MOUNTAIN VIEW, Calif.,
Aug. 21, 2019 /PRNewswire/
-- Synopsys, Inc. (Nasdaq: SNPS) today reported results for
its third quarter of fiscal year 2019. Revenue was $853.0 million, compared to $779.7 million for the third quarter of fiscal
year 2018, an increase of 9.4 percent.
"Synopsys continues to execute very well and delivered excellent
third fiscal quarter revenue, operating margin, non-GAAP earnings
and cash flow. In Q3, we also implemented a $100 million share repurchase, bringing our total
for the year to $229 million," said
Aart de Geus, chairman and co-CEO of
Synopsys. "Despite the uncertain geopolitical and economic
backdrop, global design activity and customer engagements are
thriving. Our product platforms are the strongest they've ever
been, driving technology wins and competitive displacements. As a
result of our year-to-date overachievement and broad-based strength
across the business, we're raising our annual guidance ranges."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net
income for the third quarter of fiscal 2019 was $99.9 million, or $0.65 per share, compared to $79.4 million, or $0.52 per share, for the third quarter of fiscal
2018.
Non-GAAP Results
For the third quarter of fiscal 2019, on a non-GAAP basis, net
income was $182.5 million, or
$1.18 per share, compared to non-GAAP
net income of $145.6 million, or
$0.95 per share, for the third
quarter of fiscal 2018.
For a reconciliation between GAAP and non-GAAP results, see
"GAAP to Non-GAAP Reconciliation" and the accompanying tables
below.
Business Segments
Effective in fiscal year 2019, Synopsys reports revenue and
operating income in two segments: (1) Semiconductor & System
Design, which includes EDA tools, IP products, system integration
solutions and associated services, and (2) Software Integrity,
which includes security and quality solutions for software
development across many industries. Further information regarding
these segments is provided at the end of this press release.
Financial Targets
Synopsys also provides its consolidated financial targets for
the fourth quarter and full fiscal year 2019, which do not include
any impact of future acquisition-related activities or costs. These
financial targets reflect the current status of certain customers
currently on the U.S. government's "Entity List," and do not assume
any revenue in the fourth fiscal quarter from such customers. 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.
Fourth Quarter and
Fiscal Year 2019 Financial Targets - ASC 606
|
(in millions
except per share amounts)
|
|
|
|
|
|
|
|
Q4'19
|
|
FY'19
|
|
Low
|
High
|
|
Low
|
High
|
Revenue
(2)
|
$
830
|
$
860
|
|
$ 3,340
|
$ 3,370
|
GAAP
Expenses
|
$
701
|
$
733
|
|
$ 2,820
|
$ 2,852
|
Non-GAAP
Expenses
|
$
630
|
$
650
|
|
$ 2,512
|
$ 2,532
|
Other Income
(expense)
|
$
(2)
|
$
-
|
|
$
(4)
|
$
(2)
|
Normalized Annual Tax
Rate (1)
|
16%
|
16%
|
|
16%
|
16%
|
Outstanding Shares
(fully diluted)
|
153
|
156
|
|
153
|
156
|
GAAP EPS
|
$ 0.69
|
$ 0.82
|
|
$
3.11
|
$
3.24
|
Non-GAAP
EPS
|
$ 1.10
|
$ 1.15
|
|
$
4.52
|
$
4.57
|
Operating Cash
Flow
|
|
|
|
|
~$750
|
|
(1) Applied in
non-GAAP net income calculations.
|
(2) We operate and
plan the business under current ASC 606 rules and regulations. In
previous quarters, we provided a set of FY19 comparative metrics
based on the former ASC 605 rules. However, our estimates of what
revenue would have been under the previous rules have become
increasingly inconsistent with, and therefore do not reflect, the
underlying fundamentals of the business. Nevertheless, we estimate
that FY19 target revenue using the previous ASC 605 would be
approximately $80 million less than our actual target range under
the current ASC 606. Given the lack of relevance, we no longer
provide detailed comparative metrics.
|
Earnings Call Open to Investors
Synopsys will hold a conference call for financial analysts and
investors today at 2:00 p.m. Pacific Time. A live webcast of
the call will be available on Synopsys' corporate website at
www.synopsys.com. A recording of the call will be available by
calling +1-800-475-6701 (+1-320-365-3844 for international
callers), access code 470604, beginning at 4:00 p.m. Pacific Time today, until 11:59 p.m. Pacific Time on Aug. 28, 2019. A webcast replay will also be
available on the website from approximately 5:30 p.m. Pacific Time today through the time
Synopsys announces its results for the fourth quarter and fiscal
year 2019 in December 2019. Synopsys will post copies of the
prepared remarks of Aart de Geus,
chairman and co-chief executive officer, and Trac Pham, chief financial officer, on its
website following today's call. In addition, Synopsys makes
additional information available in a financial supplement and
corporate overview presentation, also posted on the corporate
website.
