UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 14, 2017
SYNOPSYS, INC.
(Exact name of Registrant as specified in charter)
Delaware | 000-19807 | 56-1546236 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
690 East Middlefield Road
Mountain View, California 94043
(Address of principal executive offices)
Registrants telephone number, including area code: (650) 584-5000
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
On February 15, 2017, Synopsys, Inc. (Synopsys) issued a press release announcing the financial results of its first fiscal quarter ended January 31, 2017. A copy of this press release is furnished and attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in Item 2.02 of this Current Report, including the exhibit hereto, shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission by Synopsys, Inc. whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
The attached press release includes measures that are not in accordance with, or an alternative for, U.S. generally accepted accounting principles (GAAP). The attached press release includes non-GAAP earnings per share, non-GAAP net income, targeted non-GAAP expenses, and targeted non-GAAP earnings per share.
These non-GAAP measures are not in accordance with, or an alternative for, GAAP measures and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles, and management exercises judgment in determining which items should be excluded in the calculation of non-GAAP measures. While we believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP, we believe that non-GAAP measures are valuable in analyzing our core operations. Management analyzes current and future results on a GAAP basis as well as a non-GAAP basis and also provides GAAP and non-GAAP measures in our earnings release. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. The non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial measures. We believe that the presentation of non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to our financial condition and results of operations.
Synopsys management evaluates and makes decisions about our business operations primarily based on the income and costs that management believes are directly related to Synopsys core operations. For our internal budgeting and resource allocation process, and in reviewing our financial results, we use non-GAAP financial measures that exclude: (i) the amortization of acquired intangible assets; (ii) the impact of stock compensation; (iii) acquisition-related costs; and (iv) other significant items, including restructuring charges and certain accruals for legal matters. In fiscal 2016, we began utilizing a normalized annual non-GAAP tax rate in calculating non-GAAP financial measures in order to provide better consistency across interim reporting periods by eliminating the effects of non-recurring and period-specific items, 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. The normalized annual non-GAAP tax rate is 19% and is based on our projected annual tax rate through fiscal 2018. We re-evaluate this rate on an annual basis for any significant events that may materially affect our projections, such as significant changes in our geographic earnings mix or significant tax law changes in major jurisdictions where we operate.
We use these non-GAAP financial measures in making operating decisions because we believe the measures provide meaningful supplemental information regarding our core operational performance and give us a better understanding of how we should invest in research and development, fund infrastructure and product and market strategies. We use these measures to help us make budgeting decisions, for example, among product development expenses and research and development, sales and marketing and general and administrative expenses. In addition, these non-GAAP financial measures facilitate our internal comparisons to our historical operating results, forecasted targets and comparisons to competitors operating results.
As described above, we exclude the following items from one or more of our non-GAAP measures:
(i) Amortization of acquired intangible assets. We incur expenses from amortization of acquired intangible assets, which include contract rights, core/developed technology, trademarks, trade names, customer relationships, covenants not to compete, and other intangibles related to acquisitions. We amortize the intangible assets over their economic lives. We exclude this item because this expense is non-cash in nature and because we believe the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding our core operational performance and liquidity and our ability to invest in research and development and fund acquisitions and capital expenditures.
(ii) Stock compensation impact. While stock compensation expense constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense that typically requires or will require cash settlement by us and because such expense is not used by us to assess the core profitability of our business operations. In addition, excluding this item from various non-GAAP measures facilitates comparisons to our competitors operating results.
(iii) Acquisition-related costs. In connection with our business combinations, we incur significant expenses which we would not have otherwise incurred as part our business operations. These expenses include compensation expenses, professional fees and other direct expenses, and concurrent restructuring activities, including employee severance and other exit costs, as well as changes to the fair value of contingent consideration related to the acquired company. We exclude such expenses, which we would not have otherwise incurred, as they are related to acquisitions and have no direct correlation to the operation of our business.
(iv) Restructuring and other significant items. We initiate restructuring activities in order to align our costs in connection with both our operating plans and our business strategies based on then-current economic conditions. The amounts of the restructuring activities and frequency of occurrence may vary from time to time. Restructuring costs generally include severance and other termination benefits related to voluntary retirement programs and involuntary headcount reductions. Such restructuring costs are related to permanent reductions in workforce and facilities closures and, therefore, are not considered by us to be a part of the core operation of our business and not used by us when assessing the core profitability and performance of our business operations. Furthermore, excluding this item from various non-GAAP measures facilitates comparisons to our competitors and our past operating results.
