Synopsys Posts Financial Results for First Quarter Fiscal Year 2019
MOUNTAIN VIEW, Calif., Feb. 20, 2019 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its first quarter of fiscal year 2019. Revenue for the first quarter of fiscal 2019 was $820.4 million, compared to $769.4 million for the first quarter of fiscal 2018, an increase of approximately 6.6 percent.
"Our first quarter was a strong start to fiscal year 2019. We delivered excellent financial results and are reaffirming our outlook for the year," said Aart de Geus, chairman and co-CEO. "Even with some caution around global markets, electronics companies continue to invest in critical chip and system designs, as well as substantially growing amounts of sophisticated software. Synopsys is uniquely positioned to enable these designs, and our leadership is evident in both of our operating segments: Semiconductor & System Design and Software Integrity. We are well on-track towards our long-term growth and margin expansion targets."
GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income (loss) for the first quarter of fiscal 2019 was $153.5 million, or $1.01 per share, compared to $(3.7) million, or $(0.02) per share, for the first quarter of fiscal 2018. First quarter fiscal 2018 results included one-time tax expenses of approximately $119 million associated with the Tax Cuts and Jobs Act of 2017 ("tax reform").
Non-GAAP Results
On a non-GAAP basis, net income for the first quarter of fiscal 2019 was $164.9 million, or $1.08 per share, compared to non-GAAP net income of $169.6 million, or $1.10 per share, for the first quarter of fiscal 2018.
For a reconciliation between GAAP and non-GAAP results, see "GAAP to Non-GAAP Reconciliation" and the accompanying tables below.
Business Segments
Effective in fiscal year 2019, Synopsys realigned its business to evaluate the results of its Software Integrity business separate from Synopsys' traditional electronic design automation (EDA) and semiconductor IP business. Therefore, Synopsys began reporting 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 provided its consolidated financial targets for the second quarter and full fiscal year 2019, 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.
Synopsys adopted new revenue recognition requirements under ASC 606, "Revenue from Contracts with Customers," in the first fiscal quarter of 2019 under the modified retrospective method. The cumulative effect of initially applying the new recognition standards is recognized at the date of the adoption. Revenue during the fiscal 2019 transition year is estimated to be approximately $40 million lower under ASC 606 than it would be under ASC 605, "Revenue Recognition," and the impact is expected to decline to roughly neutral within two years. Throughout fiscal 2019 transition year, actual results will be presented under both ASC 606 and ASC 605 revenue recognition rules. Synopsys is providing full year targets under ASC 606 together with comparable numbers under ASC 605 for ease of comparison to prior periods. Additional details are available in the financial supplement on Synopsys' corporate website.
Second Quarter and Fiscal Year 2019 Financial Targets - ASC 606
(in millions except per share amounts)
Q2'19 FY'19
Low High Low High
---
Revenue $810 $850 $3,290 $3,340
GAAP Expenses $682 $708 $2,758 $2,788
Non-GAAP
Expenses $620 $640 $2,520 $2,540
Other Income
(expense) $0 $2 $(13) $(9)
Normalized
Annual Tax
Rate(1) 16% 16% 16% 16%
Outstanding
Shares (fully
diluted) 153 156 153 156
GAAP EPS $0.71 $0.79 $3.19 $3.32
Non-GAAP EPS $1.07 $1.12 $4.20 $4.27
Operating Cash Flow ~ $700 million
(1) Applied in non-GAAP net
income calculations
For reference, here are key fiscal year 2019 comparative amounts under ASC 605 prior year revenue recognition guidance.
-- Revenue: $3.34 billion - $3.37 billion
-- GAAP EPS: $3.39 - $3.52
-- Non-GAAP EPS: $4.40 - $4.47
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 +1-800-475-6701 (+1-320-365-3844 for international callers), access code 463842, beginning at 4:00 p.m. Pacific Time today, until 11:59 p.m. Pacific Time on February 27, 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 second quarter of fiscal year 2019 in May 2019. 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 second quarter of fiscal year 2019 earnings call in May 2019, 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 2019 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 the first quarter of fiscal year 2019 in its quarterly report on Form 10-Q to be filed by March 14, 2019.
