English
Synopsys Posts Financial Results for Third Quarter Fiscal Year 2009
MOUNTAIN VIEW, Calif. -- Aug. 19, 2009 -- Synopsys, Inc. (NASDAQ: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its third quarter ended July 31, 2009.
For the third quarter of fiscal 2009, Synopsys reported revenue of $345.2 million compared to $344.1 million for the third quarter of fiscal 2008.
"Synopsys again made excellent progress towards delivering on our year's objectives," said Aart de Geus, chairman and CEO of Synopsys. "We are actively working with customers to help them successfully navigate the economic recovery, and are positioning ourselves for even greater strength in the future."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal 2009 was $47.4 million, or $0.32 per share, compared to $57.7 million, or $0.39 per share, for the third quarter of fiscal 2008, which included a $17.3 million tax benefit associated with the settlement of an IRS tax issue for fiscal years 2000 and 2001.
Non-GAAP Results
On a non-GAAP basis, net income for the third quarter of fiscal 2009 was $68.3 million, or $0.47 per share, compared to non-GAAP net income of $64.5 million, or $0.44 per share, for the third 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 fourth quarter and full fiscal year 2009. 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 2009 Targets:
- Revenue: $335 million - $343 million
- GAAP expenses: $297 million - $313 million
- Non-GAAP expenses: $272 million - $282 million
- Other income and expense: $0 - $3 million
- Tax rate applied in non-GAAP net income calculations: approximately 26 percent
- Fully diluted outstanding shares: 146 million - 149 million
- GAAP earnings per share: $0.14 - $0.21
- Non-GAAP earnings per share: $0.29 - $0.33
- Revenue from backlog: greater than 90 percent
Full-Year Fiscal Year 2009 Targets:
- Revenue: approximately $1.357 billion - $1.365 billion
- Other income and expense: $11 million - $14 million
- Tax rate applied in non-GAAP net income calculations: approximately 27 percent
- Fully diluted outstanding shares: 144 million - 146.5 million
- GAAP earnings per share: $1.16 - $1.23
- Non-GAAP earnings per share: $1.71 - $1.75
- Cash flow from operations: $190 million - $210 million (excludes potential impact of a tentative settlement with the Internal Revenue Service, described below)
In the second quarter, the Company reached a tentative settlement with the IRS that would resolve a dispute regarding its 2002-2004 returns, primarily associated with the acquisition of Avant!. The tentative settlement is subject to further approval by the government. If approved, we expect it to result in a cash payment to the IRS of approximately $50 million, most likely within the next 12 months. If the tentative settlement is approved, this payment would be fully offset by tax reductions in future years.
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) share-based compensation; (ii) the amortization of acquired intangible assets and in-process research and development charges; (iii) other significant items, including the effect of a tax benefit from a settlement with the Internal Revenue Service, and (iv) the income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes; 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 such 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 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 Third Quarter Results
(Unaudited and in thousands, except per share amounts)
Three Months Ended Nine Months Ended
July 31, July 31,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
GAAP net income $47,436 $57,749 $148,153 $143,581
Adjustments:
Amortization of intangible
assets 11,408 10,810 33,836 34,841
Share-based compensation 13,995 17,321 42,799 50,806
In-process research and
development 400 4,800 1,000 4,800
Tax benefit from IRS
settlement - (17,253) - (17,253)
Tax effect (4,941) (8,923) (19,991) (26,595)
------ ------ ------- -------
Non-GAAP net income $68,298 $64,504 $205,797 $190,180
======= ======= ======== ========
Three Months Ended Nine Months Ended
July 31, July 31,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
GAAP earnings per share $0.32 $0.39 $1.02 $0.97
Adjustments:
Amortization of intangible
assets 0.08 0.07 0.23 0.24
Share-based compensation 0.10 0.12 0.30 0.34
In-process research and
development 0.00 0.03 0.01 0.03
Tax benefit from IRS
settlement - (0.12) - (0.12)
Tax effect (0.03) (0.05) (0.14) (0.17)
----- ----- ----- -----
Non-GAAP earnings per share $0.47 $0.44 $1.42 $1.29
===== ===== ===== =====
Shares used in calculation 146,063 147,486 144,699 147,760
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 Fourth Quarter Fiscal Year 2009 Targets
(in thousands, except per share amounts)
Range for Three Months
Ending October 31, 2009
-----------------------
Low High
--- ----
Target GAAP expenses $297,000 $313,000
Adjustment:
Estimated impact of amortization of intangible
assets (11,000) (13,000)
Estimated impact of share-based compensation (14,000) (18,000)
------- -------
Target non-GAAP expenses $272,000 $282,000
======== ========
Range for Three Months
Ending October 31, 2009
-----------------------
Low High
--- ----
Target GAAP earnings per share $0.14 $0.21
Adjustment:
Estimated impact of amortization of intangible
assets 0.09 0.07
Estimated impact of share-based compensation 0.12 0.09
Net non-GAAP tax effect (0.06) (0.04)
----- -----
Target non-GAAP earnings per share $0.29 $0.33
===== =====
Shares used in non-GAAP calculation (midpoint of
target range) 147,500 147,500
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 $1.16 $1.23
Adjustment:
Estimated impact of amortization of intangible
assets 0.33 0.32
Estimated impact of share-based compensation 0.43 0.40
In-process research and development 0.01 0.01
Net non-GAAP tax effect (0.22) (0.21)
----- -----
Target non-GAAP earnings per share $1.71 $1.75
===== =====
Shares used in non-GAAP calculation (midpoint of
target range) 145,250 145,250
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 109824, 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 fourth quarter and fiscal 2009 in December 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 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 fourth quarter and fiscal 2009 earnings call in December 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 fourth 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 third quarter in its Quarterly Report on Form 10-Q to be filed by September 10, 2009.
Financial Tables
To read read financial tables, click here
About Synopsys
Synopsys, Inc. (NASDAQ: SNPS) is a world leader in electronic design automation (EDA), supplying the global electronics market with the software, intellectual property (IP) and services used in semiconductor design, verification 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 65 offices located throughout North America, Europe, Japan, Asia and India. Visit Synopsys online at http://www.synopsys.com/.
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