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8-K - FORM 8-K - SYNOPSYS INCd542151d8k.htm

Exhibit 99.1

PRESS RELEASE                    

INVESTOR CONTACT:

Lisa L. Ewbank

Synopsys, Inc.

650-584-1901

Synopsys-ir@synopsys.com

EDITORIAL CONTACT:

Yvette Huygen

Synopsys, Inc.

650-584-4547

yvetteh@synopsys.com

Synopsys Posts Financial Results for Second Quarter Fiscal Year 2013

Q2 2013 Financial Highlights

 

Revenue: $499.3 million

 

GAAP earnings per share: $0.44

 

Non-GAAP earnings per share: $0.66

MOUNTAIN VIEW, Calif. May 22, 2013 – Synopsys, Inc. (Nasdaq: SNPS), a global leader providing software, IP and services used to accelerate innovation in chips and electronic systems, today reported results for its second quarter of fiscal year 2013.

For the second quarter of fiscal year 2013, Synopsys reported revenue of $499.3 million, compared to $432.6 million for the second quarter of fiscal 2012, an increase of 15 percent.

“Synopsys again delivered strong results in Q2, and as a result we are raising our operating cash flow and non-GAAP earnings per share targets for the year,” said Aart de Geus, chairman and co-CEO of Synopsys. “The latest silicon technologies offer high value but also great technical challenges. Because of this, more and more customer executives are sharing with us where they are heading and how Synopsys can help them succeed, thus leading to robust demand and market momentum.”

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2013 was $68.7 million, or $0.44 per share, compared to $21.0 million, or $0.14 per share, for the second quarter of fiscal 2012. Net income for the second quarter of fiscal 2012 included $30.2 million of costs associated with the acquisition of Magma Design Automation.

 

May 22, 2013    1


Non-GAAP Results

On a non-GAAP basis, net income for the second quarter of fiscal 2013 was $103.7 million, or $0.66 per share, compared to non-GAAP net income of $78.5 million, or $0.53 per share, for the second quarter of fiscal 2012.

Financial Targets

Synopsys also provided its financial targets for the third quarter and full fiscal year 2013. These targets do not include any future acquisition-related expenses that may be incurred in fiscal 2013. 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.

Third Quarter of Fiscal Year 2013 Targets:

 

Revenue: $475 million - $485 million

 

GAAP expenses: $411 million - $428 million

 

Non-GAAP expenses: $365 million - $375 million

 

Other income and expense: ($1) million - $1 million

 

Tax rate applied in non-GAAP net income calculations: 24-25 percent

 

Fully diluted outstanding shares: 155 million - 159 million

 

GAAP earnings per share: $0.28 - $0.34

 

Non-GAAP earnings per share: $0.53 - $0.55

 

Revenue from backlog: approximately 90 percent

Full Fiscal Year 2013 Targets:

 

Revenue: $1.955 billion - $1.975 billion

 

Other income and expense: $5 - $9 million

 

Tax rate applied in non-GAAP net income calculations: approximately 23 percent

 

Fully diluted outstanding shares: 155 million - 159 million

 

GAAP earnings per share: $1.48 - $1.56

 

Non-GAAP earnings per share: $2.37 - $2.42

 

Cash flow from operations: $375 million - $400 million

 

May 22, 2013    2


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, including inventory fair value adjustments, (iv) other significant items, including facilities restructuring, 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.

 

May 22, 2013    3


Reconciliation of Second Quarter Fiscal Year 2013 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.