Effectiveness of Information
The targets included in this press release, the statements made
during the earnings conference call and the information contained
in the financial supplement and corporate overview presentation
(available in the Investor Relations section of Synopsys' corporate
website at www.synopsys.com) represent Synopsys' expectations and
beliefs as of the date of this release only. Although this press
release, copies of the prepared remarks of the co-chief executive
officer and chief financial officer made during the call, the
financial supplement, and the corporate overview presentation will
remain available on Synopsys' website through the date of the
fourth quarter and fiscal year 2019 earnings call in December 2019, their continued availability
through such date does not mean that Synopsys is reaffirming or
confirming their continued validity. Synopsys does not currently
intend to report on its progress during the fourth quarter of
fiscal year 2019 or comment to analysts or investors on, or
otherwise update, the targets given in this release.
Availability of Final Financial Statements
Synopsys will include final financial statements for the third
quarter of fiscal year 2019 in its quarterly report on Form 10-Q to
be filed by Sept. 12, 2019.
About Synopsys
Synopsys, Inc. (Nasdaq: SNPS) is the Silicon to Softwareâ„¢
partner for innovative companies developing the electronic products
and software applications we rely on every day. As the world's 15th
largest software company, Synopsys has a long history of being a
global leader in electronic design automation (EDA) and
semiconductor IP and is also growing its leadership in software
security and quality solutions. Whether you're a system-on-chip
(SoC) designer creating advanced semiconductors, or a software
developer writing applications that require the highest security
and quality, Synopsys has the solutions needed to deliver
innovative, high-quality, secure products. Learn more at
www.synopsys.com.
GAAP to Non-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 core business operations and what Synopsys uses
to evaluate its business 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)
restructuring charges, (v) the effects of certain settlements,
final judgments and loss contingencies related to legal
proceedings, (vi) the various income tax impacts prompted by the
Tax Cut and Jobs Act of 2017 enacted on December 22, 2017 ("U.S. Tax Reform"), including
the income tax related to transition tax and the tax rate change,
and (vii) the income tax effect of non-GAAP pre-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.
Synopsys utilizes a normalized annual non-GAAP tax rate in the
calculation of its non-GAAP measures to provide better consistency
across interim reporting periods by eliminating the effects of
non-recurring and period-specific items such as tax audit
settlements, which can vary in size and frequency and not
necessarily reflect our normal operations, and to more clearly
align our tax rate with our expected geographic earnings mix.
In projecting this rate, we evaluate our historical and projected
mix of U.S. and international profit before tax, excluding the
impact of stock-based compensation, the amortization of purchased
intangibles and other non-GAAP adjustments described above. We also
consider other factors including our current tax structure, our
existing tax positions, and expected recurring tax incentives, such
as the U.S. federal research and development tax credit. On an
annual basis we re-evaluate this rate for significant events that
may materially affect our projections. We expect our annual
non-GAAP tax rate to be 16% in fiscal 2019 based upon our projected
normalized non-GAAP annual tax rate through fiscal 2021. We will
re-evaluate this rate on an annual basis, but further regulatory
guidance regarding specific parts of U.S. Tax Reform could
materially change our projections. Notwithstanding the foregoing,
we excluded from the normalized annual non-GAAP tax rate unusual
and infrequent events, such as tax audit settlements and certain
impacts of U.S. Tax Reform in fiscal 2018.
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, as
well as Item 2.02 of the Current Report on Form 8-K filed on
Aug. 21, 2019 for additional
information about the measures Synopsys uses to evaluate its core
business operations.
