CIMdata PLM Industry Summary Online Archive
10 January 2005
Financial News
Synopsys Corrects Full-Year Fiscal 2005 GAAP Earnings Target and Confirms and Updates First Quarter of Fiscal 2005 Financial Targets
Synopsys, Inc. corrected its generally accepted accounting principles (GAAP) earnings per share target for fiscal 2005, previously disclosed in its December 1, 2004 earnings release, to include estimated amortization of intangible assets for the full fiscal year, which was inadvertently not fully reflected in the prior target. The revised target supersedes all full-year fiscal 2005 GAAP earnings per share targets previously given by Synopsys. All other full-year fiscal 2005 targets disclosed in the December 1, 2004 release are unchanged.
Synopsys also confirmed and updated its financial targets for the first quarter of fiscal 2005, tightening its revenue and earnings per share target ranges. Synopsys raised the bottom end of its revenue target range by $4 million, making the new range $237 to $243 million, and raised the bottom end of its non-GAAP earnings per share target range by $0.02 per share, making the new range $0.05 to $0.07 per share.
The Company's updated targets for the first quarter and full-year fiscal 2005, including the correction described above, are as follows:
First Quarter of Fiscal 2005 Targets
• Revenue: $237 million-$243 million
• Non-GAAP expenses: $223 million-$233 million
• GAAP expenses: $264.5 million-$277 million
• Other income and expense: $(1.5) million - $1.5 million
• Fully diluted outstanding shares: 144 million-152 million
• Tax rate applied in net income calculations: 31%
• Non-GAAP earnings: $0.05-$0.07 per share
• GAAP earnings: $(0.15)-$(0.12) per share
• Revenue from backlog: over 90% of revenue
Full-Year Fiscal 2005 Targets
• Revenue: $930 million-$980 million
• Fully diluted outstanding shares: 144 million-152 million
• Tax rate applied in net income calculations: 31%
• Non-GAAP earnings: $0.22-$0.32 per share
• GAAP earnings: $(0.32)-$(0.21) per share
GAAP Reconciliation
Non-GAAP earnings per share consist of GAAP earnings per share excluding, to the extent incurred in a particular quarter or fiscal year, amortization of intangible assets and deferred stock compensation, in-process research and development charges, integration and other acquisition-related expenses and
facilities and workforce realignment charges. Intangible assets consist primarily of purchased technology, contract rights intangible, customer-installed base/relationships, trademarks and tradenames, covenants not to compete, customer backlog and other intangibles. Non-GAAP earnings per share are reduced by the amount of additional taxes that Synopsys would accrue if it used non-GAAP results instead of GAAP results to calculate Synopsys' tax liability.
Synopsys' management evaluates and makes operating decisions primarily based on the bookings and revenues of its core software and services business operations and the direct, ongoing and recurring costs of those operations such as cost of revenues and research and development, sales and marketing and general and administrative expenses. Management does not believe amortization of intangible assets and deferred stock compensation, in-process research and development charges, integration and other acquisition-related expenses and facilities and workforce realignment charges are ordinary, ongoing and recurring operating charges for Synopsys' core software and services business operations. Therefore, management calculates the non-GAAP financial measures used in this release excluding these charges and uses these non-GAAP financial measures to enable it to analyze further and more consistently the period-to-period financial performance of its core business operations. Management believes that, although it is important for investors to understand GAAP measures, providing investors with these non GAAP measures gives them additional important information to enable them to assess, in a way management assesses, Synopsys' current and future continuing operations.
Please visit http://www.synopsys.com/news/announce/press2005/q404_ercor.pdf to view tables that reconcile the specific items excluded from GAAP in the calculation of non-GAAP target operating.
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