CIMdata PLM Industry Summary Online Archive

30 November 2005

Financial News

Synopsys Posts Financial Results for Fourth Quarter and Full-Year Fiscal 2005

Synopsys, Inc. reported results for its fourth quarter and fiscal year ended October 31, 2005. For the fourth quarter of fiscal 2005, Synopsys reported revenue of $254.8 million, an 11 percent increase compared to $230.6 million for the fourth quarter of fiscal 2004. Revenue for fiscal year 2005 was $991.9 million, a decrease of 9 percent from the $1.09 billion in fiscal 2004. Lower revenue in fiscal 2005 reflects the company's shift to an almost fully ratable license model initiated in the fourth quarter of fiscal 2004, under which more than 90 percent of the company's license revenue is recognized over time rather than upfront in the quarter shipped. As a result, in the fourth quarter approximately 92 percent of revenue came from backlog.

"We had an excellent quarter to complete our fiscal year, with business above target in all product areas, technology indicators consistently strong and sound financial execution. We have a solid foundation for continued growth in fiscal 2006," said Aart de Geus, chairman and chief executive officer of Synopsys.

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net loss for the fourth quarter of fiscal 2005 was ($11.1) million, or ($0.08) per share, compared to net loss of ($28.4) million, or ($0.19) per share, for the fourth quarter of fiscal 2004. GAAP net loss for the fiscal year ended October 31, 2005 was ($13.1) million, or ($0.09) per share, compared to net income of $74.3 million, or $0.46 per share, for fiscal 2004.

Non-GAAP Results

On a non-GAAP basis, net income for the fourth quarter of fiscal 2005 was $14.9 million, or $0.10 per share, compared to non-GAAP net income of $1.8 million, or $0.01 per share, for the fourth quarter of fiscal 2004. Non-GAAP net income for the fiscal year ended October 31, 2005 was $57.5 million, or $0.39 per share, compared to $166.4 million, or $1.04 per share, for fiscal year 2004.

Non-GAAP net income consists of GAAP net income excluding, to the extent incurred in a particular quarter or period, amortization of intangible assets and deferred stock compensation, in-process research and development charges, integration and other acquisition-related expenses, facilities and workforce realignment charges, and other significant items which, in the opinion of management are extraordinary. Fourth quarter and fiscal 2005 non-GAAP net income excludes approximately $11 million incremental tax expense related to the Company's repatriation of $360 million in cash from its international subsidiaries. The decreases in GAAP and non-GAAP net income in fiscal year 2005 were due primarily to lower revenues as a result of Synopsys' shift to a more than 90 percent ratable license model.

Financial Targets

Synopsys also announced its operating model targets for the first quarter and full fiscal year 2006. These targets constitute forward-looking information and are based on current expectations. The non-GAAP targets exclude the impact of option expensing required by SFAS 123R, which the Company is required to adopt beginning in the first quarter of fiscal 2006. For a discussion of factors that could cause actual results to differ materially from these targets, see "Forward-Looking Statements" below.

First Quarter of Fiscal 2006 Targets:

•  Revenue: $254 million-$262 million

•  GAAP expenses: $257 million-$270 million

•  Non-GAAP expenses: $225 million-$235 million

•  Other income and expense: $0 million - $4 million

•  Fully diluted outstanding shares: 144 million-150 million

•  Tax rate applied in non-GAAP net income calculations: 31 percent

•  GAAP (loss) earnings: $(0.04)-$0.02 per share

•  Non-GAAP earnings: $0.13-$0.17 per share

•  Revenue from backlog: more than 95 percent

Full-Year Fiscal Year 2006 Targets

•  Revenue: $1,055 million-$1,085 million

•  Fully diluted outstanding shares: 144 million-150 million

•  Tax rate applied in non-GAAP net income calculations: 31 percent

•  GAAP earnings: $0.08-$0.21 per share

•  Non-GAAP earnings: $0.65-$0.73 per share

•  GAAP cash flow from operations: greater than $175 million

Full financial for Synopsis are available at http://www.synopsys.com/news/announce/press2005/earnings/earnings_q405.pdf

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