Additionally, from time to time we are party to legal proceedings and subject to review or audit by tax authorities. Legal proceedings could result in an expense or benefit due to settlements, final judgments, or accruals for loss contingencies.
(v) Income tax effect of non-GAAP pre-tax adjustments. Excluding the income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes assists investors in understanding the tax provision associated with those adjustments and the effect on net income. In fiscal 2016, we began utilizing a normalized annual non-GAAP tax rate in calculating non-GAAP financial measures in order to provide better consistency across interim reporting periods by eliminating the effects of non-recurring and period-specific items, 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. This rate is based on our projected annual rate through fiscal 2018. In projecting this rate, we evaluated 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 took into account 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.
The normalized annual non-GAAP tax rate is 19%. We re-evaluate this rate on an annual basis for any significant events that may materially affect our projections, such as significant changes in our geographic earnings mix or significant tax law changes in major jurisdictions where we operate.
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(d) Election of Director
On February 14, 2017, the Board of Directors (the Board) of Synopsys increased the size of the Board from ten to eleven directors and appointed Mercedes Johnson to serve as both a director and an Audit Committee member effective on such date. Ms. Johnson previously served as Chief Financial Officer of Avago Technologies, Inc. from 2005 to 2008, and Senior Vice President, Finance and Chief Financial Officer of Lam Research Corporation from 1997 to 2004.
Ms. Johnson will participate in Synopsys standard non-employee director compensation arrangements, under which she will receive an annual cash retainer of $125,000 payable in advance in quarterly installments. Ms. Johnson will also receive equity awards as provided by Synopsys 2005 Non-Employee Directors Equity Incentive Plan (the Directors Plan). Upon her appointment, and in accordance with the Directors Plan, Ms. Johnson was granted an initial stock option award for 30,000 shares and an interim stock option award with an aggregate fair value of $10,417, prorated from $125,000 to reflect her service for a partial year. In addition, Ms. Johnson, as a member of the Audit Committee, will receive an annual cash retainer of $15,000 payable in advance in quarterly installments.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit |
Exhibit Title | |
99.1 | Press release dated February 15, 2017 containing Synopsys, Inc.s results of operations for its first fiscal quarter ended January 31, 2017. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
SYNOPSYS, INC. | ||||||
Dated: February 15, 2017 | By: | /S/ JOHN F. RUNKEL, JR. | ||||
John F. Runkel, Jr. | ||||||
General Counsel and Corporate Secretary |
INDEX TO EXHIBITS
Exhibit |
Exhibit Title | |
99.1 | Press release dated February 15, 2017 containing Synopsys, Inc.s results of operations for its first fiscal quarter ended January 31, 2017. |
Exhibit 99.1
PRESS RELEASE
INVESTOR CONTACT:
Lisa L. Ewbank
Synopsys, Inc.
650-584-1901
Synopsys-ir@synopsys.com
EDITORIAL CONTACT:
Carole Murchison
Synopsys, Inc.
650-584-4632
carolem@synopsys.com
Synopsys Posts Financial Results for First Quarter Fiscal Year 2017
Q1 2017 Financial Highlights
| Revenue: $652.8 million |
| GAAP earnings per share: $0.56 |
| Non-GAAP earnings per share: $0.94 |
MOUNTAIN VIEW, Calif. Feb. 15, 2017 Synopsys, Inc. (Nasdaq: SNPS) today reported results for its first quarter of fiscal year 2017.
For the first quarter of fiscal 2017, Synopsys reported revenue of $652.8 million, compared to $568.6 million for the first quarter of fiscal 2016, an increase of approximately 15 percent.
The first fiscal quarter was an excellent beginning to the year, as we substantially exceeded expectations. Business was strong across the board, amplified by the timing of hardware and IP deliverables. Our first quarter results and confidence in the year lead us to increase annual revenue, earnings per share and operating cash flow targets. In addition, we continued to return capital to shareholders with a $100 million share repurchase, said Aart de Geus, chairman and co-CEO of Synopsys. Meanwhile, semiconductor and systems companies, as well as software developers across industries, continue to invest in many of the areas that enable the era of smart everything, and our Silicon to Software vision and portfolio set us apart as a highly valued partner in these efforts.
