Subjects: ERN, CCA
Synopsys Posts Financial Results for Fourth Quarter and Fiscal Year 2019
MOUNTAIN VIEW, Calif., Dec. 4, 2019 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its fourth quarter and fiscal year 2019. Revenue for the fourth quarter was $851.1 million, compared to $795.1 million for the fourth quarter of fiscal 2018. Revenue for fiscal year 2019 was $3.361 billion, an increase of 7.7 percent from $3.121 billion in fiscal year 2018.
"Fiscal 2019 was another outstanding year for Synopsys. Even as we navigated several external challenges, we significantly exceeded our beginning-of-year plan, and delivered strong growth in revenue, non-GAAP operating margin, earnings-per-share, and cash flow, and across both operating segments. We also returned $329 million to shareholders via stock repurchases," said Aart de Geus, chairman and co-CEO of Synopsys. "Against a challenging global market backdrop, design activity remains strong. Our unrelenting innovation push has resulted in stronger-than-ever platforms, which are driving notable benchmark wins and increased competitive displacements. As we move into 2020, well on our way to our next milestone of $4 billion in revenue and beyond, we are targeting solid revenue growth, continued non-GAAP operating margin expansion, mid-teens non-GAAP earnings per share growth, and strong cash flow."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter of fiscal 2019 was $160.7 million, or $1.04 per share, compared to $254.3 million, or $1.66 per share, for the fourth quarter of fiscal 2018. GAAP net income for fiscal year 2019 was $532.4 million, or $3.45 per share, compared to $432.5 million, or $2.82 per share, for fiscal year 2018.
Non-GAAP Results
On a non-GAAP basis, net income for the fourth quarter of fiscal 2019 was $177.1 million, or $1.15 per share, compared to non-GAAP net income of $119.6 million, or $0.78 per share, for the fourth quarter of fiscal 2018. Non-GAAP net income for fiscal year 2019 was $702.5 million, or $4.56 per share, compared to non-GAAP net income of $599.7 million, or $3.91 per share, for fiscal year 2018.
For a reconciliation between GAAP and non-GAAP results, see "GAAP to Non-GAAP Reconciliation" and the accompanying tables below.
Business Segments
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 first quarter and full fiscal year 2020. These financial targets do not assume any revenue from companies currently on the U.S. government's "Entity List." 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.
First Quarter and Fiscal Year 2020 Financial Targets | |||||
(in millions except per share amounts) | |||||
Q1 2020 | FY 2020 | ||||
Low | High | Low | High | ||
Revenue | $ 805 | $ 835 | $ 3,600 | $ 3,650 | |
GAAP Expenses | $ 715 | $ 744 | $ 2,934 | $ 2,983 | |
Non-GAAP Expenses | $ 635 | $ 655 | $ 2,630 | $ 2,660 | |
Other Income (Expense) | $ (5) | $ (3) | $ (16) | $ (12) | |
Normalized Annual Tax Rate (1) | 16% | 16% | 16% | 16% | |
Outstanding Shares (fully diluted) | 153 | 156 | 153 | 156 | |
GAAP EPS | $ 0.43 | $ 0.54 | $ 3.72 | $ 3.90 | |
Non-GAAP EPS | $ 0.89 | $ 0.94 | $ 5.18 | $ 5.25 | |
Operating Cash Flow | $ 800 | $ 825 | |||
(1) Applied in non-GAAP net income calculations |
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 +1-866-207-1041 (+1-402-970-0847 for international callers), access code 1966519, beginning at 5:00 p.m. Pacific Time today, until 11:59 p.m. Pacific Time on December 11, 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 first quarter of fiscal year 2020 in February 2020. 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 first quarter fiscal year 2020 earnings call in February 2020, 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 first quarter of fiscal year 2020 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 fiscal year 2019 in its annual report on Form 10-K to be filed by January 1, 2020.
About Synopsys
Synopsys, Inc. (Nasdaq: SNPS) is the Silicon to Softwaretm 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. Based upon our review, our projected normalized annual non-GAAP tax rate remains 16% through fiscal year 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 as described above.
