Synopsys Posts Financial Results for Fourth Quarter and Fiscal Year 2012

Q4 2012 Financial Highlights

(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 fourth quarter and fiscal year 2012.

For the fourth quarter of fiscal 2012, Synopsys reported revenue of $454.2 million, compared to $390.5 million for the fourth quarter of fiscal 2011.  Revenue for fiscal year 2012 was $1.756 billion, an increase of 14.3 percent from $1.536 billion in fiscal 2011.

"Synopsys delivered very strong fiscal 2012 results with double-digit revenue and non-GAAP earnings per share growth.  Simultaneously we also completed a significant number of important acquisitions during the year," said Aart de Geus, chairman and co-CEO of Synopsys.  "Electronic design automation solutions are more critical than ever, as semiconductor companies face significant technical challenges while racing to design highly complex chips and systems.  Synopsys is particularly well-positioned heading into 2013, based on our technology leadership, significant customer demand, and our predictable business model."

GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter of fiscal 2012 was $29.1 million, or $0.19 per share, compared to $39.9 million, or $0.27 per share, for the fourth quarter of fiscal 2011.  GAAP net income for fiscal year 2012 was $182.4 million, or $1.21 per share, compared to $221.4 million, or $1.47 per share, for fiscal 2011.  Net income for fiscal 2012 included $43.6 million of acquisition-related costs, plus higher amortization of intangibles than in the previous year primarily due to acquisitions.  Due to our fiscal calendar, the first quarter of fiscal year 2012 included an extra week.

Non-GAAP Results
On a non-GAAP basis, net income for the fourth quarter of fiscal 2012 was $72.4 million, or $0.47 per share, compared to non-GAAP net income of $65.3 million, or $0.45 per share, for the fourth quarter of fiscal 2011.  Non-GAAP net income for fiscal 2012 was $315.5 million, or $2.10 per share, compared to non-GAAP net income of $270.3 million, or $1.80 per share, for fiscal 2011.  Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.  Due to our fiscal calendar, the first quarter of fiscal year 2012 included an extra week.

Financial Targets
Synopsys also provided its financial targets for the first quarter and full fiscal year 2013.  These targets do not include any impact of future acquisition-related activities.  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. 

First Quarter of Fiscal Year 2013 Targets:

  • Revenue: $468 million - $478 million
  • GAAP expenses: $403 million - $419 million
  • Non-GAAP expenses: $356 million - $366 million
  • Other income and expense: ($2) million - $0 million
  • Tax rate applied in non-GAAP net income calculations: 25 - 26 percent
  • Fully diluted outstanding shares: 153 million - 157 million
  • GAAP earnings per share: $0.30 - $0.35
  • Non-GAAP earnings per share: $0.54 - $0.56
  • Revenue from backlog: greater than 90 percent

Full Fiscal Year 2013 Targets:

  • Revenue: $1.955 billion - $1.975 billion
  • Other income and expense: ($4) million - $0 million
  • Tax rate applied in non-GAAP net income calculations: 25 - 26 percent
  • Fully diluted outstanding shares: 155 million - 159 million
  • GAAP earnings per share: $1.32 - $1.46
  • Non-GAAP earnings per share: $2.26 - $2.31
  • Cash flow from operations: at least $350 million
  • Revenue from backlog: approximately 80 percent

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 charges and the effect of benefits from 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 Fourth Quarter and Fiscal Year 2012 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 Fourth Quarter and Fiscal Year 2012 Results

(unaudited and in thousands, except per share amounts)










Three Months Ended


Twelve Months Ended


October 31,


October 31,


2012


2011


2012


2011

GAAP net income

$ 29,081


$ 39,942


$ 182,402


$ 221,364

Adjustments:








Amortization of intangible assets

28,355


16,852


99,859


69,420

Stock compensation

17,336


14,984


71,414


56,414

Acquisition-related costs

7,861


963


43,600


1,231

Inventory fair value adjustments

919


-


919


-

Facility restructuring charges

-


-


470


-

Benefit from tax settlements (1)

-


-


(36,882)


(32,782)

Tax adjustments

(11,187)


(7,414)


(46,255)


(45,374)

Non-GAAP net income 

$ 72,365


$ 65,327


$ 315,527


$ 270,273


























Three Months Ended


Twelve Months Ended


October 31,


October 31,


2012


2011


2012


2011

GAAP net income per share

$     0.19


$     0.27


$       1.21


$       1.47

Adjustments:








Amortization of intangible assets

0.18


0.12


0.66


0.46

Stock compensation

0.11


0.10


0.48


0.38

Acquisition-related costs

0.05


0.01


0.30


0.01

Inventory fair value adjustments

0.01


-


0.01


-

Facility restructuring charges

-


-


0.00


-

Benefit from tax settlements (1)

-


-


(0.25)


(0.22)

Tax adjustments

(0.07)


(0.05)


(0.31)


(0.30)

Non-GAAP net income per share

$     0.47


$     0.45


$       2.10


$       1.80









Shares used in calculation

153,271


146,350


150,280


150,367









(1) Tax settlements included estimated interest.









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