01—Abstract
Summary
Summary of the 10-K/A filed February 9, 2011. Cited figures are marked; the original filing is the authoritative source.
Synopsys, Inc. (SNPS) reported its fiscal year results for the period ending October 31, 2010.
The company demonstrated robust revenue growth, a significant increase in net income, and a strong improvement in diluted earnings per share compared to the previous year. This growth was primarily driven by strong performance in time-based license revenue and solid contributions from maintenance and service revenue. The company also saw a substantial increase in goodwill and intangible assets, indicating strategic acquisitions and investments to expand its technological capabilities and market reach.
Financially, Synopsys maintained a healthy liquidity position with a significant increase in cash and cash equivalents. The company's balance sheet reflects substantial investments in intangible assets and goodwill, reflecting its strategy of growth through acquisition.
Despite these investments, the company managed its operations effectively, leading to improved profitability and a stronger financial footing. Investors should note the company's ongoing commitment to shareholder value through its stock repurchase program and the management's continued focus on strategic growth initiatives in the electronic design automation sector.
02—Key points
Key Highlights
- Total revenue increased to $1.38 billion in fiscal year 2010, up from $1.36 billion in fiscal year 2009.
- Net income significantly increased to $237.1 million in fiscal year 2010, a substantial rise from $167.7 million in fiscal year 2009.
- Diluted earnings per share (EPS) grew to $1.56 in fiscal year 2010, compared to $1.15 in fiscal year 2009.
- Goodwill increased significantly from $932.7 million to $1.27 billion, reflecting strategic acquisitions.
- Intangible assets, net, also saw a substantial increase from $96.8 million to $249.7 million, indicating continued investment in acquired technology and IP.
- Cash and cash equivalents increased to $775.4 million from $701.6 million, demonstrating strong cash generation.
- The company repurchased $184.7 million of its common stock in fiscal year 2010 as part of its ongoing stock repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Synopsys kept $0.17.
- Revenue$1.38B100.0%
- Cost of revenue−$281.1M20.4%
- Gross profit$1.10B79.6%
- Operating costs−$915.5M66.3%
- Operating income$184.1M13.3%
- Interest, other & tax$53.0M3.8%
- Net income$237.1M17.2%
Where FY2010 revenue went
$1.38B- Other operating costs: $466.2M, 34% of revenue
- R&D: $449.2M, 33% of revenue
- Cost of revenue: $281.1M, 20% of revenue
- Operating income: $184.1M, 13% of revenue
Kept 13% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2010filed February 9, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $1.38B$1.36B | +1.5% |
| Cost of Revenue | $281.09M$273.65M | +2.7% |
| Gross Profit | $1.10B$1.09B | +1.2% |
| R&D Expenses | $449.23M$419.91M | +7.0% |
| Operating Expenses | $915.46M$878.14M | +4.2% |
| Operating Income | $184.11M$208.25M | −11.6% |
| Interest Expense | $251K— | — |
| Net Income | $237.06M$167.68M | +41.4% |
| EPS (Basic) | $1.60$1.17 | +36.8% |
| EPS (Diluted) | $1.56$1.15 | +35.7% |
| Shares Outstanding (Basic) | 148.01M143.75M | +3.0% |
| Shares Outstanding (Diluted) | 151.91M145.86M | +4.2% |
05—Questions
Frequently Asked Questions
What is Synopsys' core business?
Synopsys is a world leader in providing technology solutions for developing electronics and electronic systems. Their core business involves supplying electronic design automation (EDA) software used by engineers to design, prototype, and test integrated circuits (chips). They also provide software and hardware for system development and offer pre-designed circuit blocks (IP products) to complement their offerings, along with technical services.
How has Synopsys' revenue and profitability changed in fiscal year 2010 compared to the prior year?
In fiscal year 2010, Synopsys reported total revenue of $1.38 billion, a modest increase from $1.36 billion in fiscal year 2009. More significantly, net income saw a substantial jump to $237.1 million, up from $167.7 million in fiscal year 2009. This resulted in a notable improvement in diluted earnings per share, which rose to $1.56 from $1.15.
What is the reason for the significant increase in goodwill and intangible assets?
The substantial increase in goodwill and intangible assets is primarily due to Synopsys' active acquisition strategy. The company made several acquisitions during fiscal year 2010, notably Virage Logic Corporation and other smaller entities, which are accounted for as business combinations. These acquisitions aim to expand Synopsys' technology portfolio, market reach, and product offerings, leading to increased goodwill and identifiable intangible assets on the balance sheet.
What is Synopsys' approach to managing its financial resources and shareholder returns?
Synopsys maintains a strong liquidity position, as evidenced by the increase in cash and cash equivalents. The company actively engages in stock repurchases to offset dilution from equity awards, support its stock repurchase program, and return value to shareholders. In fiscal year 2010, they repurchased $184.7 million of their common stock. Additionally, the company offers an Employee Stock Purchase Plan (ESPP) and various equity incentive plans to its employees.
06—Continue