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 December 4, 2019 for additional information about the measures Synopsys uses to evaluate its core business operations.
Reconciliation of Fourth Quarter and 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 Fourth Quarter and Fiscal Year 2019 Results (1) | |||||||
(unaudited and in thousands, except per share amounts) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
October 31, | October 31, | ||||||
2019 | 2018 | 2019 | 2018 | ||||
GAAP net income | $ 160,714 | $ 254,328 | $ 532,367 | $ 432,518 | |||
Adjustments: | |||||||
Amortization of intangible assets | 23,776 | 35,126 | 100,914 | 125,664 | |||
Stock compensation | 40,174 | 37,492 | 155,001 | 140,032 | |||
Acquisition-related costs | 1,782 | 1,557 | 5,730 | 21,179 | |||
Restructuring charges | 13,440 | 11,028 | 47,186 | 12,945 | |||
Legal matters | - | - | (18,000) | 26,000 | |||
Income tax related to transition tax | - | (10,327) | - | 63,107 | |||
Income tax related to tax rate change | - | 5,439 | - | 51,075 | |||
Income tax related to tax restructuring | - | (171,979) | - | (171,979) | |||
Tax settlement | - | - | 17,418 | - | |||
Tax adjustments | (62,818) | (43,082) | (138,093) | (100,796) | |||
Non-GAAP net income | $ 177,068 | $ 119,582 | $ 702,523 | $ 599,745 | |||
Three Months Ended | Twelve Months Ended | ||||||
October 31, | October 31, | ||||||
2019 | 2018 | 2019 | 2018 | ||||
GAAP diluted net income per share | $ 1.04 | $ 1.66 | $ 3.45 | $ 2.82 | |||
Adjustments: | |||||||
Amortization of intangible assets | 0.15 | 0.23 | 0.65 | 0.82 | |||
Stock compensation | 0.26 | 0.24 | 1.01 | 0.91 | |||
Acquisition-related costs | 0.01 | 0.01 | 0.04 | 0.14 | |||
Restructuring charges | 0.09 | 0.07 | 0.31 | 0.08 | |||
Legal matters | - | - | (0.12) | 0.17 | |||
Income tax related to transition tax | - | (0.07) | - | 0.41 | |||
Income tax related to tax rate change | - | 0.04 | - | 0.33 | |||
Income tax related to tax restructuring | - | (1.12) | - | (1.12) | |||
Tax settlement | - | - | 0.11 | - | |||
Tax adjustments | (0.40) | (0.28) | (0.89) | (0.65) | |||
Non-GAAP diluted net income per share | $ 1.15 | $ 0.78 | $ 4.56 | $ 3.91 | |||
Shares used in computing diluted net income per share amounts: | 154,532 | 153,038 | 154,190 | 153,393 | |||
(1) Synopsys' fourth quarter of fiscal year 2019 and 2018 ended on November 2, 2019 and November 3, 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 2020 Targets
The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP targets for the periods indicated below.
