(PRNewswire) — Synopsys, Inc. (Nasdaq: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its third quarter of fiscal year 2011.

For the third quarter of fiscal year 2011, Synopsys reported revenue of $386.8 million, compared to $336.9 million for the third quarter of fiscal 2010, an increase of 14.8%.  

"Synopsys delivered strong revenue, earnings per share, and cash flow in the third quarter, and we are confident that we will exit fiscal 2011 with a great deal of strength," said Aart de Geus, chairman and CEO of Synopsys.  "Design activity continues unabated, driven by demand for mobile devices, cloud infrastructure, and electronics content in many every-day products.  Synopsys is integral to the success of these end markets."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal 2011 was $52.1 million, or $0.35 per share, compared to $39.3 million, or $0.26 per share, for the third quarter of fiscal 2010.  

Non-GAAP Results

On a non-GAAP basis, net income for the third quarter of fiscal 2011 was $68.1 million, or $0.46 per share, compared to non-GAAP net income of $58.2 million, or $0.39 per share, for the third quarter of fiscal 2010.  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 2011.  These targets do not include future acquisition-related costs that may be incurred in fiscal 2011.  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 2011 Targets:

• Revenue: $386 million - $392 million
• GAAP expenses: $329 million - $341 million
• Non-GAAP expenses: $300 million - $305 million
• Other income and expense: $0 - $1 million
• Tax rate applied in non-GAAP net income calculations: 24 - 25 percent
• Fully diluted outstanding shares: 146 million - 150 million
• GAAP earnings per share: $0.26 - $0.31
• Non-GAAP earnings per share: $0.44 - $0.46
• Revenue from backlog: greater than 90 percent

Full Fiscal Year 2011 Targets:

• Revenue: $1.531 billion - $1.537 billion
• Other income and expense: $3 million - $4 million
• Tax rate applied in non-GAAP net income calculations: 22 - 23 percent
• Fully diluted outstanding shares: 148 million - 152 million
• GAAP earnings per share: $1.46 - $1.51
• Non-GAAP earnings per share: $1.79 - $1.81
• Cash flow from operations: greater than $400 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 the effect of tax benefits from settlements with the Internal Revenue Service, 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 2011 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.

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