285
Total liabilities and
stockholders' equity $4,288,472 $4,147,656
========== ==========
(1) Synopsys' third
quarter of fiscal 2013
ended on August 3, 2013.
For presentation
purposes, we refer to a
calendar month ending
July 31. Synopsys' first
quarter of fiscal 2012
includes an extra week.
SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows (1)
(in thousands)
Nine Months
Ended July 31,
----------------
2013 2012
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $190,910 $153,321
Adjustments to reconcile net
income to net cash provided by
operating
activities:
Amortization
and
depreciation 141,756 115,076
Stock
compensation 49,719 54,078
Allowance
for
doubtful
accounts 901 973
Write-
down of
long-
term
investments - 452
Gain on
sale of
investments (101) (650)
Deferred
income
taxes 7,272 10,553
Net changes in operating assets
and liabilities, net of
acquired assets and
liabilities:
Accounts
receivable 8,207 14,401
Prepaid
and other
current
assets (14,617) 6,116
Other
long-
term
assets (20,292) (7,146)
Accounts
payable
and other
liabilities (48,188) (15,490)
Income
taxes (475) (32,370)
Deferred
revenue (9,722) 83,822
------ ------
Net cash
provided
by
operating
activities 305,370 383,136
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 222 506
Proceeds
from sale
of
property
and
equipment 2,000 -
Purchases
of
property
and
equipment (47,624) (32,718)
Cash paid
for
acquisitions,
net of
cash
acquired - (584,418)
Capitalization
of
software
development
costs (2,681) (2,308)
Net cash
used in
investing
activities (48,083) (470,985)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal
payments
on
capital
leases (3,751) (5,177)
Proceeds
from
credit
facility
and term
loan - 250,000
Acquisition
of non-
controlling
interest (44,004) -
Repayment
of debts (22,975) (128,656)
Issuances
of common
stock 90,529 128,556
Purchases
of
treasury
stock (69,999) (40,000)
Other (2,030) -
Net cash
(used in)
provided
by
financing
activities (52,230) 204,723
Effect of
exchange
rate
changes
on cash
and cash
equivalents (13,069) (8,184)
Net change
in cash
and cash
equivalents 191,988 108,690
Cash and
cash
equivalents,
beginning
of the
year 700,382 855,077
Cash and
cash
equivalents,
end of
the
period $892,370 $963,767
======== ========
(1) Synopsys' third quarter
of fiscal 2013 ended on
August 3, 2013. For
presentation purposes, we
refer to a calendar month
ending July 31. Synopsys'
first quarter of fiscal
2012 includes an extra
week.
SOURCE Synopsys, Inc.
