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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 27, 1998
Synopsys, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-19807 56-154236
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
700 East Middlefield Road, Mountain View, California 94043-4033
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 962-5000
Not applicable
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(Former name or former address, if changed since last report)
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ITEM 5. Other Events
On October 27, 1998, Synopsys, Inc. (the "Company") issued a
press release announcing its financial results for the quarter and fiscal year
ended September 30, 1998. A copy of the press release is filed as Exhibit 99.1
and incorporated herein by reference.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Exhibits.
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<CAPTION>
Exhibit No. Description
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<S> <C>
99.1 Press release of the Company, dated
October 27, 1998, relating to the
financial results for the quarter
and fiscal year ended September 30,
1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
SYNOPSYS, INC.
Dated: November 16, 1998 By: /s/ Steven K. Shevick
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Steven K. Shevick
Assistant Corporate Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
99.1 Press release of the Company, dated October 27, 1998,
relating to the financial results for the quarter and
fiscal year ended September 30, 1998.
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EXHIBIT 99.1
SYNOPSYS REPORTS RECORD Q4 EARNINGS
SOLID EARNINGS MOMENTUM SUPPORTS STRATEGY OF BUILDING AN INTEGRATED
TECHNOLOGY BUSINESS
MOUNTAIN VIEW, Calif.--Oct. 27, 1998-Synopsys Inc. today reported its fourth
quarter and annual results for the period, which ended on September 30, 1998.
Synopsys closed its fiscal year with revenue of $717.9 million, an increase of
11% over the previous year.
Revenue for the fourth quarter was $194.0 million, compared with $173.7 million
for the same period last year, an increase of 12%. Pro forma net income, which
excludes the write-off of purchased in-process research and development and
other costs and extraordinary gain discussed below, was $40.2 million or $0.58
per share, compared with pro forma net income of $26.6 million or $0.40 per
share for the fourth quarter of 1997, increases of 51% and 45%, respectively.
During the fourth quarter of fiscal 1998, Synopsys completed the acquisition of
Systems Science, Inc. (SSI) for approximately $47.1 million and took a charge to
operations of $28.9 million, or $0.42 per share on an after-tax basis, as a
write-off of purchased in-process research and development and other costs.
Additionally, Synopsys completed the spin off of Viewlogic Systems, Inc. (VSI),
the printed circuit board (PCB)/systems design segment of the Viewlogic
acquisition that Synopsys completed in December 1997. VSI management made a
compelling case for operating as a standalone company that resulted in the
management-led buy-out. The transaction was valued at $58.75 million. Synopsys
recorded an extraordinary gain, net of taxes, of $26.5 million, or $0.39 per
share. Synopsys recognized the potential for growth in Viewlogic Systems as an
independent privately held company and retained a minority investment stake of
14.9 percent (fully diluted) in the new company.
Actual net income for the fourth quarter, including the above-mentioned
write-off of in-process research and development and extraordinary gain, was
$37.9 million or $0.55 per share, compared with $26.6 million or $0.40 per share
in the same period last year.
Revenue for fiscal 1998 was $717.9 million, compared with $647.0 million for the
same period last year, an increase of 11%. Pro forma net income for fiscal 1998,
which excludes merger-related and other costs, the write-off of purchased
in-process research and development and other costs and extraordinary items, was
$134.1 million or $1.96 per share, compared with pro forma net income of $97.6
million or $1.49 per share during fiscal 1997, increases of 37% and 32%,
respectively.
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Actual net income for fiscal 1998 was $91.7 million or $1.34 per share, versus
actual net income of $82.0 million or $1.25 per share for the same period last
year. All earnings per share amounts represent diluted earnings per share as
defined within Statement of Financial Accounting Standards No. 128.
"Today, at the start of fiscal 1999, Synopsys is extremely well positioned to
both catalyze and capitalize upon an anticipated rebound in the semiconductor
and electronic systems industries," stated Dr. Aart de Geus, Chairman and CEO of
Synopsys, Inc. We have built a highly integrated, technology centric business
around the needs of our customers. I want to thank our employees, shareholders
and partners for their support throughout fiscal 1998. I'd especially like to
thank our customers for their continued support and confidence in our ability to
solve their toughest design problems."
ABOUT SYNOPSYS
Synopsys, Inc. is a leading supplier of electronic design automation (EDA)
solutions to the global electronics market. The company provides comprehensive
design technologies to creators of advanced integrated circuits, electronic
systems, and systems on a chip. Synopsys also provides consulting services and
support to its customers to streamline the overall design process and accelerate
time to market. News and information are available at http://www.synopsys.com.
