SYNOPSYS INC Quarterly Report for Q2 Ended Apr 30, 2011

Summary

Synopsys Inc. reported solid revenue growth for the second quarter of fiscal year 2011, with total revenue increasing by 16% year-over-year to $393.7 million. This growth was driven by an increase in time-based license revenue and professional services revenue, bolstered by contributions from prior year acquisitions. The company also achieved a significant increase in net income, rising 105% to $81.1 million, largely attributed to a one-time tax benefit of $32.8 million resulting from a final IRS settlement for fiscal years 2006-2009. Despite increased operating expenses related to headcount growth from acquisitions and employee costs, the company maintained its focus on profitability and operational efficiency. Synopsys ended the quarter with a strong liquidity position, holding $840.5 million in cash, cash equivalents, and short-term investments, with no outstanding borrowings under its credit facility.

Key Highlights

• 1Total revenue increased by 16% to $393.7 million for the three months ended April 30, 2011, compared to $338.1 million in the prior year period.
• 2Net income saw a substantial increase of 105% to $81.1 million, primarily due to a $32.8 million tax benefit from an IRS settlement.
• 3Time-based license revenue, the company's largest revenue stream, grew by 10% year-over-year.
• 4Maintenance and service revenue increased by 36% to $49.9 million, driven by professional services contracts from recent acquisitions.
• 5Operating expenses increased, reflecting higher personnel costs and expenses related to prior year acquisitions.
• 6The company maintained a strong balance sheet with $840.5 million in cash, cash equivalents, and short-term investments as of April 30, 2011.
• 7Synopsys continues to repurchase shares, with $80.3 million remaining available under its stock repurchase program as of the end of the quarter.

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