SYNOPSYS INC. MOUNTAIN VIEW, Calif., Feb. 18, 2015 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its first quarter of fiscal year 2015.
For the first quarter of fiscal year 2015, Synopsys reported revenue of $542.0 million, compared to $479.0 million for the first quarter of fiscal 2014, an increase of approximately 13.2 percent.
"Synopsys delivered strong results in the fiscal first quarter, and we are raising our revenue and non-GAAP earnings targets for the year," said Aart de Geus, chairman and co-CEO of Synopsys. "We see high demand for our new products, momentum in IP and prototyping, and we're making good progress in our higher-growth software quality and security space."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the first quarter of fiscal 2015 was $65.2 million, or $0.41 per share, compared to $67.7 million, or $0.43 per share, for the first quarter of fiscal 2014.
Non-GAAP Results
On a non-GAAP basis, net income for the first quarter of fiscal 2015 was $125.7 million, or $0.80 per share, compared to non-GAAP net income of $93.1 million, or $0.59 per share, for the first quarter of fiscal 2014. 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 second quarter and full fiscal year 2015. These targets do not include any impact of future acquisition-related activities or costs that may be incurred in fiscal year 2015. These targets constitute forward-looking statements 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 2015 Targets:
-- Revenue: $543 million - $553 million
-- GAAP expenses: $470 million - $489 million
-- Non-GAAP expenses: $418 million - $428 million
-- Other income and expense: $0 - $2 million
-- Tax rate applied in non-GAAP net income calculations: 22 - 23 percent
-- Fully diluted outstanding shares: 155 million - 159 million
-- GAAP earnings per share: $0.26 - $0.33
-- Non-GAAP earnings per share: $0.62 - $0.64
Full Fiscal Year 2015 Targets:
-- Revenue: $2.195 billion - $2.235 billion
-- Other income and expense: $5 million - $9 million
-- Tax rate applied in non-GAAP net income calculations: 19 - 20 percent
-- Fully diluted outstanding shares: 155 million - 159 million
-- GAAP earnings per share: $1.41 - $1.50
-- Non-GAAP earnings per share: $2.75 - $2.80
-- Cash flow from operations: approximately $450 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, (iv) other significant items, including restructuring charges and certain accruals for legal and tax matters, 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 2015 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 2015
Results
(unaudited and in thousands, except per share amounts)
Three Months Ended
January 31,
2015 2014
---- ----
GAAP net
income $65,189 $67,696
Adjustments:
Amortization
of
intangible
assets 32,308 28,131
Stock
compensation 20,581 18,118
Acquisition-
related
costs 712 1,074
Restructuring
charges 15,336 -
Legal and
tax
matters (1,519) (10,267)
Tax
adjustments (6,936) (11,665)
------ -------
Non-GAAP
net
income $125,671 $93,087
======== =======
Three Months Ended
January 31,
2015 2014
---- ----
GAAP net
income
per share $0.41 $0.43
Adjustments:
Amortization
of
intangible
assets 0.21 0.18
Stock
compensation 0.13 0.12
Acquisition-
related
costs 0.00 0.01
Restructuring
charges 0.10 -
Legal and
tax
matters (0.01) (0.07)
Tax
adjustments (0.04) (0.08)
Non-GAAP
net
income
per share $0.80 $0.59
===== =====
Shares
used in
calculation 157,206 156,756
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 2015 Targets
(in thousands, except per share amounts)
Range for Three Months
Ending April 30, 2015
(1)
Low High
--- ----
Target GAAP expenses $470,000 $489,000
Adjustments:
Estimated impact of
amortization of
intangible assets (32,000) (36,000)
Estimated impact of stock
compensation (20,000) (25,000)
------- -------
Target non-GAAP expenses $418,000 $428,000
======== ========
Range for Three Months
Ending April 30, 2015
(1)
Low High
--- ----
Target GAAP earnings per
share $0.26 $0.33
Adjustments:
Estimated impact of
amortization of
intangible assets 0.23 0.20
Estimated impact of stock
compensation 0.16 0.13
Estimated impact of tax
adjustments (0.03) (0.02)
Target non-GAAP earnings
per share $0.62 $0.64
===== =====
Shares used in non-GAAP
calculation (midpoint of
target range) 157,000 157,000
GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2015 Targets
Range for Fiscal Year
Ending October 31, 2015
(1)
Low High
--- ----
Target GAAP earnings per
share $1.41 $1.50
Adjustments:
Estimated impact of
amortization of
intangible assets 0.85 0.80
Estimated impact of stock
compensation 0.60 0.55
Acquisition-related costs 0.00 0.00
Restructuring charges 0.10 0.10
Legal and tax matters (0.01) (0.01)
Net non-GAAP tax
adjustments (0.20) (0.14)
Target non-GAAP earnings
per share $2.75 $2.80
===== =====
Shares used in non-GAAP
calculation (midpoint of
target range) 157,000 157,000
(1) Synopsys' second quarter and fiscal year end on May 2, 2015 and October 31,
2015, respectively.
