10-QPeriod: Q2 FY2004

SYNOPSYS INC Quarterly Report for Q2 Ended Apr 30, 2004

Filed June 10, 2004For Securities:SNPS

Summary

Synopsys, Inc. (SNPS) reported its second-quarter results for the period ending April 30, 2004. Total revenue for the quarter was $294.6 million, a slight increase of 1% compared to the same period in the prior year. This growth was primarily driven by a 10% increase in time-based license revenue, which offset a decrease in upfront license and service revenue. The company experienced a significant increase in net income to $28.7 million, up 29% year-over-year, driven by revenue growth, a reduction in operating expenses, and a lower effective tax rate. Financially, Synopsys maintained a strong liquidity position with $613.0 million in cash, cash equivalents, and short-term investments. However, cash provided by operations decreased compared to the prior year, influenced by foreign tax disbursements and a $10 million termination fee paid in relation to a terminated merger agreement. The company actively engaged in share repurchases and entered into a new $250 million credit facility. Management highlighted ongoing product development and a focus on strategic acquisitions, including three small acquisitions in February 2004, while noting risks related to semiconductor industry cyclicality and competitive pressures.

Key Highlights

  • 1Revenue for the second quarter increased by 1% to $294.6 million, primarily driven by a 10% increase in time-based license revenue.
  • 2Net income saw a significant jump of 29% to $28.7 million, attributed to revenue growth, reduced operating expenses, and a lower tax provision.
  • 3The company ended the quarter with a robust cash position of $613.0 million, demonstrating strong liquidity.
  • 4Synopsys repurchased approximately 2.2 million shares of common stock during the quarter, indicating a commitment to returning capital to shareholders.
  • 5Three strategic acquisitions (Accelerant Networks, iRoC Technologies assets, and Analog Design Automation assets) were completed in February 2004, bolstering the company's IP and testing offerings.
  • 6A new three-year, $250 million senior unsecured revolving credit facility was established in April 2004, enhancing financial flexibility.
  • 7The company is actively contesting a lawsuit filed by MoSys following the termination of a merger agreement, with a trial set for July 2004.

Frequently Asked Questions

For the second quarter ending April 30, 2004, Synopsys reported total revenue of $294.6 million, representing a modest 1% increase compared to the same period in fiscal year 2003. This growth was primarily fueled by a 10% increase in time-based license revenue, which helped to offset decreases in upfront license and service revenues.

Synopsys demonstrated improved profitability, with net income rising 29% to $28.7 million for the second quarter of fiscal 2004, compared to $22.3 million in the prior year's second quarter. This increase was a result of a 1% rise in revenue, a 5% decrease in operating expenses, and a significant 41% reduction in the provision for income taxes.

Synopsys maintains a strong liquidity position. As of April 30, 2004, the company had $613.0 million in cash, cash equivalents, and short-term investments. Despite a decrease from the previous quarter, this substantial balance provides ample financial flexibility. Cash provided by operations for the first six months of fiscal 2004 was $101.7 million.

During the quarter, Synopsys completed three acquisitions: Accelerant Networks, Inc., the test-related assets of iRoC Technologies S.A., and the technology assets of Analog Design Automation, Inc. These acquisitions, totaling approximately $42.3 million, are expected to enhance the company's offerings in IP and testing. Additionally, Synopsys entered into a new $250 million senior unsecured revolving credit facility, bolstering its financial resources.