SYNP Synplicity (MM)

Synplicity, Inc. (Nasdaq:SYNP) Highlights: -- Second quarter revenue and earnings per share exceeded guidance -- Second quarter GAAP net income of $921,000, or $0.03 per diluted share -- Second quarter pro forma net income of $1.1 million, or $0.04 per diluted share -- Total product bookings increased in the second quarter of 2005 on a year over year and sequential basis Synplicity, Inc. (Nasdaq:SYNP), a leading supplier of software for the design and verification of semiconductors, today announced financial results for the quarter ended June 30, 2005. Revenue for the quarter ended June 30, 2005 was $15.2 million, a 7 percent increase from revenue of $14.2 million for the quarter ended June 30, 2004 and a 4 percent sequential increase from revenue of $14.6 million for the quarter ended March 31, 2005. On a generally accepted accounting principles (GAAP) basis, net income was $921,000, or $0.03 per diluted share, for the quarter ended June 30, 2005, as compared to GAAP net income of $469,000, or $0.02 per diluted share, for the quarter ended June 30, 2004, and GAAP net income of $515,000, or $0.02 per diluted share, for the quarter ended March 31, 2005. GAAP net income amounts include $222,000 in amortization of intangible assets from acquisitions and $6,000 in stock-based compensation expense for the quarter ended June 30, 2005, $222,000 in amortization of intangible assets from acquisitions and $57,000 in stock-based compensation expense for the quarter ended June 30, 2004, and $223,000 in amortization of intangible assets from acquisitions and $9,000 in stock-based compensation expense for the quarter ended March 31, 2005. Pro forma net income was $1.1 million, or $0.04 per diluted share, for the quarter ended June 30, 2005, compared to pro forma net income of $748,000, or $0.03 per diluted share, for the quarter ended June 30, 2004, and pro forma net income of $747,000, or $0.03 per diluted share, for the quarter ended March 31, 2005. Pro forma figures exclude the impact of amortization of intangible assets and stock-based compensation expense. A reconciliation of GAAP to pro forma net income is included with this press release. For the six months ended June 30, 2005, revenue was $29.7 million, a 7 percent increase from revenue of $27.7 million for the six months ended June 30, 2004. For the six months ended June 30, 2005, Synplicity had GAAP net income of $1.4 million, or $0.05 per diluted share, as compared to GAAP net income of $765,000, or $0.03 per diluted share, for the six months ended June 30, 2004. Pro forma net income was $1.9 million, or $0.07 per diluted share, for the six months ended June 30, 2005, compared to pro forma net income of $1.3 million, or $0.05 per diluted share, for the six months ended June 30, 2004. Pro forma figures exclude the impact of amortization of intangible assets and stock-based compensation expense. "In the second quarter, we continued to grow revenues and profits. In the FPGA line of business we had strong sequential and year over year bookings growth of the Synplify Pro and Identify product lines. We also had more than 100 percent year over year bookings growth for the structured ASIC product line and sold a record number of structured ASIC licenses," said Gary Meyers, President and CEO. "As we look to the remainder of 2005, we are focused on continuing to drive growth and profitability," Meyers concluded. Business Outlook The following statements are based on current expectations. We do not intend to update, confirm or change this guidance until our earnings conference call, although we may provide additional detail regarding our guidance on today's scheduled call. -- Revenue for the third quarter of 2005 is expected to be approximately $15.8 million -- GAAP and pro forma net income per fully diluted share for the third quarter of 2005 are expected to be approximately $0.05 and $0.06, respectively -- Revenue for 2005 is expected to be approximately $62 to $63 million, an increase from prior guidance -- GAAP and pro forma net income per fully diluted share for 2005 are expected to be approximately $0.19 and $0.22, respectively, an increase from prior guidance Audio Webcast Synplicity's earnings call will be webcast today at 2:00 p.m. Pacific, and may be accessed at http://investor.synplicity.com or at http://www.firstcallevents.com. Synplicity will discuss its second