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the first quarter of fiscal 2017 was $86.6 million, or $0.56 per share, compared to $60.0 million, or $0.39 per share, for the first quarter of fiscal 2016.
Non-GAAP Results
On a non-GAAP basis, net income for the first quarter of fiscal 2017 was $145.1 million, or $0.94 per share, compared to non-GAAP net income of $105.9 million, or $0.68 per share, for the first quarter of fiscal 2016.
A 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 second quarter and full fiscal year 2017, which do not include any impact of future acquisition-related activities or costs.
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.
Second Quarter of Fiscal Year 2017 Targets:
| Revenue: $665 million - $680 million |
| GAAP expenses: $560 million - $579 million |
| Non-GAAP expenses: $507 million - $517 million |
| Other income and expense: ($1) million - $1 million |
| Normalized annual tax rate applied in non-GAAP net income calculations: 19 percent |
| Fully diluted outstanding shares: 152 million - 155 million |
| GAAP earnings per share: $0.51 - $0.59 |
| Non-GAAP earnings per share: $0.85 - $0.88 |
2
Full Fiscal Year 2017 Targets:
| Revenue: $2.58 billion - $2.61 billion |
| Other income and expense: $2 million - $6 million |
| Normalized annual tax rate applied in non-GAAP net income calculations: 19 percent |
| Fully diluted outstanding shares: 152 million - 155 million |
| GAAP earnings per share: $2.01 - $2.12 |
| Non-GAAP earnings per share: $3.21 - $3.26 |
| Cash flow from operations: $500 million - $520 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 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, and (iv) other significant items, including restructuring charges and certain accruals for legal matters. In fiscal 2016, Synopsys began utilizing a normalized annual non-GAAP tax rate in the calculation of its non-GAAP measures that is based on our projected annual tax rate through fiscal 2018. In projecting this rate, we evaluated 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 took into account 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. We intend to re-evaluate this rate on an annual basis for any significant events that may materially affect our projections, such as significant changes in our geographic earnings mix or significant tax law changes in major jurisdictions where we operate. 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 in Item 2.02 of the Current Report on Form 8-K filed on February 15, 2017 for additional information about the measures Synopsys uses to evaluate its core business operations.
3
Reconciliation of First Quarter Fiscal Year 2017 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 First Quarter Fiscal Year 2017 Results
(unaudited and in thousands, except per share amounts)
Three Months Ended | ||||||||
January 31, | ||||||||
2017 | 2016 | |||||||
GAAP net income |
$ | 86,588 | $ | 60,035 | ||||
Adjustments: |
||||||||
Amortization of intangible assets |
29,508 | 37,461 | ||||||
Stock compensation |
25,834 | 23,013 | ||||||
Acquisition-related costs |
3,299 | 3,872 | ||||||
Restructuring charges |
12,105 | 2,093 | ||||||
Tax adjustments |
(12,257 | ) | (20,541 | ) | ||||
|
|
|
|
|||||
Non-GAAP net income |
$ | 145,077 | $ | 105,933 | ||||
|
|
|
|
|||||
Three Months Ended | ||||||||
January 31, | ||||||||
2017 | 2016 | |||||||
GAAP net income per share |
$ | 0.56 | $ | 0.39 | ||||
Adjustments: |
||||||||
Amortization of intangible assets |
0.19 | 0.24 | ||||||
Stock compensation |
0.17 | 0.15 | ||||||
Acquisition-related costs |
0.02 | 0.02 | ||||||
Restructuring charges |
0.08 | 0.01 | ||||||
Tax adjustments |
(0.08 | ) | (0.13 | ) | ||||
|
|
|
|
|||||
Non-GAAP net income per share |
$ | 0.94 | $ | 0.68 | ||||
|
|
|
|
|||||
Shares used in calculation |
154,433 | 155,283 |
4
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 Second Quarter Fiscal Year 2017 Targets
(in thousands, except per share amounts)
Range for Three Months | ||||||||
Ending April 30, 2017 (1) | ||||||||
Low | High | |||||||
Target GAAP expenses |
$ | 560,000 | $ | 579,000 | ||||
Adjustments: |
||||||||
Estimated impact of amortization of intangible assets |
(28,000 | ) | (33,000 | ) | ||||
Estimated impact of stock compensation |
(25,000 | ) | (29,000 | ) | ||||
|
|
|
|
|||||
Target non-GAAP expenses |
$ | 507,000 | $ | 517,000 | ||||
|
|
|
|
|||||
Range for Three Months | ||||||||
Ending April 30, 2017 (1) | ||||||||
Low | High | |||||||
Target GAAP earnings per share |
$ | 0.51 | $ | 0.59 | ||||
Adjustments: |
||||||||
Estimated impact of amortization of intangible assets |
0.21 | 0.18 | ||||||