About Synopsys
Synopsys, Inc. (Nasdaq: SNPS) is the Silicon to Software(TM) 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, 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. We expect our annual non-GAAP tax rate to be 16% in fiscal 2019 based upon our projected normalized non-GAAP annual tax rate through fiscal 2021. We will re-evaluate this rate on an annual basis, but further regulatory guidance regarding specific parts of Tax Reform could materially change our projections. Notwithstanding the foregoing, we excluded from the normalized annual non-GAAP tax rate in fiscal year 2018 certain impacts of U.S. Tax Reform described above, as such events are unusual and infrequent.
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 February 20, 2019 for additional information about the measures Synopsys uses to evaluate its core business operations.
Reconciliation of First Quarter 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 First Quarter Fiscal Year 2019 Results (1)
(unaudited and in thousands, except per share amounts)
Three Months Ended
January 31,
2019 2018
---
GAAP net income (loss) $153,514 $(3,691)
Adjustments:
Amortization of intangible
assets 28,227 28,547
Stock compensation 38,460 32,323
Acquisition-related costs 597 14,200
Restructuring (35) (282)
Legal matters (18,000)
Income tax related to
transition tax 73,434
Income tax related to tax
rate change 45,636
Tax adjustments (37,868) (20,612)
---
Non-GAAP net income $164,895 $169,555
Three Months Ended
January 31,
2019 2018
---
GAAP net income (loss) per
share (2) $1.01 $(0.02)
Adjustments:
Amortization of intangible
assets 0.18 0.19
Stock compensation 0.25 0.21
Acquisition-related costs 0.00 0.09
Restructuring 0.00 0.00
Legal matters (0.12)
Income tax related to
transition tax 0.47
Income tax related to tax
rate change 0.29
Tax adjustments (0.24) (0.13)
Non-GAAP net income per
share(2) $1.08 $1.10
Shares used in computing per share amounts: (2)
Basic -GAAP net income
(loss)
n/a 149,441
Diluted - Non-GAAP
adjustments & net income 152,661 154,068
(1) Synopsys' first quarter of
fiscal year 2019 and 2018 ended
on February 2, 2019 and February
3, 2018, respectively. For
presentation purposes, we refer
to the closest calendar month
end. The first quarter of fiscal
2018 included an extra week.
(2) We provide both basic
weighted-average outstanding
shares and fully diluted
weighted-average outstanding
shares in net income (loss) per
share calculation in the
reconciliation of earnings per
share amounts. If there is a
GAAP net loss in a reporting
period, we are required to use
basic weighted-average
outstanding shares to compute
net loss per share to prevent
anti-dilutive effect while we
use fully diluted weighted-
average outstanding shares to
compute per share non-GAAP
adjustments and net income.
