Synopsys Posts Financial Results for First Quarter Fiscal Year 2009

MOUNTAIN VIEW, Calif. -- Feb. 18, 2009 -- Synopsys, Inc. , a world leader in software and IP for semiconductor design and manufacturing, today reported results for its first quarter ended January 31, 2009.

For the first quarter of fiscal 2009, Synopsys reported revenue of $339.8 million, a 7.7 percent increase compared to $315.5 million for the first quarter of fiscal 2008.

"Synopsys' first quarter was characterized by solid financial performance, continued technology momentum and visible customer success," said Aart de Geus, chairman and CEO of Synopsys. "While the recession has clearly deepened and we have seen signs of customer stress, we believe that Synopsys is well positioned to help our customers weather the storm, and to emerge an even stronger company as a result."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the first quarter of fiscal 2009 was $52.4 million, or $0.37 per share, compared to $46.4 million, or $0.31 per share, for the first quarter of fiscal 2008.

Non-GAAP Results

On a non-GAAP basis, net income for the first quarter of fiscal 2009 was $71.6 million, or $0.50 per share, compared to non-GAAP net income of $66.0 million, or $0.44 per share, for the first quarter of fiscal 2008.

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 2009. These targets constitute forward-looking information and are based on current expectations.

Second Quarter of Fiscal Year 2009 Targets:

Revenue: $332 million - $340 million
GAAP expenses: $280.5 million - $296 million
Non-GAAP expenses: $257 million - $267 million
Other income and expense: $0 - $3 million
Tax rate applied in non-GAAP net income calculations: approximately 27 percent
Fully diluted outstanding shares: 142 million - 147 million
GAAP earnings per share: $0.25 - $0.30
Non-GAAP earnings per share: $0.39 - $0.41
Revenue from backlog: greater than 90 percent

Full-Year Fiscal Year 2009 Targets:

Revenue: approximately $1.37 billion - $1.40 billion
Other income and expense: $6 million - $10 million
Tax rate applied in non-GAAP net income calculations: approximately 27 percent
Fully diluted outstanding shares: 144 million - 149 million
GAAP earnings per share: $1.11 - $1.27
Non-GAAP earnings per share: $1.60 - $1.72
Cash flow from operations: $200 million - $220 million

Reconciliation of First Quarter Fiscal Year 2009 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 Results (Unaudited and in thousands, except per share amounts)

	Three Months Ended January 31,
	2009	2008
GAAP net income	$52,429	$46,445
Adjustments:
Amortization of intangible assets	11,808	11,624
Share-based compensation	14,143	15,644
In-process research and development	600	-
Tax effect	(7,384)	(7,697)
Non-GAAP net income	$71,596	$66,016

	Three Months Ended January 31,
	2009	2008
GAAP earnings per share	$0.37	$0.31
Adjustments:
Amortization of intangible assets	0.08	0.08
Share-based compensation	0.09	0.10
In-process research and development	0.01	-
Tax effect	(0.05)	(0.05)
Non-GAAP earnings per share	$0.50	$0.44
Shares used in calculation	142,612	150,683

Reconciliation of Target 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 2009 Targets (in thousands, except per share amounts)

	Range for Three Months Ending April 30, 2009
	Low	High
Target GAAP expenses	$280,500	$296,000
Adjustment:
Estimated impact of amortization of intangible assets	(10,500)	(14,000)
Estimated impact of share-based compensation	(13,000)	(15,000)
Target non-GAAP expenses	$257,000	$267,000

	Range for Three Months Ending April 30, 2009
	Low	High
Target GAAP earnings per share	$0.25	$0.30
Adjustment:
Estimated impact of amortization of intangible assets	0.10	0.07
Estimated impact of share-based compensation	0.10	0.09
Net non-GAAP tax effect	(0.06)	(0.05)
Target non-GAAP earnings per share	$0.39	$0.41
Shares used in non-GAAP calculation (midpoint of target range)	144,500	144,500

GAAP to Non-GAAP Reconciliation of Fiscal Year 2009 Targets

	Range for Fiscal Year Ending October 31, 2009
	Low	High
Target GAAP earnings per share	$1.11	$1.27
Adjustment:
Estimated impact of amortization of intangible assets	0.33	0.29
Estimated impact of share-based compensation	0.38	0.37
Net non-GAAP tax effect	(0.22)	(0.21)
Target non-GAAP earnings per share	$1.60	$1.72
Shares used in non-GAAP calculation (midpoint of target range)	146,500	146,500

Financial Tables

Click here to read financial tables

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 http://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 985197, beginning at 5:30 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 second quarter fiscal 2009 in May 2009. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and 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 http://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 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 second quarter earnings call in May 2009, 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 2009 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 in its Quarterly Report on Form 10-Q to be filed by March 12, 2009.

About Synopsys

Synopsys, Inc. is the world leader in electronic design automation (EDA), supplying the global electronics market with the software, intellectual property (IP) and services used in semiconductor design and manufacturing. Synopsys' comprehensive, integrated portfolio of implementation, verification, IP, manufacturing and field-programmable gate array (FPGA) solutions helps address the key challenges designers and manufacturers face today, such as power and yield management, software-to- silicon verification and time-to-results. These technology-leading solutions help give Synopsys customers a competitive edge in bringing the best products to market quickly while reducing costs and schedule risk. Synopsys is headquartered in Mountain View, California, and has more than 60 offices located throughout North America, Europe, Japan, Asia and India. Visit Synopsys online at http://www.synopsys.com/.