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 352869, 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 fiscal quarter in May 2015. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and co-chief executive officer, and Trac Pham, chief financial officer, on its website following the call. In addition, Synopsys makes additional information available in a financial supplement and corporate overview presentation, 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 and corporate overview presentation (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, the financial supplement, and corporate overview presentation will remain available on Synopsys' website through the date of the second quarter fiscal year 2015 earnings call in May 2015, 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 year 2015 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 2015 in its quarterly report on Form 10-Q to be filed by March 12, 2015.
About Synopsys
Synopsys, Inc. (Nasdaq:SNPS) is the Silicon to Software(TM) partner for innovative companies developing the electronic products and software applications we rely on every day. As the world's 15th largest software company, Synopsys has a long history of being a global leader in electronic design automation (EDA) and semiconductor IP, and is also a leader in software quality and security testing with its Coverity® solutions. Whether you're a system-on-chip (SoC) designer creating advanced semiconductors, or a software developer writing applications that require the highest quality and security, Synopsys has the solutions needed to deliver innovative, high-quality, secure products. Learn more at www.synopsys.com.
Forward-Looking Statements
This press release and our upcoming earnings results conference call contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Any statements that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include but are not limited to: sections of this press release entitled "Financial Targets" and "Reconciliation of Target Non-GAAP Operating Results"; and statements regarding Synopsys' business, acquisitions, products, technologies, business model, new markets, customer demand for our technology, and projected financial results and business objectives. These statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in our forward-looking statements. Accordingly, we caution stockholders and prospective investors not to place undue reliance on these statements. Such risks, uncertainties and factors include, but are 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,
and consolidation among our customers;
-- increased competition in the market for Synopsys' products and services
including through consolidation in the industry;
-- 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, including its acquisition of
Coverity, Inc., and challenges in entering new markets in which Synopsys
is not experienced and in the integration of the products and operations
of acquired companies or assets into Synopsys' products and operations,
including possible 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 accounting principles or standards or in the way they are
applied;
-- changes in the mix of time-based licenses and upfront licenses;
-- variability in the timing of revenue recognition due to factors such as
payment terms and the timing and value of contract renewals and
professional services projects;
-- 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, 2015; actual expenses, earnings per share, tax rate, and other projections on a GAAP and non-GAAP basis for fiscal year 2015; and cash flow from operations on a GAAP basis for fiscal year 2015 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 has 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) litigation, (x) general economic conditions, and (xi) other risks as detailed in Synopsys' SEC filings, including those described in the "Risk Factors" section in its Annual Report on Form 10-K for the fiscal year ended October 31, 2014. Furthermore, Synopsys' actual tax rates applied to income for the second quarter and fiscal year 2015 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 2015 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, the financial supplement, or the corporate overview presentation, 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
January 31,
--------------------
2015 2014
---- ----
Revenue:
Time-based
license $431,026 $400,146
Upfront license 46,480 33,972
Maintenance and
service 64,537 44,833
------ ------
Total revenue 542,043 478,951
Cost of revenue:
License 70,784 62,825
Maintenance and
service 27,983 20,271
Amortization of
intangible
assets 25,866 22,753
Total cost of
revenue 124,633 105,849
Gross margin 417,410 373,102
Operating expenses:
Research and
development 181,610 167,543
Sales and
marketing 106,169 105,792
General and
administrative 36,354 34,233
Amortization of
