Summary
Synopsys, Inc. reported fiscal year 2006 revenue of $1.096 billion, a 10% increase year-over-year, driven primarily by strong performance in time-based license revenue, which grew 18%. The company's strategic shift towards a more ratable license model has reduced revenue seasonality but also impacted upfront license and maintenance revenue. Financially, Synopsys achieved net income of $24.7 million, a significant improvement from a net loss of $17.1 million in fiscal 2005. This turnaround was attributed to increased revenue and lower amortization expenses, partially offset by higher research and development costs and the adoption of new stock-based compensation accounting standards. The company also continued its share repurchase program, buying back approximately $200 million in stock. A significant factor impacting operations is an ongoing IRS audit for fiscal years 2000-2001, with the IRS proposing a substantial tax deficiency, which Synopsys is contesting vigorously.
Key Highlights
- 1Revenue increased by 10% to $1.096 billion in fiscal year 2006.
- 2Time-based license revenue grew by 18%, reflecting the company's shift to a ratable revenue model.
- 3Net income turned positive at $24.7 million, a significant improvement from a net loss of $17.1 million in the prior year.
- 4Research and Development expenses increased by 15% to $370.6 million, reflecting investment in new products and acquisitions.
- 5The company repurchased approximately $200 million of its common stock during fiscal year 2006.
- 6Synopsys is actively contesting a significant proposed tax deficiency from the IRS for fiscal years 2000-2001, with appeals expected to continue for several years.
- 7The company acquired three businesses in fiscal year 2006: HPL Technologies, Virtio Corporation, and SIGMA-C Software AG, to enhance its product offerings in yield management, virtual prototyping, and lithography simulation.