GAAP to Non-GAAP Reconciliation of First Quarter Fiscal Year 2020 Targets (1) | ||||
(in thousands, except per share amounts) | ||||
Range for Three Months | ||||
Ending January 31, 2020 | ||||
Low | High | |||
Target GAAP expenses | $ 715,000 | $ 744,000 | ||
Adjustments: | ||||
Estimated impact of amortization of intangible assets | (22,000) | (25,000) | ||
Estimated impact of stock compensation | (49,000) | (52,000) | ||
Estimated impact of restructuring charges | (9,000) | (12,000) | ||
Target non-GAAP expenses | $ 635,000 | $ 655,000 | ||
Range for Three Months | ||||
Ending January 31, 2020 | ||||
Low | High | |||
Target GAAP earnings per share | $ 0.43 | $ 0.54 | ||
Adjustments: | ||||
Estimated impact of amortization of intangible assets | 0.16 | 0.14 | ||
Estimated impact of stock compensation | 0.34 | 0.32 | ||
Estimated impact of restructuring charges | 0.08 | 0.06 | ||
Estimated impact of tax adjustments | (0.12) | (0.12) | ||
Target non-GAAP earnings per share | $ 0.89 | $ 0.94 | ||
Shares used in non-GAAP calculation (midpoint of target range) | 154,500 | 154,500 | ||
GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2020 Targets(1) | ||||
(in thousands, except per share amounts) | ||||
Range for Fiscal Year | ||||
October 31, 2020 | ||||
Low | High | |||
Target GAAP expenses | $ 2,934,000 | $ 2,983,000 | ||
Adjustments: | ||||
Estimated impact of amortization of intangible assets | (83,000) | (88,000) | ||
Estimated impact of stock compensation | (212,000) | (217,000) | ||
Estimated impact of restructuring charges | (9,000) | (18,000) | ||
Target non-GAAP expenses | $ 2,630,000 | $ 2,660,000 | ||
Range for Fiscal Year | ||||
October 31, 2020 | ||||
Low | High | |||
Target GAAP earnings per share | $ 3.72 | $ 3.90 | ||
Adjustments: | ||||
Estimated impact of amortization of intangible assets | 0.57 | 0.54 | ||
Estimated impact of stock compensation | 1.40 | 1.37 | ||
Estimated impact of restructuring charges | 0.12 | 0.06 | ||
Impact of tax adjustments | (0.63) | (0.62) | ||
Target non-GAAP earnings per share | $ 5.18 | $ 5.25 | ||
Shares used in non-GAAP calculation (midpoint of target range) | 154,500 | 154,500 | ||
(1) Synopsys' first fiscal quarter and fiscal year will end on February 1, 2020 and October 31, 2020, respectively. 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 first quarter and full fiscal year 2020, as well as statements related to our long-term revenue, non-GAAP EPS and non-GAAP operating margin objectives, and the expected impact of the 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 December 4, 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 | Twelve Months Ended | ||||||
October 31, | October 31, | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Revenue: | |||||||
Time-based products | $ 548,375 | $ 605,561 | $ 2,197,965 | $ 2,303,317 | |||
Upfront products | 168,325 | 66,555 | 619,791 | 357,698 | |||
Maintenance and service | 134,381 | 122,966 | 542,938 | 460,043 | |||
Total revenue | 851,081 | 795,082 | 3,360,694 | 3,121,058 | |||
Cost of revenue: | |||||||
Products | 112,964 | 113,400 | 459,127 | 448,430 | |||
Maintenance and service | 56,083 | 52,760 | 234,196 | 203,434 | |||
Amortization of intangible assets | 13,696 | 24,422 | 59,623 | 84,034 | |||
Total cost of revenue | 182,743 | 190,582 | 752,946 | 735,898 | |||
Gross margin | 668,338 | 604,500 | 2,607,748 | 2,385,160 | |||
Operating expenses: | |||||||
Research and development | 290,503 | 290,875 | 1,136,932 | 1,084,822 | |||
Sales and marketing | 161,170 | 167,325 | 632,890 | 622,978 | |||
General and administrative | 63,424 | 63,043 | 229,218 | 262,560 | |||
