Synopsys Posts Financial Results for Third Quarter Fiscal Year 2009

MOUNTAIN VIEW, Calif., Aug. 19 /PRNewswire-FirstCall/ -- Synopsys, Inc. (NASDAQ: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its third quarter ended July 31, 2009.

For the third quarter of fiscal 2009, Synopsys reported revenue of $345.2 million compared to $344.1 million for the third quarter of fiscal 2008.

"Synopsys again made excellent progress towards delivering on our year's objectives," said Aart de Geus, chairman and CEO of Synopsys. "We are actively working with customers to help them successfully navigate the economic recovery, and are positioning ourselves for even greater strength in the future."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal 2009 was $47.4 million, or $0.32 per share, compared to $57.7 million, or $0.39 per share, for the third quarter of fiscal 2008, which included a $17.3 million tax benefit associated with the settlement of an IRS tax issue for fiscal years 2000 and 2001.

Non-GAAP Results

On a non-GAAP basis, net income for the third quarter of fiscal 2009 was $68.3 million, or $0.47 per share, compared to non-GAAP net income of $64.5 million, or $0.44 per share, for the third 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 fourth 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.

Fourth Quarter of Fiscal Year 2009 Targets:

    --  Revenue: $335 million - $343 million
    --  GAAP expenses: $297 million - $313 million
    --  Non-GAAP expenses: $272 million - $282 million
    --  Other income and expense: $0 - $3 million
    --  Tax rate applied in non-GAAP net income calculations: approximately 26
        percent
    --  Fully diluted outstanding shares: 146 million - 149 million
    --  GAAP earnings per share: $0.14 - $0.21
    --  Non-GAAP earnings per share: $0.29 - $0.33
    --  Revenue from backlog: greater than 90 percent

Full-Year Fiscal Year 2009 Targets:

    --  Revenue: approximately $1.357 billion - $1.365 billion
    --  Other income and expense: $11 million - $14 million
    --  Tax rate applied in non-GAAP net income calculations: approximately 27
        percent
    --  Fully diluted outstanding shares: 144 million - 146.5 million
    --  GAAP earnings per share: $1.16 - $1.23
    --  Non-GAAP earnings per share: $1.71 - $1.75
    --  Cash flow from operations: $190 million - $210 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 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; (iii) other significant items, including the effect of a tax benefit from a settlement with the Internal Revenue Service, and (iv) 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 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 Third 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 Third Quarter Results
             (Unaudited and in thousands, except per share amounts)

                                     Three Months Ended  Nine Months Ended
                                          July 31,           July 31,
                                          --------           --------
                                        2009     2008      2009      2008
                                        ----     ----      ----      ----
    GAAP net income                  $47,436  $57,749  $148,153  $143,581
    Adjustments:
        Amortization of intangible
         assets                       11,408   10,810    33,836    34,841
        Share-based compensation      13,995   17,321    42,799    50,806
        In-process research and
         development                                     400        4,800          1,000          4,800
                Tax  benefit  from  IRS
                  settlement                                                -    (17,253)                -      (17,253)
                Tax  effect                                        (4,941)    (8,923)    (19,991)    (26,595)
                                                                            ------      ------      -------      -------
        Non-GAAP  net  income                            $68,298    $64,504    $205,797    $190,180
                                                                          =======    =======    ========    ========


                                                                          Three  Months  Ended    Nine  Months  Ended
                                                                                    July  31,                      July  31,
                                                                                    --------                      --------
                                                                                2009          2008            2009            2008
                                                                                ----          ----            ----            ----
        GAAP  earnings  per  share                        $0.32        $0.39          $1.02          $0.97
        Adjustments:
                Amortization  of  intangible
                  assets                                                  0.08          0.07            0.23            0.24
                Share-based  compensation                0.10          0.12            0.30            0.34
                In-process  research  and
                  development                                        0.00          0.03            0.01            0.03
                Tax  benefit  from  IRS
                  settlement                                                -        (0.12)                -          (0.12)
                Tax  effect                                          (0.03)      (0.05)        (0.14)        (0.17)
                                                                              -----        -----          -----          -----
        Non-GAAP  earnings  per  share                $0.47        $0.44          $1.42          $1.29
                                                                              =====        =====          =====          =====

        Shares  used  in  calculation              146,063    147,486      144,699      147,760
 


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