SYNPLICITY INC - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-31545

SYNPLICITY, INC.

(Exact name of registrant as specified in its charter)

California

77-0368779

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

600 West California Avenue, Sunnyvale, CA 94086

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (408) 215-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended). Yes x No ¨

As of November 2, 2004, the registrant had 26,099,214 shares of common stock outstanding.

SYNPLICITY, INC.

INDEX


		PAGE NO.
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003	3

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2004 and 2003	4

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 6.	Exhibits	30

SIGNATURES		31

PART I - FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

SYNPLICITY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)


	September 30, 2004			December 31, 2003 ⁽¹⁾
	(unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	12,338		$	4,329
Short-term investments		35,220			41,045
Accounts receivable, net of allowances of $129 and $151 at September 30, 2004 and December 31, 2003, respectively		7,669			8,024
Other current assets		1,698			2,054

Total current assets		56,925			55,452
Property and equipment, net of accumulated depreciation of $8,665 and $7,256 at September 30, 2004 and December 31, 2003, respectively		2,753			2,941
Goodwill		1,272			1,272
Intangible assets, net		2,569			3,237
Other assets		755			559

Total assets	$	64,274		$	63,461

Liabilities and Shareholders’ Equity:
Current liabilities:
Accounts payable	$	810		$	1,098
Accrued liabilities		1,843			1,756
Accrued compensation		2,696			3,328
Deferred revenue		15,561			15,228

Total current liabilities		20,910			21,410
Shareholders’ equity:
Common stock		55,243			55,601
Additional paid-in capital		3,452			3,453
Deferred stock-based compensation		(117	)		(275	)
Accumulated deficit		(14,787	)		(16,198	)
Accumulated other comprehensive loss		(427	)		(530	)

Total shareholders’ equity		43,364			42,051

Total liabilities and shareholders’ equity	$	64,274		$	63,461

⁽¹⁾

Derived from the audited consolidated balance sheet of Synplicity, Inc. as of December 31, 2003. However, the condensed consolidated balance sheet amounts at December 31, 2003 do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

The accompanying notes are an integral part of the condensed consolidated financial statements.

SYNPLICITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2004		2003			2004		2003
Revenue:
License	$	7,733	$	6,924		$	23,197	$	20,354
Maintenance		6,387		5,622			18,656		15,994

Total revenue		14,120		12,546			41,853		36,348
Cost of revenue:
Cost of license		89		46			448		202
Cost of maintenance		619		544			1,816		1,592
Amortization of intangible assets from acquisitions		223		223			668		664

Total cost of revenue		931		813			2,932		2,458

Gross profit		13,189		11,733			38,921		33,890
Operating expenses:
Research and development		6,070		5,455			17,456		15,875
Sales and marketing		4,909		4,955			15,934		15,333
General and administrative		1,651		1,151			4,141		3,567
Stock-based compensation ⁽¹⁾		38		98			157		367

Total operating expenses		12,668		11,659			37,688		35,142

Income (loss) from operations		521		74			1,233		(1,252	)
Other income, net		155		110			410		465

Income (loss) before income taxes		676		184			1,643		(787	)
Income tax provision (benefit)		30		(225	)		232		35

Net income (loss)	$	646	$	409		$	1,411	$	(822	)

Net income (loss) per share:
Basic and diluted net income (loss) per share	$	0.02	$	0.02		$	0.05	$	(0.03	)

Shares used in basic per share calculation		26,014		25,583			25,994		25,586

Shares used in diluted per share calculation		26,858		27,052			27,460		25,586

⁽¹⁾	Amortization of deferred stock-based compensation relates to the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2004		2003		2004		2003
Cost of maintenance	$	1	$	2	$	3	$	8
Research and development		11		30		46		123
Sales and marketing		10		31		41		103
General and administrative		16		35		67		133

Total	$	38	$	98	$	157	$	367

The accompanying notes are an integral part of the condensed consolidated financial statements.

SYNPLICITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Month Ended September 30,
	2004			2003
Operating activities
Net income (loss)	$	1,411		$	(822	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		1,443			1,634
Amortization of deferred stock-based compensation		157			367
Amortization of intangible assets		668			664
Changes in operating assets and liabilities:
Accounts receivable		355			1,863
Other current assets		356			2
Other assets		(196	)		(87	)
Accounts payable		(288	)		23
Accrued liabilities		87			(138	)
Accrued compensation		(632	)		51
Deferred revenue		333			394

Net cash provided by operating activities		3,694			3,951

Investing activities
Purchases of property and equipment		(1,255	)		(1,148	)
Purchases of short-term investments		(30,375	)		(39,455	)
Proceeds from maturities of short-term investments		36,150			35,487

Net cash provided by (used in) investing activities		4,520			(5,116	)

Financing activities
Proceeds from sale of common stock		987			962
Repurchases of common stock		(1,345	)		(1,627	)
Proceeds from repayment of notes receivable from officer		—			294

Net cash used in financing activities		(358	)		(371	)
Effect of exchange rate changes on cash		153			(163	)

Net increase (decrease) in cash and cash equivalents		8,009			(1,699	)
Cash and cash equivalents at beginning of period		4,329			8,858

Cash and cash equivalents at end of period	$	12,338		$	7,159

Supplemental disclosure of cash flow information

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