Synopsys Posts Financial Results for Second Quarter Fiscal Year 2009

MOUNTAIN VIEW, Calif., May 20 /PRNewswire/ --

MOUNTAIN VIEW, Calif., May 20 /PRNewswire-FirstCall/ -- Synopsys, Inc. (NASDAQ: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its second quarter ended April 30, 2009.

For the second quarter of fiscal 2009, Synopsys reported revenue of $336.8 million, a 3.8 percent increase compared to $324.6 million for the second quarter of fiscal 2008.

"Synopsys continues to execute well in an environment that still shows signs of economic stress," said Aart de Geus, chairman and CEO of Synopsys. "Customers are choosing Synopsys for its strong technology, global support, continued investment in the future, and financial strength."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2009 was $48.3 million, or $0.33 per share, compared to $39.4 million, or $0.27 per share, for the second quarter of fiscal 2008.

Non-GAAP Results

On a non-GAAP basis, net income for the second quarter of fiscal 2009 was $65.9 million, or $0.45 per share, compared to non-GAAP net income of $59.7 million, or $0.41 per share, for the second quarter of fiscal 2008. Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

Financial Targets

Synopsys also provided its financial targets for the third quarter and full fiscal year 2009. 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 2009 Targets:

    --  Revenue: $342 million - $350 million
    --  GAAP expenses: $284.5 million - $300 million
    --  Non-GAAP expenses: $261 million - $271 million
    --  Other income and expense: $0 - $3 million
    --  Tax rate applied in non-GAAP net income calculations: approximately 27
        percent
    --  Fully diluted outstanding shares: 144 million - 149 million
    --  GAAP earnings per share: $0.26 - $0.31
    --  Non-GAAP earnings per share: $0.40 - $0.42
    --  Revenue from backlog: greater than 90 percent

Full-Year Fiscal Year 2009 Targets:

    --  Revenue: approximately $1.35 billion - $1.38 billion
    --  Other income and expense: $14 million - $18 million
    --  Tax rate applied in non-GAAP net income calculations: approximately 27
        percent
    --  Fully diluted outstanding shares: 144 million - 149 million
    --  GAAP earnings per share: $1.11 - $1.26
    --  Non-GAAP earnings per share: $1.62 - $1.72
    --  Cash flow from operations: $170 million - $190 million (excludes
        potential impact of a tentative settlement with the Internal Revenue
        Service, described below)

In the second quarter, the Company reached a tentative settlement with the IRS that would resolve a dispute regarding its 2002-2004 returns, primarily associated with the acquisition of Avant!. The tentative settlement is subject to further approval by the government. If approved, we do not expect a material impact to the Company's income statement. However, we do expect it to result in a cash payment to the IRS of approximately $50 million, most likely within the next 12 months. If the tentative settlement is approved, this payment would be fully offset by tax reductions in future years.

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) share-based compensation; (ii) the amortization of acquired intangible assets and in-process research and development charges; and (iii) the income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes; 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 such 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 Second Quarter Fiscal Year 2009 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 Results
            (Unaudited and in thousands, except per share amounts)

                               Three Months Ended  Six Months Ended

                                     April 30,          April 30,
                                    ---------          ---------
                                   2009     2008      2009      2008
                                   ----     ----      ----      ----
    GAAP net income             $48,288  $39,387  $100,717   $85,832
    Adjustments:
        Amortization of
         intangible assets       10,620   12,407    22,428    24,031
        Share-based
         compensation            14,661   17,841    28,804    33,485
        In-process research and
         development                  -        -       600                  -
                Tax  effect                              (7,666)    (9,975)    (15,050)    (17,672)
                                                                  ------      ------      -------      -------
        Non-GAAP  net  income                  $65,903    $59,660    $137,499    $125,676
                                                                =======    =======    ========    ========



                                                                Three  Months  Ended    Six  Months  Ended
                                                                            April  30,                    April  30,
                                                                      -------------            --------------
                                                                      2009          2008            2009            2008
                                                                      ----          ----            ----            ----
        GAAP  earnings
          per  share                                        $0.33        $0.27          $0.70          $0.58
        Adjustments:
                Amortization  of
                  intangible  assets                  0.07          0.09            0.16            0.16
                Share-based
                  compensation                            0.10          0.12            0.19            0.23
                In-process  research  and
                  development                                    -                -            0.01                  -
                Tax  effect                                (0.05)      (0.07)        (0.11)        (0.12)
                                                                    -----        -----          -----          -----
        Non-GAAP  earnings
          per  share                                        $0.45        $0.41          $0.95          $0.85
                                                                    =====        =====          =====          =====

        Shares  used  in  calculation    145,421    145,271      144,024      147,801
 


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