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 343554 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 2015 in February 2015. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and co-chief executive officer, and Brian Beattie, chief financial officer, on its website following the call. In addition, Synopsys makes additional information available in a financial supplement and corporate overview presentation, 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 and corporate overview presentation (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 co-chief executive officer and chief financial officer made during the call, the financial supplement and corporate overview presentation will remain available on Synopsys' website through the date of the first quarter fiscal year 2015 earnings call in February 2015, 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 2015 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 fiscal 2014 in its annual report on Form 10-K to be filed by December 31, 2014.
About Synopsys
Synopsys, Inc. (Nasdaq: SNPS) accelerates innovation in the global electronics market. As a leader in electronic design automation (EDA) and semiconductor IP, its software, IP and services help engineers address their design, verification, system and manufacturing challenges. Since 1986, engineers around the world have been using Synopsys technology to design and create billions of chips and systems. Learn more at http://www.synopsys.com.
Forward-Looking Statements
This press release and our upcoming earnings results conference call contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Any statements that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include but are not limited to: sections of this press release entitled "Financial Targets" and "Reconciliation of Target Non-GAAP Operating Results"; and statements regarding Synopsys' business, acquisitions, new products, technologies, business model, new markets, customer demand for our technology, and projected financial results and business objectives. These statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in our forward-looking statements. Accordingly, we caution stockholders and prospective investors not to place undue reliance on these statements. Such risks, uncertainties and factors include, but are not limited to:
- continued uncertainty in the global economy and its potential impact on the semiconductor and electronics industries;
- uncertainty in the growth of the semiconductor and electronics industry, and consolidation among our customers;
- increased competition in the market for Synopsys' products and services including through consolidation in the industry;
- changes in demand for Synopsys' products due to fluctuations in demand for its customers' products;
- Synopsys' ability to realize the potential financial or strategic benefits of acquisitions it completes, including its recent acquisition of Coverity, Inc., and challenges in entering new markets in which Synopsys is not experienced and in the integration of the products and operations of acquired companies or assets into Synopsys' products and operations, including possible delays in customer orders, potential loss of customers, key employees, partners or vendors, customer demand and support obligations for product offerings, and disruption of ongoing business operations and diversion of management attention;
- adverse changes in the relationships between Synopsys and key participants in the complex semiconductor ecosystem, including major foundries and intellectual property providers;
- litigation;
- lower-than-anticipated new IC design starts;
- lower-than-anticipated purchases or delays in purchases of products or consulting services by Synopsys' customers, including delays in the renewal, or non-renewal, of Synopsys' license arrangements with major customers;
- changes in accounting principles or standards or in the way they are applied;
- changes in the mix of time-based licenses and upfront licenses;
- variability in the timing of revenue recognition due to factors such as payment terms and the timing and value of contract renewals and professional services projects;
- lower-than-expected orders; and
- failure of customers to pay license fees as scheduled.
In addition, Synopsys' actual expenses, earnings per share and tax rate on a GAAP and non-GAAP basis for the fiscal quarter ending Jan. 31, 2015; actual expenses, earnings per share, tax rate, and other projections on a GAAP and non-GAAP basis for fiscal year 2015; and cash flow from operations on a GAAP basis for fiscal year 2015 could differ materially from the targets stated under "Financial Targets" above for a number of reasons, including, but not limited to, (i) integration and other acquisition-related costs, (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) a determination by Synopsys that any portion of its goodwill or intangible assets has become impaired, (iv) changes in the anticipated amount of employee stock-based compensation expense recognized in 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) fluctuations in foreign currency exchange rates, (ix) litigation, (x) general economic conditions, and (xi) other risks as detailed in Synopsys' SEC filings, including those described in the "Risk Factors" section in its latest Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2014. Furthermore, Synopsys' actual tax rates applied to income for the first quarter and fiscal year 2015 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 first quarter and fiscal year 2015 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, the financial supplement, or the corporate overview presentation whether as a result of new information, future events or otherwise, unless otherwise required by law.
INVESTOR CONTACT:
Lisa L. Ewbank
Synopsys, Inc.
650-584-1901
EDITORIAL CONTACT:
Yvette Huygen
Synopsys, Inc.
