Synplicity, Inc. (Nasdaq:SYNP): Highlights: -- Strong double digit
bookings growth year over year, with greater weighting towards
time-based orders -- Record deferred revenue and backlog -- Over $3
million of operating cash generation, with total cash and
short-term investments increasing to $58.8 million Synplicity, Inc.
(Nasdaq:SYNP), a leading supplier of software for the design and
verification of semiconductors, today announced financial results
for the quarter ended March 31, 2006. Revenue for the quarter ended
March 31, 2006 was $14.5 million, compared with $14.6 million for
the quarter ended March 31, 2005. The total value of product
bookings, including the full value of multi-year agreements,
increased by over 30 percent from total orders booked in the first
quarter of 2005. As the percentage of time-based orders was higher
in the first quarter of 2006, deferred revenue and backlog
increased to record levels. On a generally accepted accounting
principles (GAAP) basis, the net loss was $1.2 million, or $(0.04)
per diluted share for the quarter ended March 31, 2006, which
included stock-based compensation expense of $961,000, a
restructuring charge of $854,000 for severance costs and the
impairment of capitalized software development costs related to the
business re-focus announced on March 30, 2006, and amortization of
intangible assets of $223,000. For the quarter ended March 31,
2005, GAAP net income was $515,000, or $0.02 per diluted share,
which included amortization of intangible assets of $223,000 and
stock-based compensation expense of $9,000. Non-GAAP net income was
$860,000, or $0.03 per diluted share, for the quarter ended March
31, 2006, compared to non-GAAP net income of $747,000, or $0.03 per
diluted share, for the quarter ended March 31, 2005. In 2006,
non-GAAP figures include the GAAP income tax benefit of $481,000,
or $0.02 per share and exclude amortization of intangible assets,
stock-based compensation expense and the restructuring charge noted
above. In 2005, non-GAAP figures exclude amortization of intangible
assets and stock-based compensation expense. A reconciliation of
GAAP to non-GAAP net income is included with this press release.
"During Q1 we made important progress in several areas. We are
confident that our decision to withdraw from the cell-based and
structured ASIC markets will produce greater returns in our core
areas of business," said Gary Meyers, president and CEO of
Synplicity. "Synplicity has been the leading provider of FPGA
synthesis tools for the past five years and by redeploying our
R&D investments, we will strengthen our core products and
enable long term growth and increased shareholder value.
Additionally, I am pleased to report that we experienced strong
order growth during the quarter, including several large multi-year
customer agreements. We believe this is an indication of a growing
perception of our product leadership within the customer base."
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 for the second quarter
of 2006. -- Revenue for 2006 is expected to be in the range of $63
to $65 million, a decrease from prior guidance, as a result of the
business refocus noted above. -- GAAP net income per fully diluted
share for 2006 is expected to be in the range of $0.10 to $0.15, an
increase from prior guidance. GAAP net income is expected to
include charges of approximately $3.8 million relating to stock
compensation expense based on historical award activity, $890,000
of amortization of intangible assets and $854,000 of restructuring
charge relating to severance and the impairment of capitalized
software development costs. Tax expense for the year is expected to
be about 29 percent of pretax income. -- Non-GAAP net income per
share for 2006 is expected to be in the range of $0.28 to $0.34, an
increase from prior guidance. -- Revenue for the second quarter of
2006 is expected to be in the range of $15.1 to $15.6 million. --
GAAP net income per fully diluted share for the second quarter of
2006 is expected to be in the range of $0.03 to $0.05. GAAP net
income for the quarter is expected to include non-cash charges of
approximately $950,000 relating to stock-based compensation based
on historical award activity and $222,000 of amortization of
intangible assets. -- Non-GAAP net income per share for the second
quarter of 2006 is expected to be in the range of $0.07 to $0.09.
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. Synplicity will discuss the current
quarter and its second quarter and full year 2006 outlook.
Following completion of the call, a rebroadcast of the webcast will
be available at http://investor.synplicity.com through June 30,
2006. For those without access to the Internet, a replay of the
call will be available from 5:00 p.m. Pacific on April 25, 2006
through April 26, 2006. To listen to a replay, call (719) 457-0820,
access code 3341182. Use of Non-GAAP Financial Measures This press
release includes financial measures for net income (loss) and net
income (loss) per share that exclude certain non-cash and other
charges and that have not been calculated in accordance with GAAP.
These measures differ from GAAP in that they exclude amortization
of intangible assets from acquisitions and stock-based compensation
and in addition in 2006, exclude restructuring charge and include
the GAAP income tax benefit. Synplicity has 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 other activities 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 - News) is a leading supplier of innovative software
solutions that enable the rapid and effective design of
Programmable Logic Devices (FPGAs, PLDs and CPLDs) that serve a
wide range of communications, military/aerospace, consumer,
semiconductor, computer, and other electronic systems markets.
Synplicity's tools provide outstanding performance, cost and
time-to-market benefits by simplifying, improving and automating
key design planning, logic synthesis, physical synthesis and
verification functions for FPGA, FPGA-based ASIC verification, and
DSP designers. Synplicity is the number one supplier of FPGA
synthesis solutions and has been rated #1 in customer satisfaction
in 2004 and 2005 in EE Times' Annual FPGA Customer Survey.
