Synopsys Posts Financial Results for First Quarter Fiscal Year 2014

Q1 2014 Financial Highlights

MOUNTAIN VIEW, Calif., Feb. 19, 2014 — (PRNewswire) — 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 first quarter of fiscal year 2014.

For the first quarter of fiscal year 2014, Synopsys reported revenue of $479.0 million, compared to $475.1 million for the first quarter of fiscal 2013, an increase of approximately 1 percent.  

"Synopsys began the year with a strong first quarter, featuring continued customer successes and excellent progress preparing for a number of upcoming product announcements," said Aart de Geus, chairman and co-CEO of Synopsys. "While customers are cautious in their spending, technology demands continue unabated, making great EDA and IP solutions essential for their success."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the first quarter of fiscal 2014 was $67.7 million, or $0.43 per share, compared to $69.9 million, or $0.45 per share, for the first quarter of fiscal 2013.

Non-GAAP Results

On a non-GAAP basis, net income for the first quarter of fiscal 2014 was $93.1 million, or $0.59 per share, compared to non-GAAP net income of $103.0 million, or $0.67 per share, for the first quarter of fiscal 2013.  Reconciliation between GAAP and non-GAAP results is provided at the end of this press release. 

Fiscal first quarter 2013 GAAP and non-GAAP results included the impact of the reinstatement of the federal R&D tax credit for 2012 and 2013.

Financial Targets

Synopsys also provided its financial targets for the second quarter and full fiscal year 2014.  These targets do not include any impact of future acquisition-related activities or costs that may be incurred in fiscal year 2014. 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.

Second Quarter of Fiscal Year 2014 Targets:

  • Revenue: $505 million - $515 million
  • GAAP expenses: $422 million - $444 million
  • Non-GAAP expenses: $377 million - $387 million
  • Other income and expense: $0 - $1 million
  • Tax rate applied in non-GAAP net income calculations: approximately 24 percent
  • Fully diluted outstanding shares: 155 million - 159 million
  • GAAP earnings per share: $0.33- $0.41
  • Non-GAAP earnings per share: $0.60 - $0.62

Full Fiscal Year 2014 Targets:

  • Revenue: $2.03 billion - $2.065 billion
  • Other income and expense: $8 million - $11 million
  • Tax rate applied in non-GAAP net income calculations: approximately 24 percent
  • Fully diluted outstanding shares: 155 million - 159 million
  • GAAP earnings per share: $1.72 - $1.83
  • Non-GAAP earnings per share: $2.55 - $2.60
  • Cash flow from operations: $425 million - $450 million

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 the effect of tax settlements with tax authorities, 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.

Reconciliation of First Quarter Fiscal Year 2014 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 First Quarter Fiscal Year 2014 Results

(unaudited and in thousands, except per share amounts)






Three Months Ended


January 31,


2014


2013

GAAP net income

$                 67,696


$                 69,922

Adjustments:




Amortization of intangible assets

28,131


32,403

Stock compensation

18,118


17,701

Acquisition-related costs

1,074


1,836

Inventory fair value adjustment

-


1,809

Facility restructuring charges

-


(272)

Tax settlement impacts

(10,267)


-

Tax adjustments

(11,665)


(20,432)

Non-GAAP net income 

$                 93,087


$               102,967














Three Months Ended


January 31,


2014


2013

GAAP net income per share

$                     0.43


$                     0.45

Adjustments:




Amortization of intangible assets

0.18


0.21

Stock compensation

0.12


0.12

Acquisition-related costs

0.01


0.01

Inventory fair value adjustment

-


0.01

Facility restructuring charges

-


(0.00)

Tax settlement impacts

(0.07)


-

Tax adjustments

(0.08)


(0.13)

Non-GAAP net income per share

$                     0.59


$                     0.67





Shares used in calculation

156,756


154,531


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