Amortization of intangible assets | 10,080 | 10,704 | 41,291 | 41,630 | |||
Restructuring charges | 13,440 | 11,028 | 47,186 | 12,945 | |||
Total operating expenses | 538,617 | 542,975 | 2,087,517 | 2,024,935 | |||
Operating income | 129,721 | 61,525 | 520,231 | 360,225 | |||
Other income (expense), net | 1,902 | (9,277) | 25,275 | 3,318 | |||
Income before income taxes | 131,623 | 52,248 | 545,506 | 363,543 | |||
Provision (benefit) for income taxes | (29,091) | (202,080) | 13,139 | (68,975) | |||
Net income | $ 160,714 | $ 254,328 | $ 532,367 | $ 432,518 | |||
Net income per share: | |||||||
Basic | $ 1.07 | $ 1.71 | $ 3.55 | $ 2.90 | |||
Diluted | $ 1.04 | $ 1.66 | $ 3.45 | $ 2.82 | |||
Shares used in computing per share amounts: | |||||||
Basic | 150,367 | 149,148 | 149,872 | 149,036 | |||
Diluted | 154,532 | 153,038 | 154,190 | 153,393 | |||
(1) Synopsys' fourth quarter of fiscal year 2019 and 2018 ended on November 2, 2019 and November 3, 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 | |||||
(in thousands, except per share amounts) | |||||
Three Months Ended | |||||
October 31, 2019 | |||||
As reported under | Adjustments | Balances under | |||
Revenue: | |||||
Time-based products | $ 548,375 | $ 48,682 | $ 597,057 | ||
Upfront products | 168,325 | (84,288) | 84,037 | ||
Maintenance and service | 134,381 | (16,330) | 118,051 | ||
Total revenue | 851,081 | (51,936) | 799,145 | ||
Cost of revenue: | |||||
Products | 112,964 | 112,964 | |||
Maintenance and service | 56,083 | 56,083 | |||
Amortization of intangible assets | 13,696 | 13,696 | |||
Total cost of revenue | 182,743 | - | 182,743 | ||
Gross margin | 668,338 | (51,936) | 616,402 | ||
Operating expenses: | |||||
Research and development | 290,503 | 290,503 | |||
Sales and marketing | 161,170 | (6,274) | 154,896 | ||
General and administrative | 63,424 | 63,424 | |||
Amortization of intangible assets | 10,080 | 10,080 | |||
Restructuring charges | 13,440 | 13,440 | |||
Total operating expenses | 538,617 | (6,274) | 532,343 | ||
Operating income | 129,721 | (45,662) | 84,059 | ||
Other income (expense), net | 1,902 | - | 1,902 | ||
Income before income taxes | 131,623 | (45,662) | 85,961 | ||
Provision (benefit) for income taxes | (29,091) | (6,301) | (35,392) | ||
Net income (loss) | $ 160,714 | $ (39,361) | $ 121,353 | ||
Net income (loss) per share: | |||||
Basic | $ 1.07 | $ (0.26) | $ 0.81 | ||
Diluted | $ 1.04 | $ (0.25) | $ 0.79 | ||
Shares used in computing per share amounts: | |||||
Basic | 150,367 | 150,367 | |||
Diluted | 154,532 | 154,532 | |||
(1) Synopsys' fourth quarter of fiscal year 2019 ended on November 2, 2019. For presentation purposes, we refer to the closest calendar month end. |
SYNOPSYS, INC. | |||||
Unaudited Reconciliation of Consolidated Statements of Operations | |||||
(in thousands, except per share amounts) | |||||
Twelve Months Ended | |||||
October 31, 2019 | |||||
As reported under | Adjustments | Balances under | |||
Revenue: | |||||
Time-based products | $ 2,197,965 | $ 206,904 | $ 2,404,869 | ||
Upfront products | 619,791 | (235,398) | 384,393 | ||
Maintenance and service | 542,938 | (74,037) | 468,901 | ||
Total revenue | 3,360,694 | (102,531) | 3,258,163 | ||
Cost of revenue: | |||||
Products | 459,127 | 459,127 | |||
Maintenance and service | 234,196 | 234,196 | |||
Amortization of intangible assets | 59,623 | 59,623 | |||
Total cost of revenue | 752,946 | - | 752,946 | ||
Gross margin | 2,607,748 | (102,531) | 2,505,217 | ||
Operating expenses: | |||||
Research and development | 1,136,932 | 1,136,932 | |||
Sales and marketing | 632,890 | 4,121 | 637,011 | ||
General and administrative | 229,218 | 229,218 | |||