Synplicity products support industry-standard design languages
(VHDL and Verilog) and run on popular platforms. The company
operates in over 20 facilities worldwide and 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 short-term and
long-term growth, market performance and business outlook for our
core products, customers' perception of our products, backlog,
deferred revenue, revenue, stock-based compensation expense,
amortization of intangible assets, restructuring charge, income tax
expense (benefit), net income (loss) and net income (loss) 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 its software products relative to its competitors'
products, the growth of the markets addressed, and Synplicity's
level of expenses. 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, 2005 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 is a registered trademark of Synplicity, Inc. All other
brands or products are the trademarks or registered trademarks of
their owners. -0- *T SYNPLICITY, INC. CONSOLIDATED BALANCE SHEETS
(in thousands) March 31, December 31, 2006 2005 (1) -----------
-------------- (unaudited) Assets: Current assets: Cash, cash
equivalents and short-term investments $58,822 $57,099 Accounts
receivable, net 11,164 12,632 Other current assets 1,942 2,372
----------- -------------- Total current assets 71,928 72,103
Property and equipment, net 2,585 2,631 Goodwill 1,272 1,272
Intangible assets, net 1,851 1,882 Other assets 764 749 -----------
-------------- Total assets $78,400 $78,637 ===========
============== Liabilities and Shareholders' Equity: Current
liabilities: Accounts payable $84 $944 Accrued liabilities 1,703
1,461 Accrued compensation 3,671 4,031 Deferred revenue 20,448
18,355 ----------- -------------- Total current liabilities 25,906
24,791 Shareholders' equity: Common stock 57,136 58,257 Additional
paid-in capital 4,321 3,360 Accumulated deficit (8,608) (7,430)
Accumulated other comprehensive loss (355) (341) -----------
-------------- Total shareholders' equity 52,494 53,846 -----------
-------------- Total liabilities and shareholders' equity $78,400
$78,637 =========== ============== (1) Derived from audited
financial statements SYNPLICITY, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share data) (unaudited)
Quarter Ended March 31, ---------------------- 2006 2005 ----------
---------- Revenue: License $ 7,131 $7,976 Maintenance 7,338 6,582
---------- ---------- Total revenue 14,469 14,558 Cost of revenue:
Cost of license 115 132 Cost of maintenance 526 456 Amortization of
intangible assets from acquisitions 223 223 ---------- ----------
Total cost of revenue 864 811 ---------- ---------- Gross profit
13,605 13,747 Operating expenses: (2) Research and development
6,573 6,081 Sales and marketing 6,331 5,758 General and
administrative 2,124 1,531 Restructuring charge 854 -- ----------
---------- Total operating expenses 15,882 13,370 ----------
---------- Income (loss) from operations (2,277) 377 Other income,
net 618 272 ---------- ---------- Income (loss) before income taxes
(1,659) 649 Income tax provision (benefit) (481) 134 ----------
---------- Net income (loss) $(1,178) $ 515 ========== ==========
Net income (loss) per share: Basic and diluted net income (loss)
per common share $ (0.04) $ 0.02 ========== ========== Shares used
in basic per share calculation 27,016 26,258 ========== ==========
Shares used in diluted per share calculation 28,847 27,874
========== ========== (2) Includes stock-based compensation. 2006
increases are due to the adoption of FAS 123(R), as follows: Cost
of maintenance $ 23 $ -- Research and development 453 4 Sales and
marketing 238 4 General and administrative 247 1 ----------
---------- Total stock-based compensation $ 961 $ 9 ==========
========== SYNPLICITY, INC. RECONCILIATION OF GAAP INCOME (LOSS) TO
NON-GAAP INCOME (in thousands, except per share data) (unaudited)
Net Income Quarter Ended ---------------------- March 31,
---------------------- 2006 2005 ---------- --------- GAAP net
income (loss) $(1,178) $515 Amortization of intangible assets from
acquisitions 223 223 Stock-based compensation 961 9 Restructuring
charge 854 -- ---------- --------- Non-GAAP net income (3) $860
$747 ========== ========= Non-GAAP net income per share: Non-GAAP
net income per common share $0.03 $0.03 ========== ========= Shares
used in non-GAAP per share calculation 28,847 27,874 ==========
========= (3) The non-GAAP calculations of net income and net
income per share include the income tax benefit of $481,000 from
the Statement of Operations for the quarter ended March 31, 2006.
If the income tax benefit were excluded from the non-GAAP
computation of net income and net income per share and the items
noted above were taxed at the rate the Company is projecting for
the full year, the non-GAAP net income would have been $268,000 or
$0.01 per share. Forward-Looking Net Income per Share Quarter
Ending Year Ending June 30, December 31, 2006 2006 ---------------
------------- GAAP net income per share $0.03-$.05 $0.10-$.15
Amortization of intangible assets from acquisitions $0.01 $0.03
Restructuring charge $0.00 $0.03 Stock-based compensation $0.03
$0.12-$0.13 --------------- ------------- Non-GAAP net income per
share $0.07-$0.09 $0.28-$0.34 =============== ============= *T
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