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 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 earnings call in August 2008, 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 2008 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 of fiscal 2008 in its quarterly report on Form 10-Q to be filed by June 12, 2008.
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 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, system-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 60 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:
-- weakness or continued budgetary caution in the semiconductor or
electronics industries;
-- 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;
-- failure of customers to pay license fees as scheduled;
-- changes in the mix of time-based licenses and upfront licenses;
-- lower-than-expected bookings;
-- failure of Synopsys' cost control efforts, including recent efforts to
outsource certain internal functions, to result in the anticipated
savings;
-- failure to successfully develop additional intellectual property blocks
for its IP business; 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 and earnings per share on a GAAP and non-GAAP basis for the fiscal quarter ending July 31, 2008 and actual expenses, earnings per share and operating cash flow on a GAAP and non-GAAP basis for fiscal year 2008 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 or new accounting interpretations such as FASB Interpretation No. 48, to increase or decrease an income tax asset or liability, (iii) integration and other acquisition-related expenses including amortization of additional intangible assets associated with future acquisitions, if any, (iv) changes in the anticipated amount of employee share-based 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 pronouncements, (viii) general economic conditions, and (ix), other risks as detailed in our SEC filings, including those described in the "Risk Factors" section in our Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2008. Furthermore, Synopsys' actual tax rates applied to income for the third quarter and fiscal year 2008 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. Finally, Synopsys' targets for outstanding shares in the third quarter and fiscal year 2008 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.
INVESTOR CONTACT:
Lisa L. Ewbank
Synopsys, Inc.
650-584-1901
EDITORIAL CONTACT:
Yvette Huygen
Synopsys, Inc.
650-584-4547
yvetteh@synopsys.com
SYNOPSYS, INC.
Unaudited Condensed Consolidated Statements of Operations(1)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
April 30, April 30,
2008 2007 2008 2007
Revenue:
Time-based license $278,220 $243,096 $546,080 $494,702
Upfront license 12,214 14,624 24,735 28,127
Maintenance and service 34,119 35,208 69,203 70,309
Total revenue 324,553 292,928 640,018 593,138
Cost of revenue:
License 41,709 34,657 82,107 70,177
Maintenance and service 16,167 15,550 32,046 31,696
Amortization of intangible assets 5,816 5,210 10,849 11,919
Total cost of revenue 63,692 55,417 125,002 113,792
Gross margin 260,861 237,511 515,016 479,346
Operating expenses:
Research and development 95,275 91,956 187,789 187,840
Sales and marketing 82,887 79,012 160,257 168,820
General and administrative 26,171 22,551 50,012 52,228
Amortization of intangible assets 6,591 6,644 13,182 13,288
Total operating expenses 210,924 200,163 411,240 422,176
Operating income 49,937 37,348 103,776 57,170
Other income, net 151 19,668 6,481 27,602
Income before income taxes 50,088 57,016 110,257 84,772
Provision for income taxes 10,701 15,751 24,425 20,150
Net income $39,387 $41,265 $85,832 $64,622
Net income per share:
Basic $0.28 $0.29 $0.60 $0.45
Diluted $0.27 $0.28 $0.58 $0.43
Shares used in computing per share
amounts:
Basic 141,844 144,370 143,926 143,527
Diluted 145,271 149,783 147,801 148,782
(1) Synopsys' second quarter ends on May 3, 2008 and May 5, 2007,
respectively. For presentation purposes, the Unaudited Condensed
Consolidated Statements of Operations refer to a calendar month end.
SYNOPSYS, INC.
Unaudited Condensed Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
April 30, 2008 October 31, 2007
ASSETS:
Current assets:
Cash and cash equivalents $574,889 $579,327
Short-term investments 242,609 405,126
Total cash, cash equivalents and
short-term investments 817,498 984,453
Accounts receivable, net 171,993 123,900
Deferred income taxes 127,345 123,165
Income taxes receivable 42,724 42,525
Prepaid expenses and other current assets 57,337 53,496
Total current assets 1,216,897 1,327,539
Property and equipment, net 127,223 131,866
Goodwill 765,576 767,087
Intangible assets, net 54,778 78,792
Long-term deferred income taxes 168,056 216,642
Other assets 97,629 95,411
Total assets $2,430,159 $2,617,337
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued liabilities $176,746 $246,209
Accrued income taxes 10,280 207,572
Deferred revenue 522,078 577,295
Total current liabilities 709,104 1,031,076
Deferred compensation and other liabilities 83,322 84,648
Accrued income taxes 137,597 -
Long-term deferred revenue 65,310 65,220
Total liabilities 995,333 1,180,944
Stockholders' equity:
Preferred stock, $0.01 par value:
2,000 shares authorized; none outstanding - -
Common stock, $0.01 par value:
400,000 shares authorized; 141,756 and
146,365 shares outstanding, respectively 1,417 1,464
Capital in excess of par value 1,435,900 1,401,965
Retained earnings 342,424 263,977
Treasury stock, at cost: 15,512
and 10,867 shares, respectively (348,332) (234,918)
Accumulated other comprehensive
income (loss) 3,417 3,905
Total stockholders' equity 1,434,826 1,436,393
Total liabilities and stockholders'
equity $2,430,159 $2,617,337
(1) Synopsys' second quarter ends on May 3, 2008. For presentation
purposes, the Unaudited Condensed Consolidated Balance Sheets refer to
a calendar month end.
SYNOPSYS, INC.
Unaudited Condensed Consolidated Statements of Cash Flows (1)
(in thousands)
Six Months Ended April 30,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $85,832 $64,622
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization and depreciation 50,244 52,676
Share-based compensation 33,486 30,565
Allowance for doubtful accounts 429 (330)
(Gain) on sale of investments (1,192) (1)
(Gain) on sale of land - (4,284)
Deferred income taxes 3,523 10,677
Net change in deferred gains and losses on
cash flow hedges 7,495 2,990
Net changes in operating assets and
liabilities, net of acquired assets
and liabilities:
Accounts receivable (46,982) (43,935)
Prepaid expenses and other current assets (10,300) (11,272)
Other assets 26 487
Accounts payable and accrued liabilities (69,502) (59,642)
Accrued income taxes (2,873) (4,592)
Deferred revenue (67,309) 107,196
Deferred compensation and other liabilities 980 (926)
Net cash (used in) provided by operating
activities (16,143) 144,231
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
short-term investments 419,181 113,351
Purchases of short-term investments (253,699) (178,782)
Proceeds from sales of long-term investments 77 -
Purchases of long-term investments (6,694) -
Purchases of property and equipment (19,498) (24,520)
Proceeds from sale of land - 26,298
Capitalization of software development costs (1,408) (1,592)
Net cash provided by (used in) investing
activities 137,959 (65,245)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on lease obligations (1,452) -
Issuances of common stock 36,949 130,240
Purchases of common stock (170,052) (81,394)
Net cash (used in) provided by financing
activities (134,555) 48,846
Effect of exchange rate changes on cash and cash
equivalents 8,301 2,483
Net change in cash and cash equivalents (4,438) 130,315
Cash and cash equivalents, beginning of period 579,327 330,759
Cash and cash equivalents, end of period $574,889 $461,074
(1) Synopsys' second quarter ends on May 3, 2008 and May 5, 2007,
respectively. For presentation purposes, the Unaudited Consolidated
Statements of Cash Flows refer to a calendar month end.
Web site: http://www.synopsys.com/