Reconciliation of Third Quarter Fiscal Year 2019 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 and Fiscal Year 2019 Results
(1)
|
(unaudited and in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
July
31,
|
|
July
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
GAAP net
income
|
$
99,929
|
|
$
79,409
|
|
$
371,653
|
|
$
178,190
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
intangible assets
|
23,714
|
|
30,805
|
|
77,138
|
|
90,538
|
Stock
compensation
|
39,453
|
|
37,252
|
|
114,827
|
|
102,540
|
Acquisition-related
costs
|
1,796
|
|
1,402
|
|
3,948
|
|
19,622
|
Restructuring
|
19,338
|
|
23
|
|
33,746
|
|
1,917
|
Legal
matters
|
-
|
|
26,000
|
|
(18,000)
|
|
26,000
|
Income tax related to
transition tax
|
-
|
|
-
|
|
-
|
|
73,434
|
Income tax related to
tax rate change
|
-
|
|
-
|
|
-
|
|
45,636
|
Tax
settlement
|
-
|
|
-
|
|
17,418
|
|
-
|
Tax
adjustments
|
(1,772)
|
|
(29,275)
|
|
(75,275)
|
|
(57,714)
|
Non-GAAP net
income
|
$
182,458
|
|
$
145,616
|
|
$
525,455
|
|
$
480,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
July
31,
|
|
July
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
GAAP net income per
share
|
$
0.65
|
|
$
0.52
|
|
$
2.42
|
|
$
1.16
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
intangible assets
|
0.15
|
|
0.20
|
|
0.50
|
|
0.59
|
Stock
compensation
|
0.25
|
|
0.24
|
|
0.75
|
|
0.67
|
Acquisition-related
costs
|
0.01
|
|
0.01
|
|
0.03
|
|
0.13
|
Restructuring
|
0.13
|
|
-
|
|
0.22
|
|
0.01
|
Legal
matters
|
-
|
|
0.17
|
|
(0.12)
|
|
0.17
|
Income tax related to
transition tax
|
-
|
|
-
|
|
-
|
|
0.48
|
Income tax related to
tax rate change
|
-
|
|
-
|
|
-
|
|
0.30
|
Tax
settlement
|
-
|
|
-
|
|
0.11
|
|
-
|
Tax
adjustments
|
(0.01)
|
|
(0.19)
|
|
(0.49)
|
|
(0.37)
|
Non-GAAP net income
per share
|
$
1.18
|
|
$
0.95
|
|
$
3.42
|
|
$
3.14
|
|
|
|
|
|
|
|
|
Shares used in
computing per share amounts:
|
154,600
|
|
152,614
|
|
153,859
|
|
153,118
|
|
|
|
|
|
|
|
|
(1) Synopsys' third
quarter of fiscal year 2019 and 2018 ended on August 3, 2019 and
August 4, 2018, respectively. For presentation purposes, we refer
to the closest calendar month end. The first quarter of fiscal 2018
included an extra week.
|
Reconciliation of Target Non-GAAP Operating Results
The following tables reconcile the specific items excluded from
GAAP in the calculation of target non-GAAP operating results for
the periods indicated below.
GAAP to Non-GAAP
Reconciliation of Fourth Quarter Fiscal Year 2019 Targets
(1)
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
ASC
606
|
|
Range for
Three Months
|
|
Ending October 31,
2019 (2)
|
|
Low
|
|
High
|
Target GAAP
expenses
|
$
701,000
|
|
$
733,000
|
Adjustments:
|
|
|
|
Estimated impact of
amortization of intangible assets
|
(23,000)
|
|
(26,000)
|
Estimated impact of
stock compensation
|
(39,000)
|
|
(42,000)
|
Estimated impact of
restructuring
|
(9,000)
|
|
(15,000)
|
Target non-GAAP
expenses
|
$
630,000
|
|
$
650,000
|
|
|
|
|
|
|
|
|
|
ASC
606
|
|
Range for Three
Months
|
|
Ending October 31,
2019 (2)
|
|
Low
|
|
High
|
Target GAAP earnings
per share
|
$
0.69
|
|
$
0.82
|
Adjustments:
|
|
|
|
Estimated impact of
amortization of intangible assets
|
0.17
|
|
0.15
|
Estimated impact of
stock compensation
|
0.27
|
|
0.25
|
Estimated impact of
restructuring
|
0.10
|
|
0.06
|
Estimated impact of
tax adjustments
|
(0.13)
|
|
(0.13)
|
Target non-GAAP
earnings per share
|
$
1.10
|
|
$
1.15
|
|
|
|
|
Shares used in
non-GAAP calculation (midpoint of target range)
|
154,500
|
|
154,500
|
|
|
|
|
|
|
|
|
GAAP to Non-GAAP
Reconciliation of Full Fiscal Year 2019
Targets(1)
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
ASC
606
|
|
Range for Fiscal
Year
|
|
October 31, 2019
(2)
|
|
Low
|
|
High
|
Target GAAP
expenses
|
$
2,820,148
|
|
$
2,852,148
|
Adjustments:
|
|
|
|
Estimated impact of
amortization of intangible assets
|
(100,000)
|
|
(103,000)
|
Estimated impact of
stock compensation
|
(154,000)
|
|
(157,000)
|
Acquisition-related
costs
|
(3,948)
|
|
(3,948)
|
Estimated impact of
restructuring
|
(43,000)
|
|
(49,000)
|
Legal
matters
|
18,000
|
|
18,000
|
Fair value changes in
executive deferred compensation plan
|
(25,200)
|
|
(25,200)
|
Target non-GAAP
expenses
|
$
2,512,000
|
|
$
2,532,000
|
|
|
|
|
|
|
|
|
|
ASC
606
|
|
Range for Fiscal
Year
|
|
October 31, 2019
(2)
|
|
Low
|
|
High
|
Target GAAP earnings
per share
|
$
3.11
|
|
$
3.24
|
Adjustments:
|
|
|
|
Estimated impact of
amortization of intangible assets
|
0.67
|
|
0.65
|
Estimated impact of stock
compensation
|
1.02
|
|
1.00
|
Acquisition-related
costs
|
0.03
|
|
0.03
|
Estimated impact of
restructuring
|
0.32
|
|
0.28
|
Legal matters
|
(0.12)
|
|
(0.12)
|
Tax settlement
|
0.11
|
|
0.11
|
Impact of tax
adjustments
|
(0.62)
|
|
(0.62)
|
Target non-GAAP
earnings per share
|
$
4.52
|
|
$
4.57
|
|
|
|
|
Shares used in
non-GAAP calculation (midpoint of target range)
|
154,500
|
|
154,500
|
|
(1) Synopsys adopted
new revenue recognition guidance ASC 606, Revenue from Contracts
with Customers, at the beginning of fiscal 2019 under the
modified retrospective method.