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 2019 Targets (1)
(in thousands, except per share amounts)
ASC 606
Range for Three Months
Ending April 30, 2019
(2)
Low High
---
Target GAAP expenses $682,000 $708,000
Adjustments:
Estimated impact of
amortization of intangible
assets (25,000) (28,000)
Estimated impact of stock
compensation (37,000) (40,000)
Target non-GAAP expenses $620,000 $640,000
===
ASC 606
Range for Three Months
Ending April 30, 2019
(2)
Low High
---
Target GAAP earnings per
share $0.71 $0.79
Adjustments:
Estimated impact of
amortization of intangible
assets 0.18 0.16
Estimated impact of stock
compensation 0.26 0.24
Estimated impact of tax
adjustments (0.08) (0.07)
Target non-GAAP earnings
per share $1.07 $1.12
===
Shares used in non-GAAP
calculation (midpoint of
target range) 154,500 154,500
GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2019 Targets (1)
(in thousands, except per share amounts)
ASC 606
Range for Fiscal Year
October 31, 2019 (2)
Low
High
---
Target GAAP expenses $2,757,562 $2,787,562
Adjustments:
Estimated impact of
amortization of
intangible assets (99,000) (104,000)
Estimated impact of
stock compensation (156,000) (161,000)
Acquisition-related
costs (597) (597)
Restructuring 35 35
Legal matters 18,000 18,000
Target non-GAAP
expenses $2,520,000 $2,540,000
===
ASC 606
Range for Fiscal Year
October 31, 2019 (2)
Low
High
---
Target GAAP earnings
per share $3.19 $3.32
Adjustments:
Estimated impact of
amortization of
intangible assets 0.67 0.64
Estimated impact of
stock compensation 1.04 1.01
Acquisition-related
costs 0.00 0.00
Restructuring 0.00 0.00
Legal matters (0.12) (0.12)
Estimated impact of
tax adjustments (0.58) (0.58)
Target non-GAAP
earnings per share $4.20 $4.27
===
Shares used in non-
GAAP calculation
(midpoint of target
range) 154,500 154,500
(1) Synopsys adopted new revenue
recognition guidance ASC 606,
Revenue from Contracts with
Customers, at the beginning of
fiscal 2019 under the modified
retrospective method.
(2) Synopsys' second fiscal
quarter and fiscal year will
end on May 4, 2019 and November
2, 2019, respectively. For
presentation purposes, we refer
to the closest calendar month
end.
Reconciliation of Certain 2019 Comparative Amounts - ASC 605
The following tables reconcile the specific items excluded from GAAP in the calculation of certain non-GAAP comparative amounts under ASC 605 for the period indicated below.
GAAP to Non-GAAP Reconciliation of ASC 605 Comparative Amounts (1)
(in thousands, except per share amounts)
ASC 605
Range for Fiscal Year
October 31, 2019 (2)
Low
High
---
Target GAAP expenses $2,757,562 $2,787,562
Adjustments:
Estimated impact of
amortization of
intangible assets (99,000) (104,000)
Estimated impact of
stock compensation (156,000) (161,000)
Acquisition-related
costs (597) (597)
Restructuring 35 35
Legal matters 18,000 18,000
Target non-GAAP
expenses $2,520,000 $2,540,000
===
ASC 605
Range for Fiscal Year
October 31, 2019 (2)
Low
High
---
Target GAAP earnings
per share $3.39 $3.52
Adjustments:
Estimated impact of
amortization of
intangible assets 0.67 0.64
Estimated impact of
stock compensation 1.04 1.01
Acquisition-related
costs 0.00 0.00
Restructuring 0.00 0.00
Legal matters (0.12) (0.12)
Estimated impact of
tax adjustments (0.58) (0.58)
Target non-GAAP
earnings per share $4.40 $4.47
===
Shares used in non-
GAAP calculation
(midpoint of target
range) 154,500 154,500
(1) Synopsys adopted new revenue
recognition guidance ASC 606,
Revenue from Contracts with
Customers, at the beginning of
fiscal 2019 under the modified
retrospective method. For
comparison purposes, we provide
comparative amounts under old
revenue guidance ASC 605,
Revenue Recognition.