GAAP to Non-GAAP Reconciliation of Second Quarter Fiscal Year 2013 Results

(Unaudited and in thousands, except per share amounts)

 

     Three Months Ended
April 30,
    Six Months Ended
April 30,
 
     2013     2012     2013     2012  

GAAP net income

   $ 68,691      $ 20,971      $ 138,613      $ 77,665   

Adjustments:

        

Amortization of intangible assets

     32,273        28,604        64,676        45,513   

Stock compensation

     15,529        20,602        33,229        36,851   

Acquisition-related costs

     1,992        30,853        3,828        32,088   

Inventory fair value adjustment

     —           —           1,809        —      

Facility restructuring charges

     302        —           30        470   

Tax adjustments

     (15,123     (22,532     (35,554     (31,759
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 103,664      $ 78,498      $ 206,631      $ 160,828   
  

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended
April 30,
    Six Months Ended
April 30,
 
     2013     2012     2013     2012  

GAAP net income per share

   $ 0.44      $ 0.14      $ 0.89      $ 0.52   

Adjustments:

        

Amortization of intangible assets

     0.21        0.19        0.42        0.31   

Stock compensation

     0.10        0.14        0.22        0.25   

Acquisition-related costs

     0.01        0.21        0.02        0.22   

Inventory fair value adjustment

     —           —           0.01        —      

Facility restructuring charges

     0.00        —           0.00        0.00   

Tax adjustments

     (0.10     (0.15     (0.23     (0.22
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income per share

   $ 0.66      $ 0.53      $ 1.33      $ 1.08   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in calculation

     156,606        149,297        155,662        148,259   

 

May 22, 2013    4


Reconciliation of Target Non-GAAP Operating Results

The following tables reconcile the specific items excluded from GAAP in the calculation of target non-GAAP operating results for the periods indicated below.

GAAP to Non-GAAP Reconciliation of Third Quarter Fiscal Year 2013 Targets

(in thousands, except per share amounts)

 

     Range for Three Months
Ending July 31, 2013 (1)
 
     Low     High  

Target GAAP expenses

   $ 411,000      $ 428,000   

Adjustments:

    

Estimated impact of amortization of intangible assets

     (30,000     (34,000

Estimated impact of stock compensation

     (16,000     (19,000
  

 

 

   

 

 

 

Target non-GAAP expenses

   $ 365,000      $ 375,000   
  

 

 

   

 

 

 
     Range for Three Months
Ending July 31, 2013 (1)
 
     Low     High  

Target GAAP earnings per share

   $ 0.28      $ 0.34   

Adjustments:

    

Estimated impact of amortization of intangible assets

     0.22        0.19   

Estimated impact of stock compensation

     0.12        0.10   

Net non-GAAP tax adjustments

     (0.09     (0.08
  

 

 

   

 

 

 

Target non-GAAP earnings per share

   $ 0.53      $ 0.55   
  

 

 

   

 

 

 

Shares used in non-GAAP calculation (midpoint of target range)

     157,000        157,000   
GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2013 Targets   
     Range for Fiscal Year
Ending October 31, 2013 (1)
 
     Low     High  

Target GAAP earnings per share

   $ 1.48      $ 1.56   

Adjustments:

    

Estimated impact of amortization of intangible assets

     0.84        0.80   

Estimated impact of stock compensation

     0.45        0.42   

Acquisition-related costs

     0.02        0.02   

Inventory fair value adjustment

     0.01        0.01   

Facility restructuring charges

     0.00        0.00   

Net non-GAAP tax adjustments

     (0.43     (0.39
  

 

 

   

 

 

 

Target non-GAAP earnings per share

   $ 2.37      $ 2.42   
  

 

 

   

 

 

 

Shares used in non-GAAP calculation (midpoint of target range)

     157,000        157,000   

 

(1) Synopsys’ third quarter and fiscal year end on August 3, and November 2, 2013, respectively. For presentation purposes, the periods refer to the closest calendar month end.

 

May 22, 2013    5


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 293128, 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 third quarter fiscal 2013 in August 2013. 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 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 co-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 fiscal year 2013 earnings call in August 2013, 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 2013 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 fiscal 2013 in its quarterly report on Form 10-Q to be filed by June 13, 2013.

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.