|
(2) Synopsys' fourth
fiscal quarter and fiscal year will end on November 2, 2019. For
presentation purposes, we refer to the closest calendar month
end.
|
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
including, but not limited to, financial targets for the fourth
quarter and full fiscal year 2019, the comparative annual amounts
under ASC 605, and GAAP to non-GAAP reconciliations of such
targets, as well as statements related to our long-term revenue,
non-GAAP EPS and non-GAAP operating margin objectives, the expected
impact of ASC 606 on our results, and the expected impact of the
recent U.S. government action on our results. These
statements involve known and unknown risks, uncertainties and other
factors that could cause actual results to differ materially from
those expressed or implied in our forward-looking statements.
Accordingly, we caution stockholders and prospective investors not
to place undue reliance on these statements. Such risks,
uncertainties and factors include, but are not limited to:
additional administrative, legislative or regulatory action by the
U.S. or foreign governments, such as the imposition of additional
tariffs or export restrictions, which could further interfere with
our ability to provide products and services in certain countries;
the response by current or potential customers and their
willingness to purchase products and services from us in the
future; uncertainty in the growth of the semiconductor and
electronics industries; consolidation among our customers and our
dependence on a relatively small number of large customers;
uncertainty in the global economy; fluctuation of our operating
results; increased variability in our revenue due to the adoption
of ASC 606, including the resulting increase in recognizing upfront
revenue as a percentage of total revenue; our highly competitive
industries and our ability to meet our customers' demand for
innovative technology at lower costs; risks and compliance
obligations relating to the global nature of our operations;
cybersecurity threats or other security breaches; our ability to
protect our proprietary technology; our ability to realize the
potential financial or strategic benefits of acquisitions we
complete; our ability to carry out our new product and technology
initiatives; investment of more resources in research and
development than anticipated; increased risks resulting from an
increase in sales of our hardware products, including increased
variability in upfront revenue; changes in accounting principles or
standards; changes in our effective tax rate; liquidity
requirements in our U.S. operations; claims that our products
infringe on third-party intellectual property rights; litigation;
product errors or defects; the ability to obtain licenses to
third-party software and intellectual property on reasonable terms
or at all; the ability to timely recruit and retain senior
management and key employees; the inherent limitations on the
effectiveness of our controls and compliance programs; the
impairment of our investment portfolio by the deterioration of
capital markets; the accuracy of certain assumptions, judgments and
estimates that affect amounts reported in our financial statements;
and the impact of catastrophic events. More information on
potential risks, uncertainties and other factors that could affect
Synopsys' results is included in filings it makes with the
Securities and Exchange Commission from time to time, including in
the sections entitled "Risk Factors" in its Annual Report on Form
10-K for the fiscal year ended October 31,
2018 and its latest Quarterly Report on Form 10-Q. The
information provided herein is as of August
21, 2019. Synopsys undertakes no duty, and does not
intend, to update any forward-looking statement, whether as a
result of new information, future events or otherwise, unless
required by law.
SYNOPSYS,
INC.