650-584-4547
Email Contact
SYNOPSYS, INC. | |||||||
Unaudited Consolidated Statements of Operations (1) | |||||||
(in thousands, except per share amounts) | |||||||
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Three Months Ended October 31, |
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Twelve Months Ended October 31, | ||||
|
2014 |
|
2013 |
|
2014 |
|
2013 |
Revenue: |
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|
|
Time-based license |
$ 443,620 |
|
$ 412,926 |
|
$ 1,699,135 |
|
$ 1,599,464 |
Upfront license |
33,894 |
|
36,493 |
|
135,757 |
|
132,018 |
Maintenance and service |
61,498 |
|
55,456 |
|
222,580 |
|
230,732 |
Total revenue |
539,012 |
|
504,875 |
|
2,057,472 |
|
1,962,214 |
Cost of revenue: |
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License |
69,648 |
|
72,992 |
|
268,348 |
|
268,910 |
Maintenance and service |
25,161 |
|
21,264 |
|
87,226 |
|
80,338 |
Amortization of intangible assets |
26,612 |
|
24,853 |
|
101,311 |
|
104,304 |
Total cost of revenue |
121,421 |
|
119,109 |
|
456,885 |
|
453,552 |
Gross margin |
417,591 |
|
385,766 |
|
1,600,587 |
|
1,508,662 |
Operating expenses: |
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Research and development |
190,373 |
|
175,057 |
|
718,768 |
|
669,197 |
Sales and marketing |
120,232 |
|
114,913 |
|
453,079 |
|
425,982 |
General and administrative |
42,969 |
|
39,089 |
|
155,215 |
|
143,791 |
Amortization of intangible assets |
6,517 |
|
5,693 |
|
24,808 |
|
23,199 |
Total operating expenses |
360,091 |
|
334,752 |
|
1,351,870 |
|
1,262,169 |
Operating income |
57,500 |
|
51,014 |
|
248,717 |
|
246,493 |
Other income (expense), net |
4,628 |
|
8,043 |
|
23,425 |
|
29,173 |
Income before income taxes |
62,128 |
|
59,057 |
|
272,142 |
|
275,666 |
Provision (benefit) for income taxes |
(327) |
|
2,167 |
|
13,018 |
|
27,866 |
Net income |
$ 62,455 |
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$ 56,890 |
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$ 259,124 |
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$ 247,800 |
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Net income per share: |
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Basic |
$ 0.40 |
|
$ 0.37 |
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$ 1.67 |
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$ 1.62 |
Diluted |
$ 0.39 |
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$ 0.36 |
|
$ 1.64 |
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$ 1.58 |
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Shares used in computing per share amounts: |
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Basic |
156,385 |
|
154,369 |
|
155,054 |
|
153,319 |
Diluted |
158,477 |
|
157,039 |
|
157,710 |
|
156,601 |
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(1) Synopsys' fourth quarter and fiscal year 2014 and 2013 ended on November 1, 2014 and November 2, 2013, respectively. For presentation purposes, we refer to periods ended October 31. |
SYNOPSYS, INC. | ||||||
Unaudited Consolidated Balance Sheets (1) | ||||||
(in thousands, except par value amounts) | ||||||
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October 31, 2014 |
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October 31, 2013 |
ASSETS: |
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Current assets: |
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Cash and cash equivalents |
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$ 985,762 |
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$ 1,022,441 |
Accounts receivable, net |
|
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|
326,727 |
|
256,026 |
Deferred income taxes |
|
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|
111,449 |
|
92,058 |
Income taxes receivable and prepaid taxes |
|
|
26,496 |
|
18,277 | |
Prepaid and other current assets |
|
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|
54,301 |
|
59,175 |
Total current assets |
|
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|
1,504,735 |
|
1,447,977 |
Property and equipment, net |
|
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|
249,098 |
|
197,600 |
Goodwill |
|
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|
2,255,708 |
|
1,975,971 |
Intangible assets, net |
|
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|
365,030 |
|
335,425 |
Long-term prepaid taxes |
|
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|
17,645 |
|
7,935 |
Long-term deferred income taxes |
|
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|
208,156 |
|
243,066 |
Other long-term assets |
|
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|
175,127 |
|
150,961 |
Total assets |
|
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$ 4,775,499 |
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$ 4,358,935 |
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LIABILITIES AND STOCKHOLDERS' EQUITY: |
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Current liabilities: |
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Accounts payable and accrued liabilities |
