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 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 109824, beginning at 5:30 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 fourth quarter and fiscal 2009 in December 2009. 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 fourth quarter and fiscal 2009 earnings call in December 2009, 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 fourth quarter of fiscal 2009 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 third quarter in its Quarterly Report on Form 10-Q to be filed by September 10, 2009.
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 downturn and 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;
-- the terms of a final settlement, if any, with the IRS regarding the
2002-2004 returns, 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 October 31, 2009 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 2009 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 expenses including amortization of 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 April 30, 2009. Furthermore, Synopsys' actual tax rates applied to income for the fourth quarter and fiscal year 2009 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 fourth quarter and fiscal year 2009 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 Consolidated Statements of Operations (1)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
July 31, July 31,
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
Revenue:
Time-based license $284,401 $289,250 $853,449 $835,330
Upfront license 18,972 20,558 53,293 45,293
Maintenance and service 41,804 34,320 115,025 103,523
------ ------ ------- -------
Total revenue 345,177 344,128 1,021,767 984,146
Cost of revenue:
License 44,173 44,654 128,288 126,761
Maintenance and service 17,410 16,110 48,037 48,156
Amortization of intangible
assets 8,452 6,262 24,153 17,111
----- ----- ------ ------
Total cost of revenue 70,035 67,026 200,478 192,028
------ ------ ------- -------
Gross margin 275,142 277,102 821,289 792,118
Operating expenses:
Research and development 104,989 104,394 305,792 292,183
Sales and marketing 77,973 86,816 237,877 247,073
General and administrative 27,735 26,512 83,608 76,524
In-process research and
development 400 4,800 1,000 4,800
Amortization of intangible
assets 2,956 4,548 9,683 17,730
----- ----- ----- ------
Total operating
expenses 214,053 227,070 637,960 638,310
------- ------- ------- -------
Operating income 61,089 50,032 183,329 153,808
Other income, net 5,384 2,947 17,928 9,428
----- ----- ------ -----
Income before income taxes 66,473 52,979 201,257 163,236
Provision (benefit) for
income taxes 19,037 (4,770) 53,104 19,655
------ ------ ------ ------
Net income $47,436 $57,749 $148,153 $143,581
======= ======= ======== ========
Net income per share:
Basic $0.33 $0.41 $1.04 $1.00
===== ===== ===== =====
Diluted $0.32 $0.39 $1.02 $0.97
===== ===== ===== =====
Shares used in computing per
share amounts:
Basic 144,138 142,536 143,093 143,450
======= ======= ======= =======
Diluted 146,063 147,486 144,699 147,760
======= ======= ======= =======
(1) Synopsys' third quarter ended on the Saturday nearest July 31. For
presentation purposes, the Unaudited Consolidated Statements of
Operations refer to a calendar month end.
SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
July 31, October 31,
2009 2008
-------- -----------
ASSETS:
Current assets:
Cash and cash equivalents $622,281 $577,632
Short-term investments 460,258 373,669
------- -------
Total cash, cash equivalents
and short-term investments 1,082,539 951,301
Accounts receivable, net 136,760 147,365
Deferred income taxes 136,073 133,609
Income taxes receivable 44,091 49,859
Other current assets 49,494 40,156
------ ------
Total current assets 1,448,957 1,322,290
Property and equipment, net 144,928 145,087
Goodwill 933,560 899,640
Intangible assets, net 102,676 114,760
Long-term deferred income taxes 160,090 177,386
Other long-term assets 87,533 83,315
------ ------
Total assets $2,877,744 $2,742,478
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued liabilities $221,249 $289,769
Accrued income taxes 13,051 14,496
Deferred revenue 581,792 604,718
------- -------
Total current liabilities 816,092 908,983
Long-term accrued income taxes 168,008 152,745
Deferred compensation and other liabilities 93,939 76,970
Long-term deferred revenue 36,787 75,409
------ ------
Total liabilities 1,114,826 1,214,107
Stockholders' equity:
Preferred stock, $0.01 par value: 2,000
shares authorized; none outstanding - -
Common stock, $0.01 par value: 400,000
shares authorized; 144,295 and
141,786 shares outstanding,
respectively 1,442 1,418
Capital in excess of par value 1,488,013 1,471,031
Retained earnings 568,639 434,057
Treasury stock, at cost: 12,976 and
15,485 shares, respectively (287,305) (342,856)
Accumulated other comprehensive loss (7,871) (35,279)
------ -------
Total stockholders' equity 1,762,918 1,528,371
--------- ---------
Total liabilities and
stockholders' equity $2,877,744 $2,742,478
========== ==========
(1) Synopsys' third and fourth quarter ended on the Saturday nearest
July 31 and October 31, respectively. 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)
Nine Months Ended July 31,
--------------------------
2009 2008
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $148,153 $143,581
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization and depreciation 74,581 73,535
Share-based compensation 42,799 50,807
Allowance for doubtful accounts 2,735 429
Write-down of long-term investments 6,333 394
(Gain) loss on sale of investments (610) (1,347)
Deferred income taxes 15,801 18,852
Net change in deferred gains and
losses on cash flow hedges 17,949 5,169
In-process research and development 1,000 4,800
Net changes in operating assets and
liabilities, net of acquired assets
and liabilities:
Accounts receivable 10,690 (8,761)
Prepaid and other current assets 10,315 (11,277)
Other long-term assets 981 64
Accounts payable and accrued
liabilities (87,473) (26,767)
Accrued income taxes (4,778) (33,974)
Deferred revenue (62,723) 2,626
Deferred compensation and other
liabilities (504) (2,928)
---- ------
Net cash provided by operating
activities 175,249 215,203
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
short-term investments 223,994 512,797
Purchases of short-term investments (310,323) (436,144)
Proceeds from sales of long-term
investments - 77
Purchases of long-term investments (671) (7,694)
Purchases of property and equipment (24,634) (26,500)
Cash paid for acquisitions, net of
cash acquired (48,248) (181,018)
Capitalization of software development
costs (2,228) (2,114)
------ ------
Net cash used in investing activities (162,110) (140,596)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases (1,675) (1,453)
Proceeds from credit facilities 1,279 -
Payment on credit facility (260) -
Issuances of common stock 28,237 56,600
Purchases of treasury stock - (170,052)
----- --------
Net cash provided by (used in)
financing activities 27,581 (114,905)
Effect of exchange rate changes on cash and
cash equivalents 3,929 6,460
----- -----
Net change in cash and cash equivalents 44,649 (33,838)
Cash and cash equivalents, beginning of
period 577,632 579,327
------- -------
Cash and cash equivalents, end of period $622,281 $545,489
======== ========
(1) Synopsys' third quarter ended on the Saturday nearest July 31. For
presentation purposes, the Unaudited Consolidated Statements of Cash
Flows refer to a calendar month end.
