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 156545, 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 third quarter fiscal 2010 in August 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 third quarter fiscal 2010 earnings call in August 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 third 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 second quarter fiscal 2010 in its quarterly report on Form 10-Q to be filed by June 10, 2010.
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.
Forward-Looking Statements
The statements made in this press release regarding projected financial results in the sections entitled "Financial Targets," and "Reconciliation of Target Operating Results" and certain statements made in the earnings conference call are forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those described by these statements due to a number of uncertainties, including, but not limited to:
- continued uncertainty in the global economy in general, and weakness in the semiconductor and electronics industries;
- failure of customers to pay license fees as scheduled;
- lower-than-expected research and development spending by semiconductor and electronic systems companies;
- competition in the market for Synopsys' products and services;
- lower-than-anticipated new IC design starts;
- lower-than-anticipated purchases or delays in purchases of software or consulting services by Synopsys' customers, including delays in the renewal, or non-renewal, of Synopsys' license arrangements with major customers;
- changes in the mix of time-based licenses and upfront licenses;
- lower-than-expected orders; and
- difficulties in the integration of the products and operations of acquired companies or assets into Synopsys' products and operations.
In addition, Synopsys' actual expenses, earnings per share and tax rate on a GAAP and non-GAAP basis for the fiscal quarter ending July 31, 2010 and actual expenses, earnings per share, tax rate, cash flow from operations and other projections on a GAAP and non-GAAP basis for fiscal year 2010 could differ materially from the targets stated under "Financial Targets" above for a number of reasons, including, but not limited to, (i) a determination by Synopsys that any portion of its goodwill or intangible assets have become impaired, (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) integration and other acquisition-related costs including amortization of intangible assets and costs formerly capitalized but now expensed due to new accounting guidance related to business combinations, (iv) changes in the anticipated amount of employee stock compensation expense recognized on 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) general economic conditions, and (ix) other risks as detailed in our SEC filings, including those described in the "Risk Factors" section in our latest Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2010. Furthermore, Synopsys' actual tax rates applied to income for the third quarter and fiscal year 2010 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, and actions by the government. Finally, Synopsys' targets for outstanding shares in the third quarter and fiscal year 2010 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 or the financial supplement whether as a result of new information, future events or otherwise, unless otherwise required by law.
Synopsys is a registered trademark of Synopsys, Inc. Any other trademarks mentioned in this release are the property of their respective owners.
SYNOPSYS, INC. | ||||||||
Unaudited Consolidated Statements of Operations (1) | ||||||||
(in thousands, except per share amounts) | ||||||||
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| Three Months Ended April 30, |
| Six Months Ended April 30, | |||||
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| 2010 |
| 2009 (2) |
| 2010 |
| 2009 (2) | |
| Revenue: |
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| Time-based license | $ 288,672 |
| $ 287,315 |
| $ 561,147 |
| $ 574,991 | |
| Upfront license | 12,715 |
| 12,675 |
| 33,161 |
| 28,378 | |
| Maintenance and service | 36,719 |
| 36,845 |
| 73,965 |
| 73,221 | |
| Total revenue | 338,106 |