Estimated impact of stock compensation |
0.19 | 0.16 | ||||||
Estimated impact of tax adjustments |
(0.06 | ) | (0.05 | ) | ||||
|
|
|
|
|||||
Target non-GAAP earnings per share |
$ | 0.85 | $ | 0.88 | ||||
|
|
|
|
|||||
Shares used in non-GAAP calculation (midpoint of target range) |
153,500 | 153,500 |
GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2017 Targets
Range for Fiscal Year | ||||||||
Ending October 31, 2017 (1) | ||||||||
Low | High | |||||||
Target GAAP earnings per share |
$ | 2.01 | $ | 2.12 | ||||
Adjustments: |
||||||||
Estimated impact of amortization of intangible assets |
0.75 | 0.72 | ||||||
Estimated impact of stock compensation |
0.68 | 0.64 | ||||||
Acquisition-related costs |
0.02 | 0.02 | ||||||
Estimated impact of restructuring |
0.08 | 0.08 | ||||||
Estimated impact of tax adjustments |
(0.33 | ) | (0.32 | ) | ||||
|
|
|
|
|||||
Target non-GAAP earnings per share |
$ | 3.21 | $ | 3.26 | ||||
|
|
|
|
|||||
Shares used in non-GAAP calculation (midpoint of target range) |
153,500 | 153,500 |
(1) | Synopsys second quarter and fiscal year end on April 29, 2017 and October 28, 2017, respectively. For presentation purposes, we refer to the closest calendar month end. |
5
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 at 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 417535, beginning at 4:00 p.m. Pacific Time today, until 11:59 p.m. Pacific Time on February 22, 2017. A webcast replay will also be available on the website from approximately 4:30 p.m. Pacific Time today through the time Synopsys announces its results for the second fiscal quarter in May 2017. 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 the 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 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 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 corporate overview presentation will remain available on Synopsys website through the date of the second quarter fiscal year 2017 earnings call in May 2017, 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 second quarter of fiscal year 2017 or comment to analysts or investors on, or otherwise update, the targets given in this earnings release.
Availability of Final Financial Statements
Synopsys will include final financial statements for the first quarter of fiscal year 2017 in its quarterly report on Form 10-Q to be filed by March 9, 2017.
6
About Synopsys
Synopsys, Inc. (Nasdaq: SNPS) is the Silicon to Software partner for innovative companies developing the electronic products and software applications we rely on every day. As the worlds 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 youre 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.
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, information in the sections entitled Financial Targets and Reconciliation of Target Non-GAAP Operating Results as well as statements related to customer demand for our technology and projected financial results and business objectives. 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: uncertainty in the growth of the semiconductor and electronics industry; consolidation among our customers; continued uncertainty in the global economy; our ability to realize the potential financial or strategic benefits of acquisitions we complete; fluctuation of our operating results; our highly competitive industries and our ability to meet our customers demand for innovative technology at lower costs; our ability to carry out our new product and technology initiatives; our ability to protect our proprietary technology; changes in accounting principles or standards; investments of more resources in research and development than anticipated; risks and compliance obligations relating to the global nature of our operations; cybersecurity threats or other security breaches; changes in our GAAP or non-GAAP 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; increased risks resulting from an increase in sales of our hardware products; 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; evolving corporate governance and public disclosure regulations; the inherent limitations on the effectiveness of our controls and compliance programs; the impairment of our investment portfolio by the deterioration of capital markets and the change in the fair value of our non-qualified deferred compensation plan obligations; 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, 2016 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2017 to be filed with the SEC. The information provided herein is as of February 15, 2017. 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.