(2) Synopsys' fiscal year will
ended on November 2, 2019. 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 second quarter and full fiscal year 2019, the comparative annual amounts under ASC 605, and GAAP to non-GAAP reconciliations of such targets, as well as statements related to our long-term revenue, non-GAAP EPS and non-GAAP operating margin objectives, and the expected impact of ASC 606 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: 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 February 20, 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
January 31,
2019 2018
---
Revenue:
Time-based
products $553,716 $570,933
Upfront products 130,513 91,604
Maintenance and
service 136,172 106,889
---
Total revenue 820,401 769,426
Cost of revenue:
Products 116,620 111,394
Maintenance and
service 58,829 50,754
Amortization of
intangible
assets 17,443 19,008
Total cost of
revenue 192,892 181,156
Gross margin 627,509 588,270
Operating expenses:
Research and
development 271,326 264,411
Sales and
marketing 155,959 150,512
General and
administrative 42,061 56,372
Amortization of
intangible
assets 10,784 9,539
Restructuring (35) (282)
Total operating
expenses 480,095 480,552
Operating income 147,414 107,718
Other income
(expense), net (359) 12,385
---
Income before
income taxes 147,055 120,103
Provision
(benefit) for
income taxes (6,459) 123,794
Net income (loss) $153,514 $(3,691)
===
Net income (loss) per share:
Basic $1.03 $(0.02)
Diluted $1.01 $(0.02)
Shares used in computing per share
amounts:
Basic 149,288 149,441
===
Diluted 152,661 149,441
===
(1) Synopsys' first quarter of
fiscal year 2019 and 2018 ended
on February 2, 2019 and
February 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 Under ASC 606 & ASC 605(1)
(in thousands, except per share amounts)
Three Months Ended
January 31, 2019
As reported Adjustments
Balances under
under ASC 606 ASC 605
---
Revenue:
Time-based products $553,716 $15,856 $569,572
Upfront products 130,513 (16,786) 113,727
Maintenance and
service 136,172 (21,414) 114,758
Total revenue 820,401 (22,344) 798,057
Cost of revenue:
Products 116,620 116,620
Maintenance and
service 58,829 58,829
Amortization of
intangible assets 17,443 17,443
Total cost of
revenue 192,892 192,892
Gross margin 627,509 (22,344) 605,165
Operating expenses:
Research and
development 271,326 271,326
Sales and marketing 155,959 11,184 167,143
General and
administrative 42,061 42,061
Amortization of
intangible assets 10,784 10,784
Restructuring (35) (35)
Total operating
expenses 480,095 11,184 491,279
Operating income 147,414 (33,528) 113,886
Other income
(expense), net (359) (359)
Income before income
taxes 147,055 (33,528) 113,527
Provision (benefit)
for income taxes (6,459) (5,670) (12,129)
Net income (loss) $153,514 $(27,858) $125,656
===
Net income (loss) per share:
Basic $1.03 $(0.19) $0.84
Diluted $1.01 $(0.19) $0.82
Shares used in computing per share amounts:
Basic 149,288 149,288
Diluted 152,661 152,661
(1) Synopsys' first quarter of
fiscal year 2019 ended on
February 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)
January 31, 2019
October 31, 2018
---
ASSETS:
Current assets:
Cash and cash equivalents $592,305 $723,115
Accounts receivable, net 762,292 554,217
Inventories 137,559 122,407
Income taxes receivable and
prepaid taxes 55,547 76,525
Prepaid and other current
assets 249,927 67,533
Total current assets 1,797,630 1,543,797
Property and equipment, net 317,896 309,310
Goodwill 3,145,700 3,143,249
Intangible assets, net 332,187 360,404
Long-term prepaid taxes 54,722 138,312
Deferred income taxes 337,824 404,166
Other long-term assets 358,527 246,736
Total assets $6,344,486 $6,145,974
===
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued
liabilities $335,341 $578,326
Accrued income taxes 13,366 27,458
Deferred revenue 1,262,201 1,152,862
Short-term debt 414,730 343,769
Total current liabilities 2,025,638 2,102,415
Long-term accrued income taxes 47,932 50,590
Long-term deferred revenue 63,013 116,859
Long-term debt 127,140 125,535
Other long-term liabilities 296,098 265,560
Total liabilities 2,559,821 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; 149,276 and
149,265
shares outstanding, respectively
1,493 1,493
Capital in excess of par value 1,654,363 1,644,830
Retained earnings 2,820,910 2,543,688
Treasury stock, at cost: 7,985
and 7,996 shares, respectively (600,112) (597,682)
Accumulated other comprehensive
income (loss) (97,852) (113,177)
Total Synopsys stockholders'
equity 3,778,802 3,479,152
Non-controlling interest 5,863 5,863
Total stockholders' equity 3,784,665 3,485,015
Total liabilities and
stockholders' equity $6,344,486 $6,145,974
===
(1) Synopsys' first quarter of
fiscal year 2019 ended on
February 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.
SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows (1)
(in thousands)
Three Months Ended January 31,
2019 2018
---
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $153,514 $(3,691)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Amortization and depreciation 51,830 43,920
Amortization of capitalized costs to
obtain revenue contracts 12,793
Stock compensation 38,460 32,323
Allowance for doubtful accounts 1,500 368
(Gain) loss on sale of property and
investments 4
Deferred income taxes (6,215) 46,172
Net changes in operating assets and liabilities, net of
acquired assets and liabilities:
Accounts receivable (209,049) (34,811)
Inventories (15,827) (15,811)
Prepaid and other current assets (10,027) (14,504)
Other long-term assets (49,403) (25,601)
Accounts payable and accrued
liabilities (219,099) (139,864)
Income taxes (41,985) (18,017)
Deferred revenue 149,489 70,458
Net cash used in operating activities (144,019) (59,054)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
short-term investments 12,449
Purchases of property and equipment (29,007) (28,316)
Cash paid for acquisitions and
intangible assets, net of cash
acquired (608,344)
Capitalization of software
development costs (737) (807)
Net cash used in investing activities (29,744) (625,018)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility 185,080 450,000
Repayment of debt (112,812) (21,875)
Issuances of common stock 6,358 12,486
Payments for taxes related to net
share settlement of equity awards (10,593) (10,247)
Purchase of equity forward contract (20,000)
Purchases of treasury stock (29,185) (180,000)
Other (762)
Net cash provided by financing
activities 38,086 230,364
Effect of exchange rate changes on
cash, cash equivalents and
restricted cash 4,882 11,555
Net change in cash, cash equivalents
and restricted cash (130,795) (442,153)
Cash, cash equivalents and restricted
cash, beginning of the year 725,001 1,050,075
Cash, cash equivalents and restricted
cash, end of the period $594,206 $607,922
===
(1) Synopsys' first quarter of
fiscal year 2019 and 2018 ended
on February 2, 2019 and
February 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 Q1'19
ASC 605 ASC 606
---
Revenue by segment (3)
-Semiconductor &
System Design $2,840.6 $737.9
% of Total 91% 90%
-Software
Integrity $280.5 $82.5
% of Total 9% 10%
Total segment
revenue $3,121.1 $820.4
Total
Adjusted operating income by segment (3)
-Semiconductor &
System Design $701.3 $195.3
-Software
Integrity $(10.6) $5.6
Total adjusted
segment operating
income $690.7 $200.9
Adjusted operating margin by segment (3)
-Semiconductor &
System Design 24.7% 26.5%
-Software
Integrity (3.8)% 6.8%
Total adjusted
segment operating
margin 22.1% 24.5%
Total Adjusted Segment Operating Income Reconciliation(1)(2)
(in millions)
Twelve Months Ended
Three Months Ended
October 31, 2018
(3) January 31, 2019
(3)
ASC 605
ASC 606
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GAAP total operating income
- as reported $360.2 $147.4
Other expenses managed at consolidated level
-Amortization of intangible
assets $125.7 $28.2
-Stock compensation $140.0 $38.5
-Fair value changes in
executive deferred
compensation plan $4.6 $4.3
-Acquisition-related
costs $21.2 $0.6
-Restructuring $12.9 $0.0
-Legal matters $26.0 ($18.0)
Total adjusted segment
operating income $690.7 $200.9
(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' first quarter
of fiscal year 2019 ended on
February 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
Synopsys-ir@synopsys.com
EDITORIAL CONTACT:
Simone Souza
Synopsys, Inc.
650-584-6454
simone@synopsys.com
View original content:http://www.prnewswire.com/news-releases/synopsys-posts-financial-results-for-first-quarter-fiscal-year-2019-300799108.html
SOURCE Synopsys, Inc.
