SYNOPSYS,INC. (NASDAQ:SNPS) Files An 8-K Results of Operations and Financial Condition
Item2.02 Results of Operations and Financial Condition.
On May17, 2017, Synopsys, Inc.
(Synopsys) issued a press release
announcing the financial results of its second fiscal quarter
ended April30, 2017. A copy of this press release is furnished
and attached hereto as Exhibit99.1 and is incorporated herein by
reference.
The information in this Current Report, including the exhibit
hereto, shall not be deemed to be filed for purposes of Section18
of the Securities Exchange Act of 1934, as amended, or otherwise
subject to the liabilities of that section or Sections 11 and
12(a)(2)of the Securities Act of 1933, as amended. The
information contained herein and in the accompanying exhibit
shall not be incorporated by reference into any registration
statement or other document filed with the Securities and
Exchange Commission by Synopsys whether made before or after the
date hereof, regardless of any general incorporation language in
such filing, except as shall be expressly set forth by specific
reference in such filing.
The attached press release includes measures that are not in
accordance with, or an alternative for, U.S. generally accepted
accounting principles (GAAP). The
attached press release includes non-GAAP earnings per share,
non-GAAP net income, targeted non-GAAP expenses, and targeted
non-GAAP earnings per share.
These non-GAAP measures are not in accordance with, or an
alternative for, GAAP measures and may be different from non-GAAP
measures used by other companies. In addition, these non-GAAP
measures are not based on any comprehensive set of accounting
rulesor principles, and management exercises judgment in
determining which items should be excluded in the calculation of
non-GAAP measures. While we believe that non-GAAP measures have
limitations in that they do not reflect all of the amounts
associated with our results of operations as determined in
accordance with GAAP, we believe that non-GAAP measures are
valuable in analyzing our core operations.Management analyzes
current and future results on a GAAP basis as well as a non-GAAP
basis and also provides GAAP and non-GAAP measures in our
earnings release.The presentation of non-GAAP financial
information is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures
prepared in accordance with GAAP.The non-GAAP financial measures
are meant to supplement, and be viewed in conjunction with, GAAP
financial measures. We believe that the presentation of
non-GAAP measures,
when shown in conjunction with the corresponding GAAP measures,
provides useful information to investors and management regarding
financial and business trends relating to our financial condition
and results of operations.
Synopsys
management evaluates and makes decisions about our business
operations primarily based on the income and costs that
management believes are directly related to Synopsys core
operations. For our internal budgeting and resource allocation
process, and in reviewing our financial results, we use non-GAAP
financial measures that exclude: (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; and (vi)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. In fiscal 2016, we began utilizing a
normalized annual non-GAAP tax rate in calculating non-GAAP
financial measures in order 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. The normalized annual non-GAAP tax rate
is 19% and is based on our projected annual tax rate through
fiscal 2018. We re-evaluate this rate on an annual basis for any
significant events that may materially affect our projections,
such as significant changes in our geographic earnings mix or
significant tax law changes in major jurisdictions where we
operate.
We use these
non-GAAP financial measures in making operating decisions because
we believe the measures provide meaningful supplemental
information regarding our core operational performance and give
us a better understanding of how we should invest in research and
development, fund infrastructure as well as product and market
strategies.We use these measures to help us make budgeting
decisions, for example, among product development expenses and
research and development,
sales and
marketing and general and administrative expenses.In addition,
these non-GAAP financial measures facilitate our internal
comparisons to our historical operating results, forecasted
targets and comparisons to competitors operating results.
As described
above, we exclude the following items from one or more of our
non-GAAP measures:
(i)Amortization of
acquired intangible assets.We incur expenses from
amortization of acquired intangible assets, which include
contract rights, core/developed technology, trademarks, trade
names, customer relationships, covenants not to compete, and
other intangibles related to acquisitions. We amortize the
intangible assets over their economic lives. We exclude this item
because the expense is non-cash in nature and because we believe
the non-GAAP
financial measures excluding this item provide meaningful
supplemental information regarding (a)our core operational
performance and liquidity, and (b)our ability to invest in
research and development and fund acquisitions and capital
expenditures.