|
Unaudited
Consolidated Statements of Operations(1)
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
July
31,
|
|
July
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue:
|
|
|
|
|
|
|
|
Time-based
products
|
$ 537,569
|
|
$ 570,053
|
|
$
1,649,590
|
|
$
1,697,756
|
Upfront
products
|
177,552
|
|
99,579
|
|
451,466
|
|
291,143
|
Maintenance
and service
|
137,849
|
|
110,082
|
|
408,557
|
|
337,077
|
Total
revenue
|
852,970
|
|
779,714
|
|
2,509,613
|
|
2,325,976
|
Cost of
revenue:
|
|
|
|
|
|
|
|
Products
|
113,533
|
|
115,437
|
|
346,163
|
|
335,030
|
Maintenance
and service
|
59,496
|
|
49,790
|
|
178,113
|
|
150,674
|
Amortization
of intangible assets
|
13,603
|
|
20,154
|
|
45,927
|
|
59,612
|
Total cost of
revenue
|
186,632
|
|
185,381
|
|
570,203
|
|
545,316
|
Gross
margin
|
666,338
|
|
594,333
|
|
1,939,410
|
|
1,780,660
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
284,804
|
|
277,402
|
|
846,429
|
|
793,947
|
Sales and
marketing
|
157,109
|
|
157,953
|
|
471,720
|
|
455,653
|
General and
administrative
|
67,382
|
|
84,336
|
|
165,794
|
|
199,517
|
Amortization
of intangible assets
|
10,111
|
|
10,651
|
|
31,211
|
|
30,926
|
Restructuring
|
19,338
|
|
23
|
|
33,746
|
|
1,917
|
Total operating
expenses
|
538,744
|
|
530,365
|
|
1,548,900
|
|
1,481,960
|
Operating
income
|
127,594
|
|
63,968
|
|
390,510
|
|
298,700
|
Other income
(expense), net
|
5,317
|
|
7,925
|
|
23,373
|
|
12,595
|
Income before income
taxes
|
132,911
|
|
71,893
|
|
413,883
|
|
311,295
|
Provision (benefit)
for income taxes
|
32,982
|
|
(7,516)
|
|
42,230
|
|
133,105
|
Net income
|
$
99,929
|
|
$
79,409
|
|
$
371,653
|
|
$
178,190
|
|
|
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.67
|
|
$
0.53
|
|
$
2.48
|
|
$
1.20
|
Diluted
|
$
0.65
|
|
$
0.52
|
|
$
2.42
|
|
$
1.16
|
|
|
|
|
|
|
|
|
Shares used in
computing per share amounts:
|
|
|
|
|
|
|
|
Basic
|
150,123
|
|
148,490
|
|
149,708
|
|
148,760
|
Diluted
|
154,600
|
|
152,614
|
|
153,859
|
|
153,118
|
|
|
|
|
|
|
|
|
(1) Synopsys' third
quarter of fiscal year 2019 and 2018 ended on August 3, 2019 and
August 4, 2018, respectively. For presentation purposes, we refer
to the closest calendar month end. The first quarter of fiscal 2018
included an extra week.
|
SYNOPSYS,
INC.
|
Unaudited
Reconciliation of Consolidated Statements of
Operations
|
Under ASC 606
& ASC 605 (1)
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
July 31,
2019
|
|
|
As reported
under
ASC 606
|
|
Adjustments
|
|
Balances under
ASC 605
|
|
Revenue:
|
|
|
|
|
|
|
Time-based
products
|
$
537,569
|
|
$
55,604
|
|
$
593,173
|
|
Upfront
products
|
177,552
|
|
(73,267)
|
|
104,285
|
|
Maintenance
and service
|
137,849
|
|
(26,914)
|
|
110,935
|
|
Total
revenue
|
852,970
|
|
(44,577)
|
|
808,393
|
|
Cost of
revenue:
|
|
|
|
|
|
|
Products
|
113,533
|
|
|
|
113,533
|
|
Maintenance
and service
|
59,496
|
|
|
|
59,496
|
|
Amortization
of intangible assets
|
13,603
|
|
|
|
13,603
|
|
Total cost of
revenue
|
186,632
|
|
-
|
|
186,632
|
|
Gross
margin
|
666,338
|
|
(44,577)
|
|
621,761
|
|
Operating
expenses:
|
|
|
|
|
|
|
Research and
development
|
284,804
|
|
|
|
284,804
|
|
Sales and
marketing
|
157,109
|
|
(2,731)
|
|
154,378
|
|
General and
administrative
|
67,382
|
|
|
|
67,382
|
|
Amortization
of intangible assets
|
10,111
|
|
|
|
10,111
|
|
Restructuring
|
19,338
|
|
|
|
19,338
|
|
Total operating
expenses
|
538,744
|
|
(2,731)
|
|
536,013
|
|
Operating
income
|
127,594
|
|
(41,846)
|
|
85,748
|
|
Other income
(expense), net
|
5,317
|
|
-
|
|
5,317
|
|
Income before income
taxes
|
132,911
|
|
(41,846)
|
|
91,065
|
|
Provision (benefit)
for income taxes
|
32,982
|
|
(9,127)
|
|
23,855
|
|
Net income
(loss)
|
$
99,929
|
|
$
(32,719)
|
|
$
67,210
|
|
|
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
Basic
|
$
0.67
|
|
$
(0.22)
|
|
$
0.45
|
|
Diluted
|
$
0.65
|
|
$
(0.22)
|
|
$
0.43
|
|
|
|
|
|
|
|
|
Shares used in
computing per share amounts:
|
|
|
|
|
|
|
Basic
|
150,123
|
|
|
|
150,123
|
|
Diluted
|
154,600
|
|
|
|
154,600
|
|
|
|
|
|
|
|
|
(1) Synopsys'
third quarter of fiscal year 2019 ended on August 3, 2019. For
presentation purposes, we refer to the closest calendar month
end.
