SYNOPSYS INC. MOUNTAIN VIEW, Calif., Dec. 2, 2015 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its fourth quarter and fiscal year 2015.
For the fourth quarter of fiscal 2015, Synopsys reported revenue of $587.2 million, compared to $539.0 million for the fourth quarter of fiscal 2014. Revenue for fiscal year 2015 was $2.242 billion, an increase of 9.0 percent from $2.057 billion in fiscal 2014.
"Synopsys reported an excellent fourth quarter and fiscal 2015 against a somewhat challenging semiconductor industry backdrop, providing a solid foundation as we enter 2016," said Aart de Geus, chairman and co-CEO of Synopsys. "Our game-changing design and verification products have made great strides and are yielding excellent results. Meanwhile, we continue to invest and grow in our new TAM of software quality and security, both organically and with several important acquisitions during the year."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter of fiscal 2015 was $49.8 million, or $0.31 per share, compared to $62.5 million, or $0.39 per share, for the fourth quarter of fiscal 2014. GAAP net income for fiscal year 2015 was $225.9 million, or $1.43 per share, compared to $259.1 million, or $1.64 per share, for fiscal 2014.
Non-GAAP Results
On a non-GAAP basis, net income for the fourth quarter of fiscal 2015 was $105.5 million, or $0.67 per share, compared to non-GAAP net income of $100.9 million, or $0.64 per share, for the fourth quarter of fiscal 2014. Non-GAAP net income for fiscal 2015 was $438.4 million, or $2.77 per share, compared to non-GAAP net income of $398.9 million, or $2.53 per share, for fiscal 2014. Reconciliation between GAAP and non-GAAP results is provided below.
Financial Targets
Synopsys also provided its financial targets for the first quarter and full fiscal year 2016. These targets do not include any impact of future acquisition-related activities or costs that may be incurred in fiscal year 2016. Beginning in fiscal year 2016, Synopsys will utilize a normalized annual non-GAAP tax rate in calculating non-GAAP financial measures in order to provide better consistency across interim reporting periods by eliminating the effects of non-recurring and period-specific items.
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.
First Quarter of Fiscal Year 2016 Targets:
-- Revenue: $560 million - $575 million
-- GAAP expenses: $505 million - $524 million
-- Non-GAAP expenses: $445 million - $455 million
-- Other income and expense: $0 - $2 million
-- Normalized annual tax rate applied in non-GAAP net income calculations:
19 percent
-- Fully diluted outstanding shares: 155 million - 158 million
-- GAAP earnings per share: $0.25 - $0.33
-- Non-GAAP earnings per share: $0.60 - $0.63
Full Fiscal Year 2016 Targets:
-- Revenue: $2.350 billion - $2.390 billion
-- Other income and expense: $0 - $4 million
-- Normalized annual tax rate applied in non-GAAP net income calculations:
19 percent
-- Fully diluted outstanding shares: 155 million - 158 million
-- GAAP earnings per share: $1.55 - $1.71
-- Non-GAAP earnings per share: $2.93 - $3.00
