EX-99.1 2 d12545dex991.htm EX-99.1 EX-99.1

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 Third Quarter Fiscal Year 2015

Q3 2015 Financial Highlights

 

  Revenue: $555.8 million

 

  GAAP earnings per share: $0.35

 

  Non-GAAP earnings per share: $0.63

MOUNTAIN VIEW, Calif. Aug. 19, 2015 – Synopsys, Inc. (Nasdaq: SNPS) today reported results for its third quarter of fiscal year 2015.

For the third quarter of fiscal year 2015, Synopsys reported revenue of $555.8 million, compared to $521.8 million for the third quarter of fiscal 2014, an increase of 6.5 percent.

“Synopsys delivered strong third quarter results, and expects to exit the year with approximately 10% non-GAAP earnings per share growth,” said Aart de Geus, chairman and co-CEO of Synopsys. “Our new products are driving excellent customer design success and adoption momentum. In addition, we closed several acquisitions, further strengthening our IP portfolio and expanding our presence in the higher-growth software quality and security market.”

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal 2015 was $55.4 million, or $0.35 per share, compared to $65.7 million, or $0.42 per share, for the third quarter of fiscal 2014.

 

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Non-GAAP Results

On a non-GAAP basis, net income for the third quarter of fiscal 2015 was $99.7 million, or $0.63 per share, compared to non-GAAP net income of $103.2 million, or $0.65 per share, for the third quarter of fiscal 2014. Reconciliation between GAAP and non-GAAP results is provided below.

Financial Targets

Synopsys also provided its financial targets for the fourth quarter and full fiscal year 2015. These targets do not include any impact of future acquisition-related activities or costs that may be incurred in the remainder of fiscal year 2015. These targets constitute forward-looking statements 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.

Fourth Quarter of Fiscal Year 2015 Targets:

 

  Revenue: $570 million - $585 million

 

  GAAP expenses: $503 million - $521 million

 

  Non-GAAP expenses: $450 million - $460 million

 

  Other income and expense: $0 - $2 million

 

  Tax rate applied in non-GAAP net income calculations: 19 - 20 percent

 

  Fully diluted outstanding shares: 155 million - 159 million

 

  GAAP earnings per share: $0.31 - $0.38

 

  Non-GAAP earnings per share: $0.65 - $0.67

Full Fiscal Year 2015 Targets:

 

  Revenue: $2.225 billion - $2.240 billion

 

  Other income and expense: $10 million - $12 million

 

  Tax rate applied in non-GAAP net income calculations: 19 - 20 percent

 

  Fully diluted outstanding shares: 155 million - 159 million

 

  GAAP earnings per share: $1.43 - $1.50

 

  Non-GAAP earnings per share: $2.76 - $2.78

 

  Cash flow from operations: approximately $450 million

 

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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, (iv) other significant items, including restructuring charges and certain accruals for legal and tax matters, 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.

 

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Reconciliation of Third Quarter Fiscal Year 2015 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 Third Quarter Fiscal Year 2015 Results

(Unaudited and in thousands, except per share amounts)

 

     Three Months Ended
July 31,
     Nine Months Ended
July 31,
 
     2015      2014      2015      2014  

GAAP net income

   $ 55,387       $ 65,656       $ 176,172       $ 196,669   

Adjustments:

           

Amortization of intangible assets

     32,892         32,809         97,248         92,990   

Stock compensation

     23,905         21,399         64,769         58,340   

Acquisition-related costs

     4,431         36         8,615         5,484   

Restructuring charges

     (248      —           15,088         —     

Legal and tax matters

     (10,270      (2,981      (11,789      (15,288

Tax adjustments

     (6,419      (13,768      (17,195 )      (40,262
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP net income

   $ 99,678       $ 103,151       $ 332,908      $ 297,933   
  

 

 

    

 

 

    

 

 

    

 

 