 

May 22, 2013    6


Forward-Looking Statements

The statements made in this press release regarding projected financial results in the sections entitled “Financial Targets,” and “Reconciliation of Target Non-GAAP Operating Results,” and certain other statements, including statements regarding customer demand for our technology and predictable business model, are forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. In addition, 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 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;

 

  Synopsys’ ability to realize the potential financial or strategic benefits of acquisitions it completes, including the recent acquisitions of Magma Design Automation, SpringSoft and EVE, and the difficulties in the integration of the products and operations of acquired companies or assets into Synopsys’ products and operations, including 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;

 

  increased competition in the market for Synopsys’ products and services including through consolidation in the industry and among our customers;

 

  changes in demand for Synopsys’ products due to fluctuations in demand for its customers’ products;

 

  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;

 

May 22, 2013    7


  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; 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 July 31, 2013; actual expenses, earnings per share, tax rate, and other projections on a GAAP and non-GAAP basis for fiscal year 2013; and cash flow from operations on a GAAP basis for fiscal year 2013 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 have become impaired, (iv) changes in the anticipated amount of employee stock-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 guidance, (viii) fluctuations in foreign currency exchange rates, (ix) general economic conditions, and (x) 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 January 31, 2013. Furthermore, Synopsys’ actual tax rates applied to income for the third quarter and fiscal year 2013 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.

 

May 22, 2013    8


Finally, Synopsys’ targets for outstanding shares in the third quarter and fiscal year 2013 could differ from the targets given in this press release as a result of higher than expected employee stock plan issuances, 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.

###

 

May 22, 2013    9


SYNOPSYS, INC.

Unaudited Consolidated Statements of Operations (1)

(in thousands, except per share amounts)

 

     Three Months Ended April 30,      Six Months Ended April 30,  
     2013      2012      2013      2012  

Revenue:

           

Time-based license

   $ 413,491       $ 363,580       $ 799,450       $ 719,474   

Upfront

     24,779         22,333         55,568         50,845   

Maintenance and service

     60,987         46,648         119,376         87,738   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     499,257         432,561         974,394         858,057   

Cost of revenue:

           

License

     61,569         57,592         126,061         115,314   

Maintenance and service

     19,766         19,215         39,821         37,959   

Amortization of intangible assets

     26,398         23,699         52,914         37,087   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cost of revenue

     107,733         100,506         218,796         190,360   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross margin

     391,524         332,055         755,598         667,697   

Operating expenses:

           

Research and development

     169,962         151,230         327,472         284,105   

Sales and marketing

     103,930         108,836         205,688         204,240   

General and administrative

     32,254         49,948         70,192         83,787   

Amortization of intangible assets

     5,875         4,905         11,762         8,426   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     312,021         314,919         615,114         580,558   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     79,503         17,136         140,484         87,139   

Other income (expense), net

     7,204         6,353         17,953         10,179   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     86,707         23,489         158,437         97,318   

Provision (benefit) for income taxes

     18,016         2,518         19,824         19,653   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 68,691       $ 20,971       $ 138,613       $ 77,665   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share:

           

Basic

   $ 0.45       $ 0.14       $ 0.91       $ 0.54   

Diluted

   $ 0.44       $ 0.14       $ 0.89       $ 0.52   

Shares used in computing per share amounts:

           

Basic

     153,515         145,948         152,496         144,877   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     156,606         149,297         155,662         148,259   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Synopsys’ second quarter of fiscal 2013 ended on May 4, 2013. For presentation purposes, we refer to a calendar month ending April 30. Synopsys’ first quarter of fiscal 2012 includes an extra week.

 

May 22, 2013    10


SYNOPSYS, INC.

Unaudited Consolidated Balance Sheets (1)

(in thousands, except par value amounts)

 

     April 30, 2013     October 31, 2012  

ASSETS:

    

Cash and cash equivalents

   $ 681,018      $ 700,382   

Accounts receivable, net

     251,682        292,668   

Deferred income taxes

     74,558        74,712   

Income taxes receivable and prepaid taxes

     20,178        17,267   

Prepaid and other current assets

     78,933        55,627   
  

 

 

   

 

 

 

Total current assets

     1,106,369        1,140,656   

Property and equipment, net

     195,315        191,243   

Goodwill

     1,980,012        1,976,987   

Intangible assets, net

     397,219        466,322   

Long-term prepaid taxes

     9,702        9,429   

Long-term deferred income taxes

     270,037        239,412   

Other long-term assets

     140,234        123,607   
  

 

