Synopsys Posts Financial Results for Second Quarter Fiscal Year 2011

(PRNewswire) — Synopsys, Inc. (Nasdaq: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its second quarter of fiscal year 2011.

 

For the second quarter of fiscal year 2011, Synopsys reported revenue of $393.7 million, compared to $338.1 million for the second quarter of fiscal 2010, an increase of 16.4%.  

"Synopsys delivered strong second quarter results as we continue to execute well," said Aart de Geus, chairman and CEO of Synopsys.  "Our technology pipeline, delivery and customer adoption remain strong, and we continue to see momentum in our IP and Systems products."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2011 was $81.1 million, or $0.53 per share, compared to $39.5 million, or $0.26 per share, for the second quarter of fiscal 2010.  Net income for the second quarter of fiscal 2011 includes a one-time $32.8 million, or $0.21 per share, tax benefit associated with a settlement with the IRS for audits for fiscal years 2006 through 2009.

Non-GAAP Results

On a non-GAAP basis, net income for the second quarter of fiscal 2011 was $68.5 million, or $0.45 per share, compared to non-GAAP net income of $61.9 million, or $0.41 per share, for the second quarter of fiscal 2010.  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 2011.  These targets do not include future acquisition-related costs that may be incurred in fiscal 2011.  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 2011 Targets:

  • Revenue: $378 million - $386 million
  • GAAP expenses: $319 million - $337 million
  • Non-GAAP expenses: $292 million - $302 million
  • Other income and expense: $0 - $2 million
  • Tax rate applied in non-GAAP net income calculations: 24 - 25 percent
  • Fully diluted outstanding shares: 149 million - 153 million
  • GAAP earnings per share: $0.25 - $0.31
  • Non-GAAP earnings per share: $0.41 - $0.43
  • Revenue from backlog: greater than 90 percent

 

Full Fiscal Year 2011 Targets:

  • Revenue: $1.5 billion - $1.525 billion
  • Other income and expense: $1 million - $5 million
  • Tax rate applied in non-GAAP net income calculations: 24 - 25 percent
  • Fully diluted outstanding shares: 149 million - 153 million
  • GAAP earnings per share: $1.33 - $1.46
  • Non-GAAP earnings per share: $1.70 - $1.77
  • Cash flow from operations: approximately $300 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, (iv) other significant items, including the effect of tax benefits from settlements with the Internal Revenue Service, and (v) the income tax effect of 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 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 2011 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 2011 Results

(unaudited and in thousands, except per share amounts)










Three Months Ended


Six Months Ended


April 30,


April 30,


2011


2010


2011


2010

GAAP net income

$ 81,114


$ 39,549


$ 129,340


$ 172,335

Adjustments:








Amortization of intangible assets

18,664


11,814


35,647


22,464

Stock compensation

12,666


13,466


27,914


30,700

Acquisition-related costs (1)

(1,616)


6,120


466


7,166

Tax benefit from IRS settlement

(32,782)


-


(32,782)


(91,649)

Tax effect

(9,511)


(9,015)


(23,733)


(16,663)

Non-GAAP net income

$ 68,535


$ 61,934


$ 136,852


$ 124,353


























Three Months Ended


Six Months Ended


April 30,


April 30,


2011


2010


2011


2010

GAAP net income per share

$     0.53


$     0.26


$       0.84


$       1.14

Adjustments:








Amortization of intangible assets

0.12


0.08


0.23


0.15

Stock compensation

0.08


0.09


0.18


0.20

Acquisition-related costs (1)

(0.01)


0.04


0.00


0.05

Tax benefit from IRS settlement

(0.21)


-


(0.21)


(0.61)

Tax effect

(0.06)


(0.06)


(0.15)


(0.11)

Non-GAAP net income per share

$     0.45


$     0.41


$       0.89


$       0.82









Shares used in calculation

152,593


152,482


153,198


151,635









(1) Included changes to the fair value of contingent consideration related to a prior year acquisition.




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