 
     Three Months Ended
July 31,
     Nine Months Ended
July 31,
 
     2015      2014      2015      2014  

GAAP net income per share

   $ 0.35       $ 0.42       $ 1.12       $ 1.25   

Adjustments:

           

Amortization of intangible assets

     0.21         0.21         0.62         0.59   

Stock compensation

     0.14         0.14         0.40         0.37   

Acquisition-related costs

     0.03         0.00         0.05         0.04   

Restructuring charges

     —           —           0.10         —     

Legal and tax matters

     (0.06      (0.03      (0.07      (0.10

Tax adjustments

     (0.04      (0.09      (0.11      (0.26
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP net income per share

   $ 0.63       $ 0.65       $ 2.11      $ 1.89   
  

 

 

    

 

 

    

 

 

    

 

 

 

Shares used in calculation

     158,584         157,622         157,850         157,253   

 

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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 Fourth Quarter Fiscal Year 2015 Targets

(in thousands, except per share amounts)

 

     Range for Three Months
Ending October 31, 2015 (1)
 
     Low      High  

Target GAAP expenses

   $ 503,000       $ 521,000   

Adjustments:

     

Estimated impact of amortization of intangible assets

     (33,000      (36,000

Estimated impact of stock compensation

     (20,000      (25,000
  

 

 

    

 

 

 

Target non-GAAP expenses

   $ 450,000      $ 460,000   
  

 

 

    

 

 

 
     Range for Three Months
Ending October 31, 2015 (1)
 
     Low      High  

Target GAAP earnings per share

   $ 0.31       $ 0.38   

Adjustments:

     

Estimated impact of amortization of intangible assets

     0.23         0.21   

Estimated impact of stock compensation

     0.16         0.13   

Estimated impact of tax adjustments

     (0.05      (0.05
  

 

 

    

 

 

 

Target non-GAAP earnings per share

   $ 0.65      $ 0.67   
  

 

 

    

 

 

 

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

     157,000        157,000   
GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2015 Targets   
     Range for Fiscal Year
Ending October 31, 2015 (1)
 
     Low      High  

Target GAAP earnings per share

   $ 1.43       $ 1.50   

Adjustments:

     

Estimated impact of amortization of intangible assets

     0.85         0.83   

Estimated impact of stock compensation

     0.57         0.54   

Acquisition-related costs

     0.05         0.05   

Restructuring charges

     0.10         0.10   

Legal and tax matters

     (0.07      (0.07

Estimated net non-GAAP tax adjustments

     (0.17      (0.17
  

 

 

    

 

 

 

Target non-GAAP earnings per share

   $ 2.76      $ 2.78   
  

 

 

    

 

 

 

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

     157,000         157,000   

 

(1) Synopsys’ fourth quarter and fiscal year end on October 31, 2015.

 

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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 366153, 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 fourth quarter and fiscal year 2015 in December 2015. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and co-chief executive officer, and Trac Pham, 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 fourth quarter and fiscal year 2015 earnings call in December 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 fourth quarter of fiscal year 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 third quarter fiscal 2015 in its quarterly report on Form 10-Q to be filed by Sept. 10, 2015.

About Synopsys

Synopsys, Inc. (Nasdaq:SNPS) is the Silicon to Software™ partner for innovative companies developing the electronic products and software applications we rely on every day. As the

 

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world’s 15th largest software company, Synopsys has a long history of being a global leader in electronic design automation (EDA) and semiconductor IP, and is also growing its leadership in software quality and security solutions. Whether you’re a system-on-chip (SoC) designer creating advanced semiconductors, or a software developer writing applications that require the highest quality and security, Synopsys has the solutions needed to deliver innovative, high-quality, secure products. Learn more at 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, 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 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, which could result in possible delays in customer orders, potential loss of customers, key employees, partners or vendors,

 

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uncertain 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 Oct. 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

 

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described in the “Risk Factors” section in its latest Quarterly Report on Form 10-Q. Furthermore, Synopsys’ actual tax rates applied to income for the fourth 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, tax law changes, and actions by government authorities. Finally, Synopsys’ targets for outstanding shares in the fourth 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.