| 336,835 |
| 668,273 |
| 676,590 | |
| Cost of revenue: |
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| License | 44,930 |
| 42,292 |
| 86,144 |
| 84,115 | |
| Maintenance and service | 15,268 |
| 15,048 |
| 31,778 |
| 30,627 | |
| Amortization of intangible assets | 8,829 |
| 7,679 |
| 16,686 |
| 15,701 | |
| Total cost of revenue | 69,027 |
| 65,019 |
| 134,608 |
| 130,443 | |
| Gross margin | 269,079 |
| 271,816 |
| 533,665 |
| 546,147 | |
| Operating expenses: |
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| Research and development | 113,050 |
| 102,996 |
| 214,282 |
| 200,803 | |
| Sales and marketing | 79,363 |
| 82,520 |
| 158,979 |
| 159,904 | |
| General and administrative | 28,713 |
| 28,691 |
| 54,566 |
| 55,873 | |
| In-process research and development | - |
| - |
| - |
| 600 | |
| Amortization of intangible assets | 2,985 |
| 2,941 |
| 5,778 |
| 6,727 | |
| Total operating expenses | 224,111 |
| 217,148 |
| 433,605 |
| 423,907 | |
| Operating income | 44,968 |
| 54,668 |
| 100,060 |
| 122,240 | |
| Other income, net | 8,905 |
| 10,445 |
| 11,155 |
| 12,544 | |
| Income before income taxes | 53,873 |
| 65,113 |
| 111,215 |
| 134,784 | |
| Provision (benefit) for income taxes | 14,324 |
| 16,825 |
| (61,120) |
| 34,067 | |
| Net income | $ 39,549 |
| $ 48,288 |
| $ 172,335 |
| $ 100,717 | |
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| Net income per share: |
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| Basic | $ 0.27 |
| $ 0.34 |
| $ 1.17 |
| $ 0.71 | |
| Diluted | $ 0.26 |
| $ 0.33 |
| $ 1.14 |
| $ 0.70 | |
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| Shares used in computing per share amounts: |
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| Basic | 148,890 |
| 143,275 |
| 147,860 |
| 142,562 | |
| Diluted | 152,482 |
| 145,421 |
| 151,635 |
| 144,024 | |
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| (1) Synopsys' second quarter ended on the Saturday nearest April 30. For presentation purposes, the Unaudited Consolidated Statements of Operations refer to a calendar month end. | ||||||||
| (2) For the three and six months ended April 30, 2009, Synopsys reclassifed $3.3 million and $5.9 million from upfront license to time-based licensed revenue to conform to the current year presentation which had no impact on total revenue. | ||||||||
| SYNOPSYS, INC. | ||||
| Unaudited Consolidated Balance Sheets (1) | ||||
| (in thousands, except par value amounts) | ||||
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| April 30, 2010 |
| October 31, 2009 | |
| ASSETS: |
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| Current assets: |
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| Cash and cash equivalents | $ 669,431 |
| $ 701,613 | |
| Short-term investments | 409,023 |
| 466,713 | |
| Total cash, cash equivalents and short-term investments | 1,078,454 |
| 1,168,326 | |
| Accounts receivable, net | 149,654 |
| 127,010 | |
| Deferred income taxes | 70,229 |
| 73,453 | |
| Income taxes receivable | 36,294 |
| 51,191 | |
| Prepaid and other current assets | 45,263 |
| 43,820 | |
| Total current assets | 1,379,894 |
| 1,463,800 | |
| Property and equipment, net | 140,630 |
| 146,910 | |
| Goodwill | 998,910 |
| 932,691 | |
| Intangible assets, net | 119,806 |
| 96,810 | |
| Long-term deferred income taxes | 270,365 |
| 205,396 | |
| Other long-term assets | 95,731 |
| 93,247 | |
| Total assets | $ 3,005,336 |
| $ 2,938,854 | |
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| LIABILITIES AND STOCKHOLDERS' EQUITY: |
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| Current liabilities: |
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| Accounts payable and accrued liabilities | $ 186,802 |
| $ 255,095 | |
| Accrued income taxes | 28,024 |
| 5,508 | |
| Deferred revenue | 505,771 |
| 553,990 | |
| Total current liabilities | 720,597 |
| 814,593 | |
| Long-term accrued income taxes | 88,132 |
| 157,354 | |
| Other long-term liabilities | 100,220 |
| 88,002 | |
| Long-term deferred revenue | 38,226 |
| 34,739 | |
| Total liabilities | 947,175 |
| 1,094,688 | |
| Stockholders' equity: |
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| Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding | - |
| - | |
| Common stock, $0.01 par value: 400,000 shares authorized; 149,802 and |
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| 146,945 shares outstanding, respectively | 1,498 |
| 1,469 | |
| Capital in excess of par value | 1,512,888 |
| 1,500,166 | |
| Retained earnings | 725,102 |
| 574,980 | |
| Treasury stock, at cost: 7,463 and 10,326 shares, respectively | (165,266) |
| (228,618) | |
| Accumulated other comprehensive loss | (16,061) |
| (3,831) | |
| Total stockholders' equity | 2,058,161 |
| 1,844,166 | |
| Total liabilities and stockholders' equity | $ 3,005,336 |
| $ 2,938,854 | |
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| (1) Synopsys' second quarter ended on the Saturday nearest April 30. For presentation purposes, the Unaudited Consolidated Balance Sheets refer to a calendar month end. | ||||
| SYNOPSYS, INC. | ||||
| Unaudited Consolidated Statements of Cash Flows (1) | ||||
| (in thousands) | ||||
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| Six Months Ended April 30, | |||
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| 2010 |
| 2009 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: |
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| Net income | $172,335 |
| $100,717 | |
| Adjustments to reconcile net income to net cash provided by operating |
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| activities: |
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| Amortization and depreciation | 50,219 |
| 49,728 | |
| Stock compensation | 30,704 |
| 28,803 | |
| Allowance for doubtful accounts | (742) |
| 2,723 | |
| Write-down of long-term investments | - |
| 2,960 | |
| Gain on sale of investments | (2,420) |
| (324) | |
| Deferred income taxes | (38,549) |
| 7,612 | |
| In-process research and development | - |
| 600 | |
| Net changes in operating assets and liabilities, net of |
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| acquired assets and liabilities: |
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| Accounts receivable | (20,626) |
| (46,707) | |
| Prepaid and other current assets | 11,373 |
| (3,047) | |
| Other long-term assets | (3,997) |
| (617) | |
| Accounts payable and other liabilities | (68,672) |
| (105,639) | |
| Accrued income taxes | (48,157) |
| (5,959) | |
| Deferred revenue | (45,235) |
| (88,065) | |
| Net cash provided by (used in) operating activities | 36,233 |
| (57,215) | |
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| CASH FLOWS FROM INVESTING ACTIVITIES: |
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| Proceeds from sales and maturities of short-term investments | 188,650 |
| 123,041 | |
| Purchases of short-term investments | (131,748) |
| (119,227) | |
| Purchases of property and equipment | (13,793) |
| (14,734) | |
| Cash paid for acquisitions, net of cash acquired | (130,872) |
| (27,333) | |
| Capitalization of software development costs | (1,415) |
| (1,485) | |
| Net cash used in investing activities | (89,178) |
| (39,738) | |
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| CASH FLOWS FROM FINANCING ACTIVITIES: |
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| Principal payments on capital leases | (1,346) |
| (984) | |
| Issuances of common stock | 73,210 |
| 26,652 | |
| Purchases of treasury stock | (50,257) |
| - | |
| Net cash provided by financing activities | 21,607 |
| 25,668 | |
| Effect of exchange rate changes on cash and cash equivalents | (844) |
| 52 | |
| Net change in cash and cash equivalents | (32,182) |
| (71,233) | |
| Cash and cash equivalents, beginning of period | 701,613 |
| 577,632 | |
| Cash and cash equivalents, end of period | $669,431 |
| $506,399 | |
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| (1) Synopsys' second quarter ended on the Saturday nearest April 30. For presentation purposes, the Unaudited Consolidated Statements of Cash Flows refer to a calendar month end. | ||||
| INVESTOR CONTACT : | |
| Lisa L. Ewbank | |
| Synopsys, Inc. | |
| 650-584-1901 | |
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| EDITORIAL CONTACT : | |
| Yvette Huygen | |
| Synopsys, Inc. | |
| 650-584-4547 | |
