SYNOPSYS INC. MOUNTAIN VIEW, Calif., Aug. 19, 2015 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its third quarter of fiscal year 2015.
For the third quarter of fiscal year 2015, Synopsys reported revenue of $555.8 million, compared to $521.8 million for the third quarter of fiscal 2014, an increase of 6.5 percent.
"Synopsys delivered strong third quarter results, and expects to exit the year with approximately 10% non-GAAP earnings per share growth," said Aart de Geus, chairman and co-CEO of Synopsys. "Our new products are driving excellent customer design success and adoption momentum. In addition, we closed several acquisitions, further strengthening our IP portfolio and expanding our presence in the higher-growth software quality and security market."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal 2015 was $55.4 million, or $0.35 per share, compared to $65.7 million, or $0.42 per share, for the third quarter of fiscal 2014.
Non-GAAP Results
On a non-GAAP basis, net income for the third quarter of fiscal 2015 was $99.7 million, or $0.63 per share, compared to non-GAAP net income of $103.2 million, or $0.65 per share, for the third quarter of fiscal 2014. Reconciliation between GAAP and non-GAAP results is provided below.
Financial Targets
Synopsys also provided its financial targets for the fourth 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 the remainder of 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.
Fourth Quarter of Fiscal Year 2015 Targets:
-- Revenue: $570 million - $585 million
-- GAAP expenses: $503 million - $521 million
-- Non-GAAP expenses: $450 million - $460 million
-- Other income and expense: $0 - $2 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: $0.31 - $0.38
-- Non-GAAP earnings per share: $0.65 - $0.67
Full Fiscal Year 2015 Targets:
-- Revenue: $2.225 billion - $2.240 billion
-- Other income and expense: $10 million - $12 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: $1.43 - $1.50
-- Non-GAAP earnings per share: $2.76 - $2.78
-- 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 Third 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 Third Quarter Fiscal Year 2015 Results
(unaudited and in thousands, except per share amounts)
Three Months Ended Nine Months Ended
July 31, July 31,
2015 2014 2015 2014
---- ---- ---- ----
GAAP net income $55,387 $65,656 $176,172 $196,669
Adjustments:
Amortization of intangible
assets 32,892 32,809 97,248 92,990
Stock compensation 23,905 21,399 64,769 58,340
Acquisition-related costs 4,431 36 8,615 5,484
Restructuring charges (248) - 15,088 -
Legal and tax matters (10,270) (2,981) (11,789) (15,288)
Tax adjustments (6,419) (13,768) (17,195) (40,262)
------ ------- ------- -------
Non-GAAP net income $99,678 $103,151 $332,908 $297,933
======= ======== ======== ========
Three Months Ended Nine Months Ended
July 31, July 31,
2015 2014 2015 2014
---- ---- ---- ----
GAAP net income per share $0.35 $0.42 $1.12 $1.25
Adjustments:
Amortization of intangible
assets 0.21 0.21 0.62 0.59
Stock compensation 0.14 0.14 0.40 0.37
Acquisition-related costs 0.03 0.00 0.05 0.04
Restructuring charges - - 0.10 -
Legal and tax matters (0.06) (0.03) (0.07) (0.10)
Tax adjustments (0.04) (0.09) (0.11) (0.26)
Non-GAAP net income per
share $0.63 $0.65 $2.11 $1.89
===== ===== ===== =====
Shares used in calculation 158,584 157,622 157,850 157,253
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 2015 Targets
(in thousands, except per share amounts)
Range for Three Months
Ending October 31, 2015
(1)
Low High
--- ----
Target GAAP expenses $503,000 $521,000
Adjustments:
Estimated impact of
amortization of
intangible assets (33,000) (36,000)
Estimated impact of stock
compensation (20,000) (25,000)
Target non-GAAP expenses $450,000 $460,000
======== ========
Range for Three Months
Ending October 31, 2015
(1)
Low High
--- ----
Target GAAP earnings per
share $0.31 $0.38
Adjustments:
Estimated impact of
amortization of
intangible assets 0.23 0.21
Estimated impact of stock
compensation 0.16 0.13
Estimated impact of tax
adjustments (0.05) (0.05)
Target non-GAAP earnings
per share $0.65 $0.67
===== =====
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 $1.43 $1.50
Adjustments:
Estimated impact of
amortization of
intangible assets 0.85 0.83
Estimated impact of stock
compensation 0.57 0.54
Acquisition-related costs 0.05 0.05
Restructuring charges 0.10 0.10
Legal and tax matters (0.07) (0.07)
Estimated net non-GAAP
tax adjustments (0.17) (0.17)
Target non-GAAP earnings
per share $2.76 $2.78
===== =====
Shares used in non-GAAP
calculation (midpoint of
target range) 157,000 157,000
(1) Synopsys' fourth
quarter and fiscal year
end on October 31, 2015.