intangible
assets 6,442 5,378
Restructuring
charges 15,336 -
Total operating
expenses 345,911 312,946
Operating
income 71,499 60,156
Other income
(expense), net 5,116 11,028
----- ------
Income before
income taxes 76,615 71,184
Provision
(benefit) for
income taxes 11,426 3,488
Net income $65,189 $67,696
======= =======
Net income per share:
Basic $0.42 $0.44
Diluted $0.41 $0.43
Shares used in computing per share
amounts:
Basic 154,458 154,066
======= =======
Diluted 157,206 156,756
======= =======
(1) Synopsys' first quarter and fiscal year 2015 and 2014 ended on
January 31, 2015 and February 1, 2014, respectively. 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, 2015 October 31, 2014
---------------- ----------------
ASSETS:
Current assets:
Cash and cash equivalents $796,824 $985,762
Short-term investments 120,238 -
------- ---
Total cash, cash equivalents and
short-term investments 917,062 985,762
Accounts receivable, net 283,007 326,727
Deferred income taxes 95,800 111,449
Income taxes receivable and prepaid
taxes 28,089 26,496
Prepaid and other current assets 92,315 54,301
------ ------
Total current assets 1,416,273 1,504,735
Property and equipment, net 256,092 249,098
Goodwill 2,245,920 2,255,708
Intangible assets, net 332,385 365,030
Long-term prepaid taxes 4,501 17,645
Long-term deferred income taxes 227,715 208,156
Other long-term assets 179,463 175,127
Total assets $4,662,349 $4,775,499
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued
liabilities $242,335 $397,113
Accrued income taxes 12,024 31,404
Deferred revenue 823,745 928,242
Short-term debt 265,000 30,000
------- ------
Total current liabilities 1,343,104 1,386,759
Long-term accrued income taxes 42,154 50,952
Long-term deferred revenue 98,413 77,646
Long-term debt 37,500 45,000
Other long-term liabilities 204,157 158,972
------- -------
Total liabilities 1,725,328 1,719,329
Stockholders' equity:
Preferred stock, $0.01 par value:
2,000 shares authorized; none
outstanding - -
Common stock, $0.01 par value:
400,000 shares authorized;
153,457and
155,965 shares outstanding,
respectively 1,535 1,560
Capital in excess of par value 1,586,965 1,614,603
Retained earnings 1,608,758 1,551,592
Treasury stock, at cost: 3,807 and
1,299 shares, respectively (162,992) (49,496)
Accumulated other comprehensive loss (97,245) (62,089)
------- -------
Total stockholders' equity 2,937,021 3,056,170
Total liabilities and stockholders'
equity $4,662,349 $4,775,499
========== ==========
(1) Synopsys' first quarter of fiscal 2015 ended on January 31, 2015, and its fiscal year 2014 ended on November 1, 2014. For presentation purposes, we refer to the
closest calendar month end.
SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows (1)
(in thousands)
Three Months Ended January
31,
--------------------------
2015 2014
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $65,189 $67,696
Adjustments to reconcile net income to net cash used in operating
activities:
Amortization and depreciation 50,529 43,714
Stock compensation 20,581 18,118
Allowance for doubtful accounts 300 (400)
Gain on sale of investments (12) (6,529)
Deferred income taxes (158) 5,891
Net changes in operating assets and liabilities, net of
acquired assets and liabilities:
Accounts receivable 40,857 7,910
Prepaid and other current assets (42,860) (13,635)
Other long-term assets (7,597) (6,695)
Accounts payable and other liabilities (125,320) (134,902)
Income taxes (14,024) (10,068)
Deferred revenue (74,828) (44,992)
------- -------
Net cash used in operating activities (87,343) (73,892)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
short-term investments 8,012 -
Purchases of short-term investments (128,427) -
Proceeds from sales of long-term
investments - 6,791
Purchases of property and equipment (19,607) (14,353)
Cash paid for acquisitions and
intangible assets, net of cash
acquired - (900)
Capitalization of software development
costs (909) (902)
Net cash used in investing activities (140,931) (9,364)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility 250,000 -
Repayment of debt (22,723) (7,748)
Issuances of common stock 10,542 21,581
Purchase of equity forward contract (36,000) -
Purchases of treasury stock (144,000) (54,747)
Other (14) (111)
Net cash provided by (used in)
financing activities 57,805 (41,025)
Effect of exchange rate changes on cash
and cash equivalents (18,469) (5,107)
Net change in cash and cash equivalents (188,938) (129,388)
Cash and cash equivalents, beginning of
the year 985,762 1,022,441
Cash and cash equivalents, end of the
period $796,824 $893,053
======== ========
(1) Synopsys' first quarter and fiscal year 2015 and 2014 ended on January 31, 2015 and February 1,
2014, respectively. For presentation purposes, we refer to periods ended January 31.
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
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SOURCE Synopsys, Inc.