quarter 2005 results and 2005 business outlook. Following completion of the call, a rebroadcast of the webcast will be available at http://investor.synplicity.com through July 31, 2005. For those without access to the Internet, a replay of the call will be available from 5:00 p.m. Pacific on July 20, 2005 through July 27, 2005. To listen to a replay, call (719) 457-0820, access code 1975614. Use of Non-GAAP Financial Measures This press release includes financial measures for net income and net income per share that exclude certain non-cash charges and that have not been calculated in accordance with GAAP. These measures differ from GAAP in that they exclude the amortization of intangible assets from acquisitions and stock-based compensation expense for stock options granted prior to Synplicity's initial public offering. Synplicity has previously provided these measurements in addition to GAAP financial results because it believes they provide a consistent basis for comparison between quarters that is not influenced by certain non-cash expenses and therefore are helpful to understanding Synplicity's underlying operational results. Further, these non-GAAP measures are some of the primary measures Synplicity's management uses for planning and forecasting. These measures should not be considered an alternative to GAAP, and these non-GAAP measures may not be comparable to information provided by other companies. About Synplicity Synplicity(R) Inc. (Nasdaq:SYNP) is a leading supplier of innovative synthesis, verification and physical implementation software solutions that enable the rapid and effective design and verification of semiconductors. Synplicity's high-quality, high-performance tools significantly reduce costs and time-to-market for FPGA, structured/platform ASIC and cell-based/COT ASIC designers. The company's underlying Behavior Extracting Synthesis Technology(R) (BEST(TM)), which is embedded in its logical, physical and verification tools, and has led to Synplicity's top position in FPGA synthesis, now provides the same fast runtimes and quality of results to ASIC and COT customers. The company's fast, easy-to-use products support industry standard design languages (VHDL and Verilog) and run on popular platforms. Synplicity employs over 290 people in its 20 facilities worldwide. Synplicity is headquartered in Sunnyvale, California. For more information, visit http://www.synplicity.com. Forward-Looking Statements This press release contains forward-looking statements including, but not limited to, statements regarding Synplicity's growth, profitability, acceptance of its products, and business outlook for revenue and net income per share. These statements relate to future events and involve known and unknown risks, uncertainties and other factors that may cause Synplicity's actual financial results, levels of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. In some cases, you will be able to identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. Forward-looking statements are only predictions and actual events or results may differ materially. Synplicity cannot provide any assurance that its future results will meet expectations. Synplicity's operating results could differ materially due to a number of factors, including the performance and quality of both its FPGA and ASIC software products relative to its competitors' products, the growth of structured/platform ASIC and FPGA markets and the growth of its ASIC synthesis business. For additional information and considerations regarding the risks faced by Synplicity, see its annual report on Form 10-K for the year ended December 31, 2004 and quarterly report on Form 10-Q for the three months ended March 31, 2005, each as filed with the Securities and Exchange Commission, as well as other periodic reports filed with the SEC from time to time. Although Synplicity believes that the expectations reflected in the forward-looking statements are reasonable, Synplicity cannot guarantee future results, levels of activity, performance or achievements. In addition, neither Synplicity nor any other person assumes responsibility for the accuracy or completeness of these forward-looking statements. Synplicity disclaims any obligation to update information contained in any forward-looking statement. Synplicity, Synplify Pro, Identify and Behavior Extracting Synthesis Technology