Synopsys Posts Financial Results for Fourth Quarter and Fiscal Year 2009

MOUNTAIN VIEW, Calif. -- Dec. 2, 2009 -- Synopsys, Inc. (NASDAQ: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its fourth quarter and fiscal year ended October 31, 2009.

For the fourth quarter of fiscal 2009, Synopsys reported revenue of $338.3 million compared to $352.8 million for the fourth quarter of fiscal 2008. Revenue for fiscal year 2009 was $1.36 billion, an increase of two percent from $1.34 billion in fiscal 2008.

"Synopsys met or exceeded almost every goal we set at the beginning of the year, a notable accomplishment given the turbulence that characterized the economic environment," said Aart de Geus, chairman and CEO of Synopsys. "Looking forward into 2010, we intend to continue to control expenses, invest to accelerate our strong technology momentum, and focus on growing our customer relationships."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter of fiscal 2009 was $19.5 million, or $0.13 per share, compared to $46.4 million, or $0.32 per share, for the fourth quarter of fiscal 2008. GAAP net income for fiscal year 2009 was $167.7 million, or $1.15 per share, compared to $190.0 million, or $1.29 per share, for 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 fourth quarter of fiscal 2009 was $49.5 million, or $0.33 per share, compared to non-GAAP net income of $62.7 million, or $0.43 per share, for the fourth quarter of fiscal 2008. Non-GAAP net income for fiscal year 2009 was $255.3 million, or $1.75 per share, compared to non-GAAP net income of $252.9 million, or $1.71 per share, for 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 first quarter and full fiscal year 2010. 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.

Note: in the second quarter of 2009, Synopsys reached a tentative settlement with the IRS that would resolve a dispute regarding its 2002-2004 returns, primarily associated with Synopsys' acquisition of Avant!. If approved, it is expected to result in a decrease in forecasted GAAP income tax expense in fiscal 2010 (for additional detail, refer to the Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2009). The targets below exclude this potential impact.

First Quarter of Fiscal Year 2010 Targets:

• Revenue: $325 million - $333 million
• GAAP expenses: $269 million - $286 million
• Non-GAAP expenses: $245 million - $255 million
• Other income and expense: $0 - $3 million
• Tax rate applied in non-GAAP net income calculations: approximately 27 percent
• Fully diluted outstanding shares: 148 million - 153 million
• GAAP earnings per share: $0.23 - $0.28
• Non-GAAP earnings per share: $0.38 - $0.40
• Revenue from backlog: greater than 90 percent

Full-Year Fiscal Year 2010 Targets:

• Revenue: approximately $1.33 billion - $1.35 billion
• Other income and expense: $4 million - $8 million
• Tax rate applied in non-GAAP net income calculations: approximately 27 percent
• Fully diluted outstanding shares: 150 million - 155 million
• GAAP earnings per share: $1.01 - $1.20
• Non-GAAP earnings per share: $1.52 - $1.62
• Cash flow from operations: $200 million - $220 million

Reconciliation of Fourth Quarter and Full 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 Fourth Quarter and Fiscal
                              Year 2009 Results
           (unaudited and in thousands, except per share amounts)
 
                                 Three Months Ended  Twelve Months Ended
                                     October 31,         October 31,
                                   2009      2008      2009      2008
GAAP net income                  $19,528   $46,397  $167,681  $189,978
Adjustments:
  Amortization of intangible
   assets                         11,638     9,250    45,474    44,091
  Stock compensation              14,137    14,666    56,936    65,472
  In-process research and
   development                     1,200         -     2,200     4,800
  Facility restructuring charge    4,538         -     4,538         -
  Tax benefit from IRS settlement      -         -         -   (17,253)
  Tax effect                      (1,543)   (7,635)  (21,534)  (34,230)
Non-GAAP net income              $49,498   $62,678  $255,295  $252,858
 
 
 
                                  Three Months Ended   Twelve Months Ended
                                      October 31,         October 31,
                                    2009      2008      2009      2008
GAAP net income per share          $0.13     $0.32     $1.15     $1.29
Adjustments:
  Amortization of intangible
   assets                           0.08      0.06      0.31      0.30
  Stock compensation                0.09      0.10      0.39      0.44
  In-process research and
   development                      0.01         -      0.02      0.03
  Facility restructuring charge     0.03         -      0.03         -
  Tax benefit from IRS settlement      -         -         -     (0.12)
  Tax effect                       (0.01)    (0.05)    (0.15)    (0.23)
Non-GAAP net income per share      $0.33     $0.43     $1.75     $1.71
 
Shares used in calculation       149,332   145,638   145,857   147,672
 
 

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 First Quarter Fiscal Year 2010 Targets
                  (in thousands, except per share amounts)
 
                                             Range for Three Months
                                             Ending January 31, 2010
                                              Low              High
Target GAAP expenses                       $269,000          $286,000
Adjustment:
  Estimated impact of amortization of
   intangible assets                        (10,000)          (13,000)
  Estimated impact of stock compensation    (14,000)          (18,000)
Target non-GAAP expenses                   $245,000          $255,000
 
 
                                              Range for Three Months
                                              Ending January 31, 2010
                                               Low               High
Target GAAP earnings per share                $0.23             $0.28
Adjustment:
  Estimated impact of amortization of
   intangible assets                           0.09              0.07
  Estimated impact of stock compensation       0.12              0.09
  Net non-GAAP tax effect                     (0.06)            (0.04)
Target non-GAAP earnings per share            $0.38             $0.40
 
Shares used in non-GAAP calculation
 (midpoint of target range)                 150,500           150,500
 
 
 
        GAAP to Non-GAAP Reconciliation of Fiscal Year 2010 Targets
 
                                               Range for Fiscal Year
                                              Ending October 31, 2010
                                               Low               High
Target GAAP earnings per share                $1.01             $1.20
Adjustment:
  Estimated impact of amortization of
   intangible assets                           0.33              0.26
  Estimated impact of stock compensation       0.39              0.34
  Net non-GAAP tax effect                     (0.21)            (0.18)
Target non-GAAP earnings per share            $1.52             $1.62
 
Shares used in non-GAAP calculation
 (midpoint of target range)                 152,500           152,500

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 122503, 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 first quarter fiscal 2010 in February 2010. 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 first quarter fiscal 2010 earnings call in February 2010, 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 2010 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 fourth quarter and full fiscal year in its Annual Report on Form 10-K to be filed by December 30, 2009.

Financial Tables

To read financial table, 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/.