 

   

 

 

 

Total assets

   $ 4,098,888      $ 4,147,656   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

    

Current liabilities:

    

Accounts payable and accrued liabilities

   $ 277,114      $ 383,093   

Accrued income taxes

     13,926        4,682   

Deferred revenue

     691,882        834,864   

Short-term debt

     30,000        30,000   
  

 

 

   

 

 

 

Total current liabilities

     1,012,922        1,252,639   

Long-term accrued income taxes

     57,468        52,645   

Long-term deferred revenue

     62,840        67,184   

Long-term debt

     90,000        105,000   

Other long-term liabilities

     176,726        126,217   
  

 

 

   

 

 

 

Total liabilities

     1,399,956        1,603,685   

Stockholders’ equity:

    

Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding

     —           —      

Common stock, $0.01 par value: 400,000 shares authorized; 153,605 and 150,899 shares outstanding, respectively

     1,535        1,509   

Capital in excess of par value

     1,599,164        1,585,034   

Retained earnings

     1,231,378        1,098,694   

Treasury stock, at cost: 3,659 and 6,365 shares, respectively

     (105,138     (168,090

Accumulated other comprehensive loss

     (28,007     (15,461
  

 

 

   

 

 

 

Total stockholders’ equity excluding non-controlling interest

     2,698,932        2,501,686   

Non-controlling interest

     —           42,285   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 4,098,888      $ 4,147,656   
  

 

 

   

 

 

 

 

(1) Synopsys’ second quarter of fiscal 2013 ended on May 4, 2013. For presentation purposes, we refer to a calendar month ending April 30. Synopsys’ first quarter of fiscal 2012 includes an extra week.

 

May 22, 2013    11


SYNOPSYS, INC.

Unaudited Consolidated Statements of Cash Flows (1)

(in thousands)

 

     Six Months Ended April 30,  
     2013     2012  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

   $ 138,613      $ 77,665   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Amortization and depreciation

     94,154        74,862   

Stock compensation

     33,229        36,855   

Allowance for doubtful accounts

     901        452   

Gain on sale of investments

     (101     (349

Deferred income taxes

     8,225        10,033   

Net changes in operating assets and liabilities, net of acquired assets and liabilities:

    

Accounts receivable

     39,287        (11,516

Prepaid and other current assets

     (27,502     (3,442

Other long-term assets

     (16,524     (8,128

Accounts payable and other liabilities

     (97,569     (48,393

Income taxes

     (2,574     (8,436

Deferred revenue

     (127,847     (32,147
  

 

 

   

 

 

 

Net cash provided by operating activities

     42,292        87,456   

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Proceeds from sales and maturities of short-term investments

     —           166,132   

Purchases of short-term investments

     —           (18,179

Proceeds from sales of long-term investments

     222        —      

Purchases of property and equipment

     (29,426     (19,585

Proceeds from sale of property and equipment

     2,000        —      

Cash paid for acquisitions, net of cash acquired

     —           (564,528

Capitalization of software development costs

     (1,787     (1,539
  

 

 

   

 

 

 

Net cash used in investing activities

     (28,991     (437,699

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Principal payments on capital leases

     (784     (1,888

Proceeds from credit facility and term loan

     —           250,000   

Acquisition of non-controlling interest

     (44,004     —      

Repayment of debts

     (15,237     (21,156

Issuances of common stock

     75,193        111,180   

Purchases of treasury stock

     (34,998     (40,000

Other

     (1,130     —      
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (20,960     298,136   

Effect of exchange rate changes on cash and cash equivalents

     (11,705     (6,376
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (19,364     (58,483

Cash and cash equivalents, beginning of the year

     700,382        855,077   
  

 

 

   

 

 

 

Cash and cash equivalents, end of the period

   $ 681,018      $ 796,594   
  

 

 

   

 

 

 

 

(1) Synopsys’ second quarter of fiscal 2013 ended on May 4, 2013. For presentation purposes, we refer to a calendar month ending April 30. Synopsys’ first quarter of fiscal 2012 includes an extra week.

 

May 22, 2013    12