|
SYNOPSYS,
INC.
|
Unaudited
Reconciliation of Consolidated Statements of
Operations
|
Under ASC 606
& ASC 605 (1)
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
July 31,
2019
|
|
|
As reported
under
ASC 606
|
|
Adjustments
|
|
Balances under
ASC 605
|
|
Revenue:
|
|
|
|
|
|
|
Time-based
products
|
$
1,649,590
|
|
$
158,222
|
|
$
1,807,812
|
|
Upfront
products
|
451,466
|
|
(151,110)
|
|
300,356
|
|
Maintenance
and service
|
408,557
|
|
(57,707)
|
|
350,850
|
|
Total
revenue
|
2,509,613
|
|
(50,595)
|
|
2,459,018
|
|
Cost of
revenue:
|
-
|
|
|
|
|
|
Products
|
346,163
|
|
|
|
346,163
|
|
Maintenance
and service
|
178,113
|
|
|
|
178,113
|
|
Amortization
of intangible assets
|
45,927
|
|
|
|
45,927
|
|
Total cost of
revenue
|
570,203
|
|
-
|
|
570,203
|
|
Gross
margin
|
1,939,410
|
|
(50,595)
|
|
1,888,815
|
|
Operating
expenses:
|
-
|
|
|
|
|
|
Research and
development
|
846,429
|
|
|
|
846,429
|
|
Sales and
marketing
|
471,720
|
|
10,395
|
|
482,115
|
|
General and
administrative
|
165,794
|
|
|
|
165,794
|
|
Amortization
of intangible assets
|
31,211
|
|
|
|
31,211
|
|
Restructuring
|
33,746
|
|
|
|
33,746
|
|
Total operating
expenses
|
1,548,900
|
|
10,395
|
|
1,559,295
|
|
Operating
income
|
390,510
|
|
(60,990)
|
|
329,520
|
|
Other income
(expense), net
|
23,373
|
|
-
|
|
23,373
|
|
Income before income
taxes
|
413,883
|
|
(60,990)
|
|
352,893
|
|
Provision (benefit)
for income taxes
|
42,230
|
|
(12,198)
|
|
30,032
|
|
Net income
(loss)
|
$
371,653
|
|
$
(48,792)
|
|
$
322,861
|
|
|
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
Basic
|
$
2.48
|
|
$
(0.33)
|
|
$
2.16
|
|
Diluted
|
$
2.42
|
|
$
(0.32)
|
|
$
2.10
|
|
|
|
|
|
|
|
|
Shares used in
computing per share amounts:
|
|
|
|
|
|
|
Basic
|
149,708
|
|
|
|
149,708
|
|
Diluted
|
153,859
|
|
|
|
153,859
|
|
|
|
|
|
|
|
|
(1) Synopsys'
third quarter of fiscal year 2019 ended on August 3, 2019. For
presentation purposes, we refer to the closest calendar month
end.
|
SYNOPSYS,
INC.