###

 

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SYNOPSYS, INC.

Unaudited Consolidated Statements of Operations (1)

(in thousands, except per share amounts)

 

     Three Months Ended
July 31,
     Nine Months Ended
July 31,
 
     2015     2014      2015      2014  

Revenue:

          

Time-based license

   $ 445,807      $ 431,184      $ 1,324,677      $ 1,255,515   

Upfront license

     48,878        31,594        139,671        101,863   

Maintenance and service

     61,120        59,034        190,704        161,082   
  

 

 

   

 

 

    

 

 

    

 

 

 

Total revenue

     555,805        521,812        1,655,052        1,518,460   

Cost of revenue:

          

License

     77,516        68,573        218,650        198,700   

Maintenance and service

     25,251        20,685        82,244        62,065   

Amortization of intangible assets

     26,704        26,272        78,182        74,699   
  

 

 

   

 

 

    

 

 

    

 

 

 

Total cost of revenue

     129,471        115,530        379,076        335,464   
  

 

 

   

 

 

    

 

 

    

 

 

 

Gross margin

     426,334        406,282        1,275,976        1,182,996   

Operating expenses:

          

Research and development

     197,999        182,809        567,924        528,395   

Sales and marketing

     116,988        112,271        343,736        332,847   

General and administrative

     43,925        37,438        121,254        112,246   

Amortization of intangible assets

     6,188        6,537        19,066        18,291   

Restructuring charges

     (248     —           15,088        —     
  

 

 

   

 

 

    

 

 

    

 

 

 

Total operating expenses

     364,852        339,055        1,067,068        991,779   
  

 

 

   

 

 

    

 

 

    

 

 

 

Operating income

     61,482        67,227        208,908        191,217   

Other income (expense), net

     3,711        3,544        16,784        18,797   
  

 

 

   

 

 

    

 

 

    

 

 

 

Income before income taxes

     65,193        70,771        225,692        210,014   

Provision (benefit) for income taxes

     9,806        5,115        49,520        13,345   
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income

   $ 55,387      $ 65,656      $ 176,172      $ 196,669   
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income per share:

          

Basic

   $ 0.36      $ 0.42      $ 1.14      $ 1.27   

Diluted

   $ 0.35      $ 0.42      $ 1.12      $ 1.25   

Shares used in computing per share amounts:

          

Basic

     155,533        155,194        154,835        154,611   
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted

     158,584        157,622        157,850        157,253   
  

 

 

   

 

 

    

 

 

    

 

 

 

 

(1) Synopsys’ third quarter for fiscal year 2015 and 2014 ended on August 1, 2015 and August 2, 2014, respectively. For presentation purposes, we refer to closest calendar month end.

 

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SYNOPSYS, INC.

Unaudited Consolidated Balance Sheets (1)

(in thousands, except par value amounts)

 

     July 31, 2015     October 31, 2014  

ASSETS:

    

Current assets:

    

Cash and cash equivalents

   $ 986,423     $ 985,762   

Short-term investments

     136,496       —     
  

 

 

   

 

 

 

Total cash, cash equivalents and short-term investments

     1,122,919       985,762   

Accounts receivable, net

     307,825       326,727   

Deferred income taxes

     75,939       111,449   

Income taxes receivable and prepaid taxes

     36,344        26,496   

Prepaid and other current assets

     84,510        54,301   
  

 

 

   

 

 

 

Total current assets

     1,627,537       1,504,735   

Property and equipment, net

     260,667       249,098   

Goodwill

     2,335,816       2,255,708   

Intangible assets, net

     318,499       365,030   

Long-term prepaid taxes

     13,800        17,645   

Long-term deferred income taxes

     211,733       208,156   

Other long-term assets

     185,920       175,127   
  

 

