Synopsys Posts Financial Results for Fourth Quarter and Fiscal Year 2019

4 December 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 Software™ 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

Under ASC 606 & ASC 605 (1)

(in thousands, except per share amounts)



























Three Months Ended 



October 31, 2019



As reported under

ASC 606



Adjustments



Balances under

ASC 605

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

Under ASC 606 & ASC 605 (1)

(in thousands, except per share amounts)



























Twelve Months Ended 



October 31, 2019



As reported under

ASC 606



Adjustments



Balances under

ASC 605

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]

 

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SOURCE Synopsys, Inc.