are registered trademarks of Synplicity, Inc. BEST is a trademark of Synplicity Inc. All other names mentioned herein are the trademarks or registered trademarks of their owners. -0- *T SYNPLICITY, INC. CONSOLIDATED BALANCE SHEETS (in thousands) June 30, December 31, 2005 2004 (1) ------------- ------------ (unaudited) Assets: Current assets: Cash, cash equivalents and short-term investments $52,690 $48,681 Accounts receivable, net 8,685 8,851 Other current assets 1,685 2,167 ------------- ------------ Total current assets 63,060 59,699 Property and equipment, net 3,076 2,989 Goodwill 1,272 1,272 Intangible assets, net 1,902 2,347 Other assets 756 780 ------------- ------------ Total assets $70,066 $67,087 ============= ============ Liabilities and Shareholders' Equity: Current liabilities: Accounts payable $1,066 $1,087 Accrued liabilities 1,959 1,398 Accrued compensation 3,200 3,797 Deferred revenue 18,147 15,957 ------------- ------------ Total current liabilities 24,372 22,239 Shareholders' equity: Common stock 55,333 56,107 Additional paid-in capital 3,411 3,452 Deferred stock-based compensation (32) (88) Accumulated deficit (12,548) (13,984) Accumulated other comprehensive loss (470) (639) ------------- ------------ Total shareholders' equity 45,694 44,848 ------------- ------------ Total liabilities and shareholders' equity $70,066 $67,087 ============= ============ (1) Derived from audited financial statements. SYNPLICITY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Six Months Ended Ended June 30, June 30, ----------------- ----------------- 2005 2004 2005 2004 -------- -------- -------- -------- Revenue: License $8,377 $8,070 $16,353 $15,464 Maintenance 6,806 6,165 13,388 12,269 -------- -------- -------- -------- Total revenue 15,183 14,235 29,741 27,733 Cost of revenue: Cost of license 161 156 293 359 Cost of maintenance 462 607 918 1,197 Amortization of intangible assets from acquisitions 222 222 445 445 -------- -------- -------- -------- Total cost of revenue 845 985 1,656 2,001 -------- -------- -------- -------- Gross profit 14,338 13,250 28,085 25,732 Operating expenses: Research and development 6,155 5,821 12,232 11,386 Sales and marketing 5,776 5,607 11,530 11,025 General and administrative 1,688 1,327 3,218 2,490 Stock-based compensation 6 57 15 119 -------- -------- -------- -------- Total operating expenses 13,625 12,812 26,995 25,020 -------- -------- -------- -------- Income from operations 713 438 1,090 712 Other income, net 342 132 614 255 -------- -------- -------- -------- Income before income taxes 1,055 570 1,704 967 Income tax provision 134 101 268 202 -------- -------- -------- -------- Net income $921 $469 $1,436 $765 ======== ======== ======== ======== Net income per share: Basic net income per share $0.04 $0.02 $0.05 $0.03 ======== ======== ======== ======== Shares used in basic per share calculation 26,303 26,073 26,280 25,984 ======== ======== ======== ======== Diluted net income per share $0.03 $0.02 $0.05 $0.03 ======== ======== ======== ======== Shares used in diluted per share calculation 27,373 27,623 27,608 27,756 ======== ======== ======== ======== SYNPLICITY, INC. RECONCILIATION OF GAAP NET INCOME TO PRO FORMA NET INCOME (in thousands, except per share data) (unaudited) Three Months Six Months Ended Ended ----------------------- --------------- June 30, March 31, June 30, --------------- ------- --------------- 2005 2004 2005 2005 2004 ------- ------- ------- ------- ------- GAAP net income $921 $469 $515 $1,436 $765 Amortization of intangible assets from acquisitions 222 222 223 445 445 Stock-based compensation 6 57 9 15 119 ------- ------- ------- ------- ------- Pro forma net income $1,149 $748 $747 $1,896 $1,329 ======= ======= ======= ======= ======= Pro forma net income per share: Pro forma net income per common share $0.04 $0.03 $0.03 $0.07 $0.05 ======= ======= ======= ======= ======= Shares used in pro forma per share calculation 27,373 27,623 27,874 27,608 27,756 ======= ======= ======= ======= ======= Quarter Ending Year Ending September 30, December 31, 2005 2005 ---------------------------------- (Forward-Looking) GAAP net income per diluted share $0.05 $0.19 Amortization of intangible assets from acquisitions 0.01 0.03 Stock-based compensation - - ---------------------------------- Pro forma net income per diluted share $0.06 $0.22 ================================== *T