|
Unaudited
Consolidated Balance Sheets (1)
|
(in thousands,
except par value amounts)
|
|
|
|
|
|
|
|
July 31,
2019
|
|
October 31,
2018
|
ASSETS:
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
686,780
|
|
$
723,115
|
Accounts
receivable, net
|
|
457,390
|
|
554,217
|
Inventories
|
|
155,108
|
|
122,407
|
Income taxes
receivable and prepaid taxes
|
|
29,751
|
|
76,525
|
Prepaid and
other current assets
|
|
288,616
|
|
67,533
|
Total current assets
|
|
1,617,645
|
|
1,543,797
|
Property and
equipment, net
|
|
372,566
|
|
309,310
|
Goodwill
|
|
3,143,056
|
|
3,143,249
|
Intangible assets,
net
|
|
283,305
|
|
360,404
|
Long-term prepaid
taxes
|
|
13,973
|
|
138,312
|
Deferred income
taxes
|
|
339,354
|
|
404,166
|
Other long-term
assets
|
|
383,509
|
|
246,736
|
Total assets
|
|
$
6,153,408
|
|
$
6,145,974
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY:
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
471,629
|
|
$
578,326
|
Accrued income
taxes
|
|
3,175
|
|
27,458
|
Deferred
revenue
|
|
1,138,993
|
|
1,152,862
|
Short-term
debt
|
|
16,653
|
|
343,769
|
Total current liabilities
|
|
1,630,450
|
|
2,102,415
|
Long-term accrued
income taxes
|
|
27,847
|
|
50,590
|
Long-term deferred
revenue
|
|
91,229
|
|
116,859
|
Long-term
debt
|
|
125,285
|
|
125,535
|
Other long-term
liabilities
|
|
338,928
|
|
265,560
|
Total liabilities
|
|
2,213,739
|
|
2,660,959
|
Stockholders'
equity:
|
|
|
|
|
Preferred
stock, $0.01 par value: 2,000 shares authorized; none
outstanding
|
|
-
|
|
-
|
Common stock,
$0.01 par value: 400,000 shares authorized; 150,373 and
|
|
|
|
|
149,265 shares
outstanding, respectively
|
|
1,504
|
|
1,493
|
Capital in
excess of par value
|
|
1,597,629
|
|
1,644,830
|
Retained
earnings
|
|
3,003,430
|
|
2,543,688
|
Treasury
stock, at cost: 6,888 and 7,996 shares, respectively
|
|
(572,104)
|
|
(597,682)
|
Accumulated
other comprehensive income (loss)
|
|
(96,653)
|
|
(113,177)
|
Total Synopsys stockholders' equity
|
|
3,933,806
|
|
3,479,152
|
Non-controlling
interest
|
|
5,863
|
|
5,863
|
Total stockholders' equity
|
|
3,939,669
|
|
3,485,015
|
Total liabilities and stockholders' equity
|
|
$
6,153,408
|
|
$
6,145,974
|
|
|
|
|
|
(1) Synopsys' third
quarter of fiscal year 2019 ended on August 3, 2019, and its fiscal
year 2018 ended on November 3, 2018. For presentation purposes, we
refer to the closest calendar month end.
|
SYNOPSYS,
INC.
|
Unaudited
Consolidated Statements of Cash Flows (1)
|
(in
thousands)
|
|
|
|
|
|
Nine Months Ended
July 31,
|
|
2019
|
|
2018
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
Net income
|
$ 371,653
|
|
$
178,190
|
Adjustments to
reconcile net income to net cash used in
|
|
|
|
operating
activities:
|
|
|
|
Amortization and
depreciation
|
152,133
|
|
150,245
|
Amortization of
capitalized costs to obtain revenue contracts
|
46,230
|
|
-
|
Stock
compensation
|
114,826
|
|
102,540
|
Allowance for
doubtful accounts
|
8,950
|
|
3,368
|
(Gain) loss on sale
of property and investments
|
(4,052)
|
|
(93)
|
Deferred income
taxes
|
(9,664)
|
|
5,509
|
Net changes in
operating assets and liabilities, net of
|
|
|
|
acquired assets and
liabilities:
|
|
|
|
Accounts
receivable
|
89,370
|
|
(41,695)
|
Inventories
|
(39,431)
|
|
(48,440)
|
Prepaid and other
current assets
|
(38,224)
|
|
(9,766)
|
Other long-term
assets
|
(114,344)
|
|
(31,652)
|
Accounts payable and
accrued liabilities
|
(45,200)
|
|
(56,491)
|
Income
taxes
|
(6,963)
|
|
(35,014)
|
Deferred
revenue
|
53,980
|
|
76,780
|
Net cash provided by
operating activities
|
579,264
|
|
293,481
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Proceeds from sales
and maturities of short-term investments
|
-
|
|
12,449
|
Proceeds from sales
of long-term investments
|
6,361
|
|
494
|
Purchases of
long-term investments
|
-
|
|
(645)
|
Proceeds from sales
of property and equipment
|
-
|
|
1,662
|
Purchases of property
and equipment
|
(122,358)
|
|
(70,469)
|
Cash paid for
acquisitions and intangible assets, net of cash acquired
|
-
|
|
(646,687)
|
Capitalization of
software development costs
|
(2,245)
|
|
(2,714)
|
Net cash used in
investing activities
|
(118,242)
|
|
(705,910)
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Proceeds from credit
facility
|
192,897
|
|
615,000
|
Repayment of
debt
|
(520,312)
|
|
(137,500)
|
Issuances of common
stock
|
107,354
|
|
72,722
|
Payments for taxes
related to net share settlement of equity awards
|
(52,309)
|
|
(42,636)
|
Purchase of equity
forward contract
|
(20,000)
|
|
(33,000)
|
Purchases of treasury
stock
|
(209,185)
|
|
(367,000)
|
Other
|
(762)
|
|
1,759
|
Net cash (used in)
provided by financing activities
|
(502,317)
|
|
109,345
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
4,975
|
|
(3,826)
|
Net change in cash,
cash equivalents and restricted cash
|
(36,320)
|
|
(306,910)
|
Cash, cash
equivalents and restricted cash, beginning of the year
|
725,001
|
|
1,050,075
|
Cash, cash
equivalents and restricted cash, end of the period
|
$ 688,681
|
|
$
743,165
|
|
|
|
|
(1) Synopsys' third
quarter of fiscal year 2019 and 2018 ended on August 3, 2019 and
August 4, 2018, respectively. For presentation purposes, we refer
to the closest calendar month end. The first quarter of fiscal 2018
included an extra week.