Amortization of intangible assets | 41,291 | 41,291 | |||
Restructuring charges | 47,186 | 47,186 | |||
Total operating expenses | 2,087,517 | 4,121 | 2,091,638 | ||
Operating income | 520,231 | (106,652) | 413,579 | ||
Other income (expense), net | 25,275 | - | 25,275 | ||
Income before income taxes | 545,506 | (106,652) | 438,854 | ||
Provision (benefit) for income taxes | 13,139 | (18,499) | (5,360) | ||
Net income (loss) | $ 532,367 | $ (88,153) | $ 444,214 | ||
Net income (loss) per share: | |||||
Basic | $ 3.55 | $ (0.59) | $ 2.96 | ||
Diluted | $ 3.45 | $ (0.57) | $ 2.88 | ||
Shares used in computing per share amounts: | |||||
Basic | 149,872 | 149,872 | |||
Diluted | 154,190 | 154,190 | |||
(1) Synopsys' fiscal year 2019 ended on November 2, 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) | ||||||
October 31, 2019 | October 31, 2018 | |||||
ASSETS: | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ 728,597 | $ 723,115 | ||||
Accounts receivable, net | 553,895 | 554,217 | ||||
Inventories | 141,518 | 122,407 | ||||
Income taxes receivable and prepaid taxes | 24,855 | 76,525 | ||||
Prepaid and other current assets | 290,052 | 67,533 | ||||
Total current assets | 1,738,917 | 1,543,797 | ||||
Property and equipment, net | 429,532 | 309,310 | ||||
Goodwill | 3,171,179 | 3,143,249 | ||||
Intangible assets, net | 279,374 | 360,404 | ||||
Long-term prepaid taxes | 15,503 | 138,312 | ||||
Deferred income taxes | 390,129 | 404,166 | ||||
Other long-term assets | 380,526 | 246,736 | ||||
Total assets | $ 6,405,160 | $ 6,145,974 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities | $ 506,459 | $ 578,326 | ||||
Accrued income taxes | 15,904 | 27,458 | ||||
Deferred revenue | 1,212,476 | 1,152,862 | ||||
Short-term debt | 17,614 | 343,769 | ||||
Total current liabilities | 1,752,453 | 2,102,415 | ||||
Long-term accrued income taxes | 29,911 | 50,590 | ||||
Long-term deferred revenue | 90,102 | 116,859 | ||||
Long-term debt | 120,093 | 125,535 | ||||
Other long-term liabilities | 323,725 | 265,560 | ||||
Total liabilities | 2,316,284 | 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; 150,331 and | ||||||
149,265 shares outstanding, respectively | 1,503 | 1,493 | ||||
Capital in excess of par value | 1,635,455 | 1,644,830 | ||||
Retained earnings | 3,164,144 | 2,543,688 | ||||
Treasury stock, at cost: 6,930 and 7,996 shares, respectively | (625,642) | (597,682) | ||||
Accumulated other comprehensive income (loss) | (92,447) | (113,177) | ||||
Total Synopsys stockholders' equity | 4,083,013 | 3,479,152 | ||||
Non-controlling interest | 5,863 | 5,863 | ||||
Total stockholders' equity | 4,088,876 | 3,485,015 | ||||
Total liabilities and stockholders' equity | $ 6,405,160 | $ 6,145,974 | ||||
(1) Synopsys' fiscal year 2019 and 2018 ended on November 2, 2019 and November 3, 2018, respectively. For presentation purposes, we refer to the closest calendar month end. |
SYNOPSYS, INC. | |||
Unaudited Consolidated Statements of Cash Flows (1) | |||
(in thousands) | |||
Year Ended October 31, | |||
2019 | 2018 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 532,367 | $ 432,518 | |
Adjustments to reconcile net income to net cash provided by | |||
operating activities: | |||
Amortization and depreciation | 201,676 | 209,207 | |
Amortization of capitalized costs to obtain revenue contracts | 62,750 | - | |
Stock compensation | 155,001 | 140,032 | |
Allowance for doubtful accounts | 11,669 | 3,368 | |
(Gain) loss on sale of property and investments | (4,052) | (93) | |
Deferred income taxes | (82,620) | (210,310) | |
Net changes in operating assets and liabilities, net of | |||
acquired assets and liabilities: | |||