-- Cash flow from operations: at least $500 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. Beginning in fiscal 2016, Synopsys will utilize a normalized annual non-GAAP tax rate in the calculation of its non-GAAP measures that is based on our projected annual tax rate through fiscal 2018. In projecting this rate, we evaluated our historical and projected mix of U.S. and international profit before tax, excluding the impact of stock-based compensation, the amortization of purchased intangibles and other non-GAAP adjustments described above. We also took into account other factors including our current tax structure, our existing tax positions, and expected recurring tax incentives, such as the U.S. federal research and development tax credit. We intend to re-evaluate this rate on an annual basis for any significant events that may materially affect our projections, such as significant changes in our geographic earnings mix or significant tax law changes in major jurisdictions where we operate. 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 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 Fourth Quarter and Fiscal Year 2015 Results
(Unaudited and in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
October 31, October 31,
2015 2014 2015 2014
---- ---- ---- ----
GAAP net income $49,762 $62,455 $225,934 $259,124
Adjustments:
Amortization of
intangible assets 38,801 33,129 136,049 126,119
Stock compensation 22,936 21,100 86,400 79,440
Acquisition-related
costs 7,074 379 16,994 5,864
Restructuring charges - - 15,088 -
Legal and tax matters 5,103 (1,482) (6,686) (16,770)
Tax adjustments (18,155) (14,634) (35,350) (54,897)
------- ------- ------- -------
Non-GAAP net income $105,521 $100,947 $438,429 $398,880
======== ======== ======== ========
Three Months Ended Twelve Months Ended
October 31, October 31,
2015 2014 2015 2014
---- ---- ---- ----
GAAP net income per
share $0.31 $0.39 $1.43 $1.64
Adjustments:
Amortization of
intangible assets 0.25 0.21 0.86 0.80
Stock compensation 0.15 0.14 0.54 0.51
Acquisition-related
costs 0.04 0.00 0.10 0.04
Restructuring charges - - 0.10 -
Legal and tax matters 0.03 (0.01) (0.04) (0.11)
Tax adjustments (0.11) (0.09) (0.22) (0.35)
-----
Non-GAAP net income per
share $0.67 $0.64 $2.77 $2.53
===== ===== ===== =====
Shares used in
calculation 158,121 158,477 158,065 157,710
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 2016 Targets
(in thousands, except per share amounts)
Range for Three Months
Ending January 31, 2016
(1)
Low High
--- ----
Target GAAP expenses $505,000 $524,000
Adjustments:
Estimated impact of
amortization of
intangible assets (37,000) (41,000)
Estimated impact of
stock compensation (23,000) (28,000)
Target non-GAAP expenses $445,000 $455,000
======== ========
Range for Three Months
Ending January 31, 2016
(1)
Low High
--- ----
Target GAAP earnings per
share $0.25 $0.33
Adjustments:
Estimated impact of
amortization of
intangible assets 0.26 0.24
Estimated impact of
stock compensation 0.18 0.15
Estimated impact of tax
adjustments (2) (0.09) (0.09)
Target non-GAAP
earnings per share $0.60 $0.63
===== =====
Shares used in non-GAAP
calculation (midpoint
of target range) 156,500 156,500
GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2016 Targets
Range for Fiscal Year
Ending October 31, 2016
(1)
------------------------
Low High
--- ----
Target GAAP earnings per
share $1.55 $1.71
Adjustments:
Estimated impact of
amortization of
intangible assets 0.84 0.79
Estimated impact of
stock compensation 0.68 0.64
Estimated impact of tax
adjustments (2) (0.14) (0.14)
Target non-GAAP
earnings per share $2.93 $3.00
===== =====
Shares used in non-GAAP
calculation (midpoint
of target range) 156,500 156,500
(1) Synopsys' first quarter and
fiscal year end on January 30,
2016 and October 29, 2016,
respectively. For presentation
purposes, we refer to the
closest calendar month end.
(2) Estimated impact of tax
adjustments reflects the
application of our normalized
annual non-GAAP tax rate to
non-GAAP pre-tax income.