 

   

 

 

 

Total assets

   $ 4,953,972     $ 4,775,499   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

    

Current liabilities:

    

Accounts payable and accrued liabilities

   $ 330,825      $ 397,113   

Accrued income taxes

     25,750        31,404   

Deferred revenue

     912,768        928,242   

Short-term debt

     190,000        30,000   
  

 

 

   

 

 

 

Total current liabilities

     1,459,343        1,386,759   

Long-term accrued income taxes

     39,207        50,952   

Long-term deferred revenue

     90,569        77,646   

Long-term debt

     22,500        45,000   

Other long-term liabilities

     204,105        158,972   
  

 

 

   

 

 

 

Total liabilities

     1,815,724        1,719,329   

Stockholders’ equity:

    

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

     —          —     

Common stock, $0.01 par value: 400,000 shares authorized; 155,929 and 155,965 shares outstanding, respectively

     1,559        1,560   

Capital in excess of par value

     1,604,994        1,614,603   

Retained earnings

     1,688,764        1,551,592   

Treasury stock, at cost: 1,336 and 1,299 shares, respectively

     (61,204     (49,496

Accumulated other comprehensive income (loss)

     (95,865     (62,089
  

 

 

   

 

 

 

Total stockholders’ equity

     3,138,248        3,056,170   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 4,953,972      $ 4,775,499   
  

 

 

   

 

 

 

 

(1) Synopsys’ third quarter for fiscal year 2015 ended on August 1, 2015. Fiscal year 2014 ended on November 1, 2014. For presentation purposes, we refer to the closest calendar month end.

 

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SYNOPSYS, INC.

Unaudited Consolidated Statements of Cash Flows (1)

(in thousands)

 

     Nine Months Ended July 31,  
     2015     2014  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

   $ 176,172     $ 196,669   

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

    

Amortization and depreciation

     154,535       140,750   

Stock compensation

     63,463       58,341   

Allowance for doubtful accounts

     1,100       (750

(Gain) loss on sale of investments

     (22 )     (6,538

Deferred income taxes

     24,134       7,459   

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

    

Accounts receivable

     16,976       24,834   

Prepaid and other current assets

     (35,836 )     982   

Other long-term assets

     (16,141 )     (18,847

Accounts payable and accrued liabilities

     (25,512 )     (28,270

Income taxes

     (20,633 )     (18,950

Deferred revenue

     4,507       22,361   
  

 

 

   

 

 

 

Net cash provided by operating activities

     342,743       378,041   

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Proceeds from sales and maturities of short-term investments

     48,155       —     

Purchases of short-term investments

     (185,402 )     —     

Proceeds from sales of long-term investments

     —          7,313   

Purchases of property and equipment

     (67,708 )     (58,085

Cash paid for acquisitions and intangible assets, net of cash acquired

     (126,883 )     (373,513

Capitalization of software development costs

     (2,798 )     (2,812

Other

     900       (3,000
  

 

 

   

 

 

 

Net cash used in investing activities

     (333,736 )     (430,097

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Proceeds from credit facility

     410,000       200,000   

Repayment of debt

     (272,924 )     (223,239

Issuances of common stock

     56,414       45,336   

Purchases of treasury stock

     (180,000 )     (79,747

Other

     (116     (5,008
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     13,374       (62,658

Effect of exchange rate changes on cash and cash equivalents

     (21,720 )     (4,681
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     661       (119,395

Cash and cash equivalents, beginning of the year

     985,762       1,022,441   
  

 

 

   

 

 

 

Cash and cash equivalents, end of the period

   $ 986,423     $ 903,046   
  

 

 

   

 

 

 

 

(1) Synopsys’ third quarter for fiscal year 2015 and 2014 ended on August 1, 2015 and August 2, 2014, respectively. For presentation purposes, we refer to closest calendar month end.

 

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