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$ 397,113 |
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$ 358,197 | |
Accrued income taxes |
|
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31,404 |
|
7,168 |
Deferred revenue |
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|
928,242 |
|
827,554 |
Short-term debt |
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30,000 |
|
30,000 |
Total current liabilities |
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1,386,759 |
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1,222,919 |
Long-term accrued income taxes |
|
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|
50,952 |
|
53,064 |
Long-term deferred revenue |
|
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|
77,646 |
|
54,736 |
Long-term debt |
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|
45,000 |
|
75,000 |
Other long-term liabilities |
|
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|
158,972 |
|
164,939 |
Total liabilities |
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1,719,329 |
|
1,570,658 |
Stockholders' equity: |
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Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding |
|
- |
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- | ||
Common stock, $0.01 par value: 400,000 shares authorized; 155,965 and 154,169 shares outstanding, respectively |
|
1,560 |
|
1,542 | ||
Capital in excess of par value |
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1,614,603 |
|
1,597,244 |
Retained earnings |
|
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1,551,592 |
|
1,324,854 |
Treasury stock, at cost:1,299 and 3,095 shares, respectively |
(49,496) |
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(106,668) | |||
Accumulated other comprehensive loss |
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(62,089) |
|
(28,695) | |
Total stockholders' equity |
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3,056,170 |
|
2,788,277 |
Total liabilities and stockholders' equity |
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$ 4,775,499 |
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$ 4,358,935 | ||
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(1) Synopsys' fiscal year 2014 and 2013 ended on November 1, 2014 and November 2, 2013, respectively. For presentation purposes, we refer to periods ended October 31. |
SYNOPSYS, INC. | |||
Unaudited Consolidated Statements of Cash Flows (1) | |||
(in thousands) | |||
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Twelve Months Ended October 31, | ||
|
2014 |
|
2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ 259,124 |
|
$ 247,800 |
Adjustments to reconcile net income to net cash provided by operating activities: |
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Amortization and depreciation |
192,826 |
|
187,404 |
Stock compensation |
79,440 |
|
67,511 |
Allowance for doubtful accounts |
(1,250) |
|
102 |
Gain on sale of investments |
(6,999) |
|
(868) |
Deferred income taxes |
(17,100) |
|
(676) |
Net changes in operating assets and liabilities, net of |
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acquired assets and liabilities: |
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Accounts receivable |
(65,018) |
|
37,590 |
Prepaid and other current assets |
1,836 |
|
(12,063) |
Other long-term assets |
(23,270) |
|
(27,468) |
Accounts payable and other liabilities |
40,645 |
|
(1,135) |
Income taxes |
(9,095) |
|
(2,306) |
Deferred revenue |
99,814 |
|
814 |
Net cash provided by operating activities |
550,953 |
|
496,705 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds from sales of long-term investments |
7,774 |
|
989 |
Purchases of property and equipment |
(103,275) |
|
(65,459) |
Proceeds from sales of property and equipment |
- |
|
2,000 |
Cash paid for acquisitions and intangible assets, net of cash acquired |
(394,623) |
|
- |
Capitalization of software development costs |
(3,638) |
|
(3,609) |
Other |
(3,488) |
|
- |
Net cash used in investing activities |
(497,250) |
|
(66,079) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Acquisition of non-controlling interest |
- |
|
(44,004) |
Proceeds from credit facility |
200,000 |
|
- |
Repayment of debt |
(230,968) |
|
(30,712) |
Issuances of common stock |
82,083 |
|
131,914 |
Purchases of treasury stock |
(119,747) |
|
(145,016) |
Other |
(5,057) |
|
(10,167) |
Net cash used in financing activities |
(73,689) |
|
(97,985) |
Effect of exchange rate changes on cash and cash equivalents |
(16,693) |
|
(10,582) |
Net change in cash and cash equivalents |
(36,679) |
|
322,059 |
Cash and cash equivalents, beginning of the year |
1,022,441 |
|
700,382 |
Cash and cash equivalents, end of the period |
$ 985,762 |
|
$ 1,022,441 |
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(1) Synopsys' fourth quarter of fiscal 2014 and 2013 ended on November 1, 2014 and November 2, 2013, respectively. For presentation purposes, we refer to periods ended October 31. |