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 372275, beginning at 4:00 p.m. Pacific Time today, until 11:59 p.m. Pacific Time on Dec. 9, 2015. 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 year 2016 in February 2016. 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 today's call. In addition, Synopsys makes additional information available in a financial supplement and corporate overview presentation 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 first quarter fiscal year 2016 earnings call in February 2016, 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 year 2016 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 fiscal year 2015 in its annual report on Form 10-K to be filed by Dec. 31, 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 16th largest software company, Synopsys has a long history of being a global leader in electronic design automation (EDA) and semiconductor IP and is also growing its leadership in software quality and security 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, projected business results, business objectives, acquisitions, products, technologies, business model, new markets, customer demand for our technology, and our planned stock repurchase activity. 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:
-- uncertainty in the growth of the semiconductor and electronics industry,
and consolidation among our customers;
-- continued uncertainty in the global economy and its potential impact on
the semiconductor and electronics industries;
-- 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;
-- the level of Synopsys' acquisition activity and our ability to realize
the potential financial or strategic benefits of acquisitions we
complete, including 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,
which could result in possible delays in customer orders, potential loss
of customers, key employees, partners or vendors, uncertain 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;
-- with respect to the recently announced unauthorized third-party access
of Synopsys' customer-facing license and product delivery system, higher
than expected costs associated with the incident or enhanced procedures
we may employ in the future, use or sale of the accessed products by
unauthorized third parties and the resulting impact on our business, the
reactions of customers, partners and various U.S. and foreign government
regulators, and additional findings we or law enforcement may make
including additional incidents that could be discovered;
-- 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 Jan. 31, 2016; actual expenses, earnings per share, tax rate, and other projections on a GAAP and non-GAAP basis for fiscal year 2016; and cash flow from operations on a GAAP basis for fiscal year 2016 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 tax rate for such periods, which could differ from projections as a result of a number of factors, including the actual geographic mix of revenue during the quarter and year, tax law changes, actions by government authorities such as a failure to reinstate the U.S. federal research and development tax credit, or judgment by management, based upon the status of pending audits and settlements, to increase or decrease an income tax asset or liability, (iii) significant changes in Synopsys' geographic mix of revenue or in the tax laws of the major jurisdictions in which Synopsys operates, which could lead Synopsys to re-evaluate its normalized annual non-GAAP tax rate and adjust it from the rate given in this press release, (iv) fluctuations in foreign currency exchange rates, (v) a determination by Synopsys that any portion of its goodwill or intangible assets has become impaired, (vi) changes in the anticipated amount of employee stock-based compensation expense recognized in Synopsys' financial statements, (vii) actual change in the fair value of Synopsys' non-qualified deferred compensation plan obligations, (viii) increases or decreases to estimated capital expenditures, (ix) changes driven by new accounting rules, regulations, interpretations or guidance, (x) litigation, (xi) general economic conditions, and (xii) 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. Furthermore, Synopsys' targets for outstanding shares in the first quarter and fiscal year 2016 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 Twelve Months Ended
October 31, October 31,
----------- -----------
2015 2014 2015 2014
---- ---- ---- ----
Revenue:
Time-based
license $467,535 $443,620 $1,792,212 $1,699,135
Upfront license 57,654 33,894 197,325 135,757
Maintenance and
service 61,970 61,498 252,674 222,580
------ ------ ------- -------
Total revenue 587,159 539,012 2,242,211 2,057,472
Cost of revenue:
License 84,983 69,648 303,633 268,348
Maintenance and
service 22,998 25,161 105,242 87,226
Amortization of
intangible
assets 31,863 26,612 110,045 101,311
Total cost of
revenue 139,844 121,421 518,920 456,885
Gross margin 447,315 417,591 1,723,291 1,600,587
Operating expenses:
Research and
development 208,305 190,373 776,229 718,768
Sales and
marketing 130,671 120,232 474,407 453,079
General and
administrative 43,843 42,969 165,097 155,215
Amortization of
intangible
assets 6,938 6,517 26,004 24,808
Restructuring
charges - - 15,088 -
Total operating
expenses 389,757 360,091 1,456,825 1,351,870
Operating income 57,558 57,500 266,466 248,717
Other income
(expense), net (1,640) 4,628 15,144 23,425
------ ----- ------ ------
Income before
income taxes 55,918 62,128 281,610 272,142
Provision
(benefit) for
income taxes 6,156 (327) 55,676 13,018
Net income $49,762 $62,455 $225,934 $259,124
======= ======= ======== ========
Net income per share:
Basic $0.32 $0.40 $1.46 $1.67
Diluted $0.31 $0.39 $1.43 $1.64
Shares used in computing per share amounts:
Basic 155,322 156,385 154,957 155,054
======= ======= ======= =======
Diluted 158,121 158,477 158,065 157,710
======= ======= ======= =======
(1) Synopsys' fourth quarter
of fiscal year 2015 and 2014
ended on October 31, 2015 and
November 1, 2014,
respectively. For
presentation purposes, we
refer to the closest calendar
month end.
SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
October 31, 2015 October 31, 2014
---------------- ----------------
ASSETS:
Current assets:
Cash and cash equivalents $836,188 $985,762
Short-term investments 128,747 -
------- ---
Total cash, cash
equivalents and short-
term investments 964,935 985,762
Accounts receivable, net 385,694 326,727
Deferred income taxes 94,994 111,449
Income taxes receivable
and prepaid taxes 46,732 26,496
Prepaid and other current
assets 71,446 54,301
------ ------
Total current assets 1,563,801 1,504,735
Property and equipment,
net 263,077 249,098
Goodwill 2,471,241 2,255,708
Intangible assets, net 363,659 365,030
Long-term prepaid taxes 18,736 17,645
Long-term deferred income
taxes 178,915 208,156
Other long-term assets 186,310 175,127
Total assets $5,045,739 $4,775,499
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and
accrued liabilities $385,542 $397,113
Accrued income taxes 19,565 31,404
Deferred revenue 968,246 928,242
Short-term debt 205,000 30,000
------- ------
Total current liabilities 1,578,353 1,386,759
Long-term accrued income
taxes 37,763 50,952
Long-term deferred revenue 93,613 77,646
Long-term debt - 45,000
Other long-term
liabilities 202,021 158,972
------- -------
Total liabilities 1,911,750 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; 155,157 and 155,965
shares outstanding, respectively
1,552 1,560
Capital in excess of par
value 1,610,460 1,614,603
Retained earnings 1,725,727 1,551,592
Treasury stock, at cost:
2,107 and 1,299 shares,
respectively (98,375) (49,496)
Accumulated other
comprehensive income
(loss) (105,375) (62,089)
-------- -------
Total stockholders' equity 3,133,989 3,056,170
Total liabilities and
stockholders' equity $5,045,739 $4,775,499
========== ==========
(1) Synopsys' fiscal year
2015 and 2014 ended on
October 31, 2015 and November
1, 2014, respectively. For
presentation purposes, we
refer to the closest calendar
month end.
SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows (1)
(in thousands)
Twelve Months Ended
October 31,
-----------
2015 2014
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $225,934 $259,124
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization and depreciation 211,821 192,826
Stock compensation 86,400 79,440
Allowance for doubtful accounts 1,300 (1,250)
(Gain) loss on sale of investments (109) (6,999)
Excess tax benefits on stock-based
awards (4,245) -
Deferred income taxes 15,197 (17,100)
Net changes in operating assets and liabilities, net of acquired
assets and liabilities:
Accounts receivable (56,533) (65,018)
Prepaid and other current assets (23,106) 1,836
Other long-term assets (16,259) (23,270)
Accounts payable and accrued
liabilities 27,568 40,645
Income taxes (22,947) (9,095)
Deferred revenue 50,139 99,814
------ ------
Net cash provided by operating
activities 495,160 550,953
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
short-term investments 109,173 -
Purchases of short-term investments (238,902) -
Proceeds from sales of long-term
investments - 7,774
Purchases of property and equipment (86,965) (103,275)
Cash paid for acquisitions and
intangible assets, net of cash
acquired (340,153) (394,623)
Capitalization of software development
costs (3,682) (3,638)
Other 900 (3,488)
Net cash used in investing activities (559,629) (497,250)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility 460,000 200,000
Repayment of debt (330,425) (230,968)
Issuances of common stock 84,904 82,083
Purchase of equity forward contract (20,000) -
Purchases of treasury stock (260,000) (119,747)
Excess tax benefits on stock-based
awards 4,245 -
Other (794) (5,057)
Net cash used in financing activities (62,070) (73,689)
Effect of exchange rate changes on
cash and cash equivalents (23,035) (16,693)
Net change in cash and cash
equivalents (149,574) (36,679)
Cash and cash equivalents, beginning
of the year 985,762 1,022,441
Cash and cash equivalents, end of the
period $836,188 $985,762
======== ========
(1) Synopsys' fourth quarter
of fiscal year 2015 and 2014
ended on October 31, 2015 and
November 1, 2014,
respectively. For
presentation purposes, we
refer to the closest calendar
month end.
INVESTOR CONTACT:
Lisa L. Ewbank
Synopsys, Inc.
650-584-1901
Synopsys-ir@synopsys.com
EDITORIAL CONTACT:
Sheryl Gulizia
Synopsys, Inc.
650-584-8635
sgulizia@synopsys.com
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SOURCE Synopsys, Inc.