This release, other than historical information contained herein, may consist of
forward-looking statements that involve risks and uncertainties. These
statements may differ materially from actual future events or results. Factors
which could cause results to differ from those projected herein include: the
failure of the semiconductor or electronic systems industries to rebound as
anticipated, or an overall slowdown in the U.S. economy; the continuation of
adverse economic conditions in Japan and the Asia-Pacific region; failure of the
company to successfully expand its capacity to provide consulting services; and
increasing competition in the market for the company's products and services.
Readers are referred to documents filed by Synopsys with the Securities and
Exchange Commission, specifically the most recent reports on Forms 10-Q and
10-K, which identify important risk factors that could cause actual results to
differ from those contained in the forward-looking statements.
Note to Editors: Synopsys is a registered trademark of Synopsys, Inc. All other
trademarks mentioned in this release are the intellectual property of their
respective owners.
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SYNOPSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
September 30, September 30,
1998 1997(1) 1998 1997(1)
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(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenue:
Product $115,455 $105,360 $430,979 $408,256
Service 78,562 68,312 286,961 238,700
-------- -------- -------- --------
Total revenue 194,017 173,672 717,940 646,956
Cost of revenue:
Product 10,380 9,422 36,371 36,777
Service 15,279 13,919 57,396 50,108
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Total cost of
revenue 25,659 23,341 93,767 86,885
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Gross margin 168,358 150,331 624,173 560,071
-------- -------- -------- --------
Operating expenses:
Research and
development 40,691 36,168 154,407 146,613
Sales and marketing 63,519 64,493 245,376 240,606
General and
administrative 11,082 13,552 47,179 47,284
Merger-related and
other costs -- -- 51,009 11,400
In-process research
and development
and other costs 28,878 -- 33,069 5,500
-------- -------- -------- --------
Total operating
expenses 144,170 114,213 531,040 451,403
Operating income 24,188 36,118 93,133 108,668
Other income, net 7,914 4,819 25,984 24,361
-------- -------- -------- --------
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<TABLE>
<S> <C> <C> <C> <C>
Income before
income taxes 32,102 40,937 119,117 133,029
Income tax provision 20,733 14,308 55,819 51,043
---------- ------- ---------- -------
Income before
extraordinary item 11,369 26,629 63,298 81,986
Extraordinary item,
net of tax 26,535 -- 28,404 --
Net income $ 37,904 $26,629 $ 91,702 $81,986
========== ======= ========== =======
Basic earnings per share:
Income before
extraordinary item 0.17 0.42 0.97 1.31
Extraordinary item 0.40 -- 0.43 --
---------- ------- ---------- -------
Net income $ 0.57 $ 0.42 $ 1.40 $ 1.31
========== ======= ========== =======
Weighted average
common shares 66,646 63,373 65,501 62,413
========== ======= ========== =======
Diluted earnings per share:
Income before
extraordinary item 0.17 0.40 0.93 1.25
Extraordinary item 0.39 -- 0.42 --
---------- ------- ---------- -------
Net income 0.55 0.40 1.34 1.25
========== ======= ========== =======
Weighted average
common shares and
equivalents where
dilutive 68,810 66,599 68,427 65,486
</TABLE>
(1) Amounts for prior periods have been restated to reflect the acquisition of
Viewlogic in a pooling of interests transaction effective December 4, 1997.
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SYNOPSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
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<CAPTION>
September 30, September 30,
1998 1997
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<S> <C> <C>
ASSETS
Current assets:
Cash and short-term
investments $ 599,769 $ 434,830
Accounts receivable, net 126,336 119,030
Prepaid expenses,
deferred taxes
and other 42,451 36,580
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Total current assets 768,556 590,440
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Property and equipment,
net 99,879 92,079
Capitalized software
development costs, net 1,685 7,297
Long-term investments 38,265 61,056
Other assets 38,242 17,717
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Total assets 946,627 768,589
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $ 117,275 $ 114,881
Current portion of
long-term debt 7,648 8,964
Income taxes payable 50,313 33,282
Deferred revenue 92,980 97,523
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Total current
liabilities 268,216 254,650
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Long-term debt 13,138 9,191
</TABLE>
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<TABLE>
<S> <C> <C>
Deferred compensation 4,886 3,205
Stockholders' equity:
Capital stock 417,608 334,724
Retained earnings 242,957 151,664
Treasury stock, at cost (11,184) --
Cumulative translation
adjustment (666) (1,552)
Net unrealized gain on
investment 11,672 16,707
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Total stockholders'
equity 660,387 501,543
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Total liabilities and
stockholders' equity $ 946,627 $ 768,589
========= =========
</TABLE>
Contact:
Synopsys, Inc.
David M. Sugishita, 650/694-4257