###
7
SYNOPSYS, INC.
Unaudited Consolidated Statements of Operations (1)
(in thousands, except per share amounts)
Three Months Ended | ||||||||
January 31, | ||||||||
2017 | 2016 | |||||||
Revenue: |
||||||||
Time-based products |
$ | 489,365 | $ | 464,280 | ||||
Upfront products |
79,609 | 43,437 | ||||||
Maintenance and service |
83,812 | 60,887 | ||||||
|
|
|
|
|||||
Total revenue |
652,786 | 568,604 | ||||||
Cost of revenue: |
||||||||
Products |
96,971 | 76,393 | ||||||
Maintenance and service |
37,303 | 22,525 | ||||||
Amortization of intangible assets |
21,472 | 30,526 | ||||||
|
|
|
|
|||||
Total cost of revenue |
155,746 | 129,444 | ||||||
|
|
|
|
|||||
Gross margin |
497,040 | 439,160 | ||||||
Operating expenses: |
||||||||
Research and development |
212,648 | 196,705 | ||||||
Sales and marketing |
126,511 | 122,620 | ||||||
General and administrative |
40,866 | 39,697 | ||||||
Amortization of intangible assets |
8,036 | 6,935 | ||||||
Restructuring charges |
12,105 | 2,093 | ||||||
|
|
|
|
|||||
Total operating expenses |
400,166 | 368,050 | ||||||
|
|
|
|
|||||
Operating income |
96,874 | 71,110 | ||||||
Other income (expense), net |
11,487 | (6,768 | ) | |||||
|
|
|
|
|||||
Income before income taxes |
108,361 | 64,342 | ||||||
Provision (benefit) for income taxes |
21,773 | 4,307 | ||||||
|
|
|
|
|||||
Net income |
$ | 86,588 | $ | 60,035 | ||||
|
|
|
|
|||||
Net income per share: |
||||||||
Basic |
$ | 0.57 | $ | 0.39 | ||||
Diluted |
$ | 0.56 | $ | 0.39 | ||||
Shares used in computing per share amounts: |
||||||||
Basic |
150,782 | 152,968 | ||||||
|
|
|
|
|||||
Diluted |
154,433 | 155,283 | ||||||
|
|
|
|
(1) | Synopsys first quarter of fiscal year 2017 and 2016 ended on January 28, 2017 and January 30, 2016, respectively. For presentation purposes, we refer to the closest calendar month end. |
8
SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets (1)
(in thousands, except par value amounts)
January 31, 2017 | October 31, 2016 | |||||||
ASSETS: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 827,709 | $ | 976,620 | ||||
Short-term investments |
138,648 | 140,695 | ||||||
|
|
|
|
|||||
Total cash, cash equivalents and short-term investments |
966,357 | 1,117,315 | ||||||
Accounts receivable, net |
331,984 | 438,873 | ||||||
Income taxes receivable and prepaid taxes |
54,596 | 56,091 | ||||||
Prepaid and other current assets |
131,106 | 104,659 | ||||||
|
|
|
|
|||||
Total current assets |
1,484,043 | 1,716,938 | ||||||
Property and equipment, net |
256,811 | 257,035 | ||||||
Goodwill |
2,652,257 | 2,518,245 | ||||||
Intangible assets, net |
301,922 | 266,661 | ||||||
Long-term prepaid taxes |
15,800 | 13,991 | ||||||
Long-term deferred income taxes |
355,469 | 281,926 | ||||||
Other long-term assets |
197,952 | 185,569 | ||||||
|
|
|
|
|||||
Total assets |
$ | 5,264,254 | $ | 5,240,365 | ||||
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS EQUITY: |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 251,098 | $ | 401,451 | ||||
Accrued income taxes |
9,583 | 22,693 | ||||||
Deferred revenue |
1,018,834 | 1,085,802 | ||||||
Short-term debt |
177,040 | 205,000 | ||||||
|
|
|
|
|||||
Total current liabilities |
1,456,555 | 1,714,946 | ||||||
Long-term accrued income taxes |
37,394 | 39,562 | ||||||
Long-term deferred revenue |
74,955 | 79,856 | ||||||
Long-term debt |
142,500 | | ||||||
Other long-term liabilities |
228,165 | 210,855 | ||||||
|
|
|
|
|||||
Total liabilities |
1,939,569 | 2,045,219 | ||||||
Stockholders equity: |
||||||||
Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding |
| | ||||||