Accounts receivable | (8,575) | (95,785) | |
Inventories | (19,243) | (66,509) | |
Prepaid and other current assets | (49,779) | (12,652) | |
Other long-term assets | (124,895) | (25,908) | |
Accounts payable and accrued liabilities | (19,280) | 49,043 | |
Income taxes | 19,777 | (103,841) | |
Deferred revenue | 125,717 | 105,329 | |
Net cash provided by operating activities | 800,513 | 424,399 | |
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 | (3,245) | (3,561) | |
Proceeds from sales of property and equipment | - | 1,662 | |
Purchases of property and equipment | (198,129) | (98,976) | |
Cash paid for acquisitions and intangible assets, net of cash acquired | (36,605) | (652,643) | |
Capitalization of software development costs | (4,259) | (2,950) | |
Net cash used in investing activities | (235,877) | (743,525) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from credit facilities | 192,897 | 620,635 | |
Repayment of debt | (524,063) | (295,313) | |
Issuances of common stock | 156,364 | 123,829 | |
Payments for taxes related to net share settlement of equity awards | (57,143) | (45,772) | |
Purchases of treasury stock | (329,185) | (400,000) | |
Other | (762) | 1,759 | |
Net cash (used in) provided by financing activities | (561,892) | 5,138 | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2,782 | (11,086) | |
Net change in cash, cash equivalents and restricted cash | 5,526 | (325,074) | |
Cash, cash equivalents and restricted cash, beginning of year | 725,001 | 1,050,075 | |
Cash, cash equivalents and restricted cash, end of year | $ 730,527 | $ 725,001 | |
(1) Synopsys' fiscal year 2019 and 2018 ended on November 2, 2019 and November 3, 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 | Q4'19 | FY19 | |||
ASC 605 | ASC 606 | ASC 606 | |||
Revenue by segment (3) | |||||
- Semiconductor & System Design | $ 2,840.6 | $ 765.8 | $ 3,026.1 | ||
% of Total | 91.0% | 90.0% | 90.0% | ||
- Software Integrity | $ 280.5 | $ 85.3 | $ 334.6 | ||
% of Total | 9.0% | 10.0% | 10.0% | ||
Total segment revenue | $ 3,121.1 | $ 851.1 | $ 3,360.7 | ||
Adjusted operating income by segment (3) | |||||
- Semiconductor & System Design | $ 701.3 | $ 202.1 | $ 806.6 | ||
- Software Integrity | $ (10.6) | $ 9.4 | $ 32.2 | ||
Total adjusted segment operating income | $ 690.7 | $ 211.5 | $ 838.8 | ||
Adjusted operating margin by segment (3) | |||||
- Semiconductor & System Design | 24.7% | 26.4% | 26.7% | ||
- Software Integrity | (3.8%) | 11.0% | 9.6% | ||
Total adjusted segment operating margin | 22.1% | 24.8% | 25.0% | ||
Total Adjusted Segment Operating Income Reconciliation (1)(2) | |||||
(in millions) | |||||
Twelve Months Ended | Three Months Ended | Twelve Months Ended | |||
October 31, 2018 (3) | October 31, 2019 (3) | October 31, 2019 (3) | |||
ASC 605 | ASC 606 | ASC 606 | |||
GAAP total operating income ? as reported | $ 360.2 | $ 129.7 | $ 520.2 | ||
Other expenses managed at consolidated level | |||||
-Amortization of intangible assets | 125.7 | 23.8 | 100.9 | ||
-Stock compensation | 140.0 | 40.2 | 155.0 | ||
-Fair value changes in executive deferred compensation plan | 4.6 | 2.6 | 27.8 | ||
-Acquisition-related costs | 21.2 | 1.8 | 5.7 | ||
-Restructuring | 12.9 | 13.4 | 47.2 | ||
-Legal matters | 26.0 | - | (18.0) | ||
Total adjusted segment operating income | $ 690.7 | 211.5 | $ 838.8 | ||
(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' fourth quarter of fiscal year 2019 ended on November 2, 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
[email protected]
EDITORIAL CONTACT:
Simone Souza
Synopsys, Inc.
650-584-6454
[email protected]
SOURCE Synopsys, Inc.
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