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 366153, 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 2015 in December 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 fourth quarter and fiscal year 2015 earnings call in December 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 fourth 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 third quarter fiscal 2015 in its quarterly report on Form 10-Q to be filed by Sept. 10, 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 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, 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 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;
-- 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 Oct. 31, 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 latest Quarterly Report on Form 10-Q. Furthermore, Synopsys' actual tax rates applied to income for the fourth 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, tax law changes, and actions by government authorities. Finally, Synopsys' targets for outstanding shares in the fourth 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 Nine Months Ended
July 31, July 31,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Revenue:
Time-based license $445,807 $431,184 $1,324,677 $1,255,515
Upfront license 48,878 31,594 139,671 101,863
Maintenance and
service 61,120 59,034 190,704 161,082
------ ------ ------- -------
Total revenue 555,805 521,812 1,655,052 1,518,460
Cost of revenue:
License 77,516 68,573 218,650 198,700
Maintenance and
service 25,251 20,685 82,244 62,065
Amortization of
intangible assets 26,704 26,272 78,182 74,699
Total cost of
revenue 129,471 115,530 379,076 335,464
Gross margin 426,334 406,282 1,275,976 1,182,996
Operating expenses:
Research and
development 197,999 182,809 567,924 528,395
Sales and marketing 116,988 112,271 343,736 332,847
General and
administrative 43,925 37,438 121,254 112,246
Amortization of
intangible assets 6,188 6,537 19,066 18,291
Restructuring
charges (248) - 15,088 -
Total operating
expenses 364,852 339,055 1,067,068 991,779
Operating income 61,482 67,227 208,908 191,217
Other income
(expense), net 3,711 3,544 16,784 18,797
----- ----- ------ ------
Income before
income taxes 65,193 70,771 225,692 210,014
Provision (benefit)
for income taxes 9,806 5,115 49,520 13,345
Net income $55,387 $65,656 $176,172 $196,669
======= ======= ======== ========
Net income per share:
Basic $0.36 $0.42 $1.14 $1.27
Diluted $0.35 $0.42 $1.12 $1.25
Shares used in computing per share amounts:
Basic 155,533 155,194 154,835 154,611
======= ======= ======= =======
Diluted 158,584 157,622 157,850 157,253
======= ======= ======= =======
(1) Synopsys' third quarter for
fiscal year 2015 and 2014 ended
on August 1, 2015 and August 2,
2014, respectively. For
presentation purposes, we refer
to closest calendar month end.
SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
July 31, 2015 October 31, 2014
------------- ----------------
ASSETS:
Current assets:
Cash and cash equivalents $986,423 $985,762
Short-term investments 136,496 -
------- ---
Total cash, cash equivalents
and short-term investments 1,122,919 985,762
Accounts receivable, net 307,825 326,727
Deferred income taxes 75,939 111,449
Income taxes receivable and
prepaid taxes 36,344 26,496
Prepaid and other current
assets 84,510 54,301
------ ------
Total current assets 1,627,537 1,504,735
Property and equipment, net 260,667 249,098
Goodwill 2,335,816 2,255,708
Intangible assets, net 318,499 365,030
Long-term prepaid taxes 13,800 17,645
Long-term deferred income
taxes 211,733 208,156
Other long-term assets 185,920 175,127
Total assets $4,953,972 $4,775,499
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued
liabilities $330,825 $397,113
Accrued income taxes 25,750 31,404
Deferred revenue 912,768 928,242
Short-term debt 190,000 30,000
------- ------
Total current liabilities 1,459,343 1,386,759
Long-term accrued income
taxes 39,207 50,952
Long-term deferred revenue 90,569 77,646
Long-term debt 22,500 45,000
Other long-term liabilities 204,105 158,972
------- -------
Total liabilities 1,815,724 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; 155,929 and 155,965
shares outstanding, respectively
1,559 1,560
Capital in excess of par
value 1,604,994 1,614,603
Retained earnings 1,688,764 1,551,592
Treasury stock, at cost:
1,336 and 1,299 shares,
respectively (61,204) (49,496)
Accumulated other
comprehensive income (loss) (95,865) (62,089)
------- -------
Total stockholders' equity 3,138,248 3,056,170
Total liabilities and
stockholders' equity $4,953,972 $4,775,499
========== ==========
(1) Synopsys' third quarter for
fiscal year 2015 ended on August
1, 2015. 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)
Nine Months Ended July 31,
--------------------------
2015 2014
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $176,172 $196,669
Adjustments to reconcile net income to net cash provided by
operating
activities:
Amortization and depreciation 154,535 140,750
Stock compensation 63,463 58,341
Allowance for doubtful accounts 1,100 (750)
(Gain) loss on sale of investments (22) (6,538)
Deferred income taxes 24,134 7,459
Net changes in operating assets and liabilities, net of
acquired assets and liabilities:
Accounts receivable 16,976 24,834
Prepaid and other current assets (35,836) 982
Other long-term assets (16,141) (18,847)
Accounts payable and accrued
liabilities (25,512) (28,270)
Income taxes (20,633) (18,950)
Deferred revenue 4,507 22,361
----- ------
Net cash provided by operating
activities 342,743 378,041
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
short-term investments 48,155 -
Purchases of short-term investments (185,402) -
Proceeds from sales of long-term
investments - 7,313
Purchases of property and equipment (67,708) (58,085)
Cash paid for acquisitions and
intangible assets, net of cash
acquired (126,883) (373,513)
Capitalization of software development
costs (2,798) (2,812)
Other 900 (3,000)
Net cash used in investing activities (333,736) (430,097)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility 410,000 200,000
Repayment of debt (272,924) (223,239)
Issuances of common stock 56,414 45,336
Purchases of treasury stock (180,000) (79,747)
Other (116) (5,008)
Net cash provided by (used in)
financing activities 13,374 (62,658)
Effect of exchange rate changes on cash
and cash equivalents (21,720) (4,681)
Net change in cash and cash equivalents 661 (119,395)
Cash and cash equivalents, beginning of
the year 985,762 1,022,441
Cash and cash equivalents, end of the
period $986,423 $903,046
======== ========
(1) Synopsys' third quarter for
fiscal year 2015 and 2014 ended
on August 1, 2015 and August 2,
2014, respectively. For
presentation purposes, we refer
to closest calendar month end.
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.