|
SYNOPSYS,
INC.
|
Business Segment
Reporting (1)
|
(in
millions)
|
|
|
|
|
|
|
|
FY18
|
|
Q3'19
|
|
YTD
Q3'19
|
|
ASC
605
|
|
ASC
606
|
|
ASC
606
|
Revenue by segment
(3)
|
|
|
|
|
|
- Semiconductor &
System Design
|
$
2,840.6
|
|
$
769.4
|
|
$
2,260.3
|
% of
Total
|
91.0%
|
|
90.2%
|
|
90.1%
|
- Software
Integrity
|
$
280.5
|
|
$
83.6
|
|
$
249.3
|
% of
Total
|
9.0%
|
|
9.8%
|
|
9.9%
|
Total segment
revenue
|
$
3,121.1
|
|
$
853.0
|
|
$
2,509.6
|
|
|
|
|
|
|
Adjusted operating
income by segment (3)
|
|
|
|
|
|
- Semiconductor &
System Design
|
$
701.3
|
|
$
207.8
|
|
$
604.5
|
- Software
Integrity
|
$
(10.6)
|
|
$
8.8
|
|
$
22.9
|
Total adjusted
segment operating income
|
$
690.7
|
|
$
216.6
|
|
$
627.4
|
|
|
|
|
|
|
Adjusted operating
margin by segment (3)
|
|
|
|
|
|
- Semiconductor &
System Design
|
24.7%
|
|
27.0%
|
|
26.7%
|
- Software
Integrity
|
(3.8)%
|
|
10.5%
|
|
9.2%
|
Total adjusted
segment operating margin
|
22.1%
|
|
25.4%
|
|
25.0%
|
Total Adjusted
Segment Operating Income Reconciliation
(1)(2)
|
(in
millions)
|
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
October 31, 2018
(3)
|
|
July 31,
2019 (3)
|
|
July 31,
2019 (3)
|
|
ASC
605
|
|
ASC
606
|
|
ASC
606
|
GAAP total operating
income – as reported
|
$
360.2
|
|
$
127.6
|
|
$
390.5
|
Other expenses
managed at consolidated level
|
|
|
|
|
|
-Amortization of
intangible assets
|
125.7
|
|
23.7
|
|
77.1
|
-Stock
compensation
|
140.0
|
|
39.5
|
|
114.8
|
-Fair value changes
in executive deferred compensation plan
|
4.6
|
|
4.7
|
|
25.2
|
-Acquisition-related
costs
|
21.2
|
|
1.8
|
|
3.9
|
-Restructuring
|
12.9
|
|
19.3
|
|
33.7
|
-Legal
matters
|
26.0
|
|
-
|
|
(18.0)
|
Total adjusted
segment operating income
|
$
690.7
|
|
$
216.6
|
|
$
627.4
|
|
|
|
|
|
|
(1) Synopsys manages the
business on a long-term, annual basis, and considers quarterly
fluctuations of revenue and profitability as normal elements of our
business. Quarterly variability, which increases as a result of ASC
606, should be expected.
|
|
(2) These segment results are
consistent with the information required by ASC 280, Segment
Reporting. They are presented to reflect the information that
is considered by Synopsys' chief operating decision maker (CODM) to
evaluate the operating performance of its segments. The CODM does
not allocate certain operating expenses managed at a consolidated
level to our reportable segments, and as a result, the reported
operating income and operating margin do not include these
unallocated expenses as shown in the table above. Amounts may not
foot due to rounding.
|
|
(3) Synopsys' third quarter
of fiscal year 2019 ended on August 3, 2019, and its fiscal year
2018 ended on November 3, 2018. For presentation purposes, we refer
to the closest calendar month end. The first quarter of fiscal 2018
included an extra week.
|
INVESTOR CONTACT:
Lisa L. Ewbank
Synopsys, Inc.
650-584-1901
Synopsys-ir@synopsys.com
EDITORIAL CONTACT:
Simone Souza
Synopsys, Inc.
650-584-6454
simone@synopsys.com
View original
content:http://www.prnewswire.com/news-releases/synopsys-posts-financial-results-for-third-quarter-fiscal-year-2019-300905411.html
SOURCE Synopsys, Inc.