Common stock, $0.01 par value: 400,000 shares authorized; 150,428 and 151,454 shares outstanding, respectively |
1,505 | 1,515 | ||||||
Capital in excess of par value |
1,640,036 | 1,644,675 | ||||||
Retained earnings |
2,137,395 | 1,947,585 | ||||||
Treasury stock, at cost: 6,836 and 5,811 shares, respectively |
(355,257 | ) | (294,052 | ) | ||||
Accumulated other comprehensive income (loss) |
(98,994 | ) | (104,577 | ) | ||||
|
|
|
|
|||||
Total stockholders equity |
3,324,685 | 3,195,146 | ||||||
|
|
|
|
|||||
Total liabilities and stockholders equity |
$ | 5,264,254 | $ | 5,240,365 | ||||
|
|
|
|
(1) | Synopsys first quarter of fiscal 2017 ended on January 28, 2017, and its fiscal year 2016 ended on October 29, 2016. For presentation purposes, we refer to the closest calendar month end. |
9
SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows (1)
(in thousands)
Three Months Ended January 31, | ||||||||
2017 | 2016 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 86,588 | $ | 60,035 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
Amortization and depreciation |
49,464 | 56,436 | ||||||
Stock compensation |
25,834 | 23,013 | ||||||
Allowance for doubtful accounts |
229 | 250 | ||||||
(Gain) loss on sale of investments |
(1 | ) | 3 | |||||
Write-down of long-term investments |
1,300 | | ||||||
Deferred income taxes |
12,989 | (3,955 | ) | |||||
Net changes in operating assets and liabilities, net of acquired assets and liabilities: |
||||||||
Accounts receivable |
122,192 | 30,365 | ||||||
Prepaid and other current assets |
(24,893 | ) | (27,825 | ) | ||||
Other long-term assets |
(13,931 | ) | 9,008 | |||||
Accounts payable and accrued liabilities |
(129,316 | ) | (145,229 | ) | ||||
Income taxes |
(14,201 | ) | (5,174 | ) | ||||
Deferred revenue |
(69,372 | ) | (32,097 | ) | ||||
|
|
|
|
|||||
Net cash provided by (used in) operating activities |
46,882 | (35,170 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Proceeds from sales and maturities of short-term investments |
37,284 | 40,489 | ||||||
Purchases of short-term investments |
(35,338 | ) | (34,933 | ) | ||||
Proceeds from sales of long-term investments |
| 161 | ||||||
Purchases of property and equipment |
(18,178 | ) | (15,337 | ) | ||||
Cash paid for acquisitions and intangible assets, net of cash acquired |
(187,624 | ) | (18,941 | ) | ||||
Capitalization of software development costs |
(1,033 | ) | (920 | ) | ||||
Other |
2,100 | | ||||||
|
|
|
|
|||||
Net cash used in investing activities |
(202,789 | ) | (29,481 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Proceeds from credit facility |
150,000 | 30,000 | ||||||
Repayment of debt |
(35,000 | ) | (7,500 | ) | ||||
Issuances of common stock |
7,205 | 1,486 | ||||||
Payments for taxes related to net share settlement of equity awards |
(6,887 | ) | (5,211 | ) | ||||
Purchase of equity forward contract |
(20,000 | ) | (40,000 | ) | ||||
Purchases of treasury stock |
(80,000 | ) | (160,000 | ) | ||||
Other |
559 | (1,030 | ) | |||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities |
15,877 | (182,255 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents |
(8,881 | ) | (6,296 | ) | ||||
|
|
|
|
|||||
Net change in cash and cash equivalents |
(148,911 | ) | (253,202 | ) | ||||
Cash and cash equivalents, beginning of the year |
976,620 | 836,188 | ||||||
|
|
|
|
|||||
Cash and cash equivalents, end of the period |
$ | 827,709 | $ | 582,986 | ||||
|
|
|
|
(1) | Synopsys first quarter of fiscal year 2017 and 2016 ended on January 28, 2017 and January 30, 2016, respectively. For presentation purposes, we refer to the closest calendar month end. |
10