(ii)Stock compensation
impact.While stock compensation expense constitutes an
ongoing and recurring expense, such expense is excluded from
non-GAAP results because it is not an expense that typically
requires or will require cash settlement by us and because such
expense is not used by us to assess the core profitability of our
business operations. In addition, excluding this item from
various non-GAAP measures facilitates comparisons to our
competitors operating results.
(iii)Acquisition-related
costs.In connection with our business combinations, we incur
significant expenses which we would not have otherwise incurred
as part of our business operations. These expenses include
compensation expenses, professional fees and other direct
expenses, and concurrent restructuring activities, including
employee severance and other exit costs, as well as changes to
the fair value of contingent consideration related to the
acquired company. We exclude such expenses, which we would not
have otherwise incurred, as they are related to acquisitions and
have no direct correlation to the operation of our
business.
(iv)Restructuring
charges.We initiate restructuring activities in order to
align our costs in connection with both our operating plans and
our business strategies based on then-current economic
conditions.The amounts of the restructuring activities and
frequency of occurrence may vary from time to time. Restructuring
costs generally include severance and other termination benefits
related to voluntary retirement programs and involuntary
headcount reductions as well as facilities closures.Such
restructuring costs include elimination of operational redundancy
and permanent reductions in workforce and facilities closures
and, therefore, are not considered by us to be a part of the core
operation of our business and not used by us when assessing the
core profitability and performance of our business
operations.Furthermore, excluding this item from various non-GAAP
measures facilitates comparisons to our competitors and our past
operating results.
(v) Legal matters.
From time to time we are party to legal proceedings. Legal
proceedings could result in an expense or benefit due to
settlements, final judgments, or accruals for loss contingencies.
We exclude these types of expenses or benefits because we do not
believe they are reflective of the core operation of our
business.
(vi)Income tax effect of
non-GAAP pre-tax adjustments.Excluding the income tax effect
of non-GAAP pre-tax adjustments from the provision for income
taxes assists investors in understanding the tax provision
associated with those adjustments and the effect on net income.
In fiscal 2016, we began utilizing a normalized annual non-GAAP
tax rate in calculating non-GAAP financial measures in order 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. This rate is
based on our projected annual rate through fiscal 2018. In
projecting this rate, we evaluated 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 considered 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.
The normalized annual non-GAAP
tax rate is 19%. We re-evaluate this rate on an
annual basis for any significant events that may materially
affect our projections, such as significant changes in our
geographic earnings mix or significant tax law changes in major
jurisdictions where we operate.
Item9.01 Financial
Statements and Exhibits.
| (d) | Exhibits |
|
Exhibit Number |
Exhibit Title |
|
| 99.1 |
Press release dated May17, 2017 containing Synopsys,Inc.s results of operations for its second fiscal quarter ended April30, 2017. |
About SYNOPSYS, INC. (NASDAQ:SNPS)
Synopsys, Inc. provides software, intellectual property (IP) and services. The Company supplies the electronic design automation (EDA) software that engineers use to design and test integrated circuits, also known as chips. It also offers IP products, which are pre-designed circuits that engineers use as components of larger chip designs rather than designing those circuits themselves. It provides software and hardware used to develop the electronic systems that incorporate chips and the software that runs on them. It provides technical services to support its solutions and help its customers develop chips and electronic systems. It is also a provider of software tools that developers use to develop software code in a range of industries, including electronics, financial services, energy, and industrials. It offers products and services in four categories: core EDA; IP, Systems and Software Integrity; Manufacturing Solutions, and Professional Services and Other. SYNOPSYS, INC. (NASDAQ:SNPS) Recent Trading Information
SYNOPSYS, INC. (NASDAQ:SNPS) closed its last trading session down -1.73 at 73.39 with 1,178,311 shares trading hands.