Synplicity�, Inc. (Nasdaq:SYNP), a leading supplier of innovative
IC design and verification solutions, today announced financial
results for the quarter and year ended December 31, 2007. Revenue
for the quarter ended December 31, 2007 grew by 23% to $20.1
million, from the $16.4 million reported for the quarter ended
December 31, 2006. On a generally accepted accounting principles
(GAAP) basis, net income was $10.3 million, or $0.38 per diluted
share, for the quarter ended December 31, 2007. GAAP net income
included a benefit of $9.4 million, or $0.34 per diluted share,
related to the recognition of deferred tax assets in accordance
with the accounting rules specified in SFAS 109. Excluding the
benefit from the deferred tax assets, net income was $936,000, or
$0.04 per diluted share in the quarter ended December 31, 2007. For
the quarter ended December 31, 2006, GAAP net income was $1.6
million, or $0.06 per diluted share. For the quarter ended December
31, 2007, GAAP net income included $879,000 of amortization of
intangible assets, principally from the June 2007 acquisition of
HARDI, and $802,000 of stock-based compensation expense. For the
quarter ended December 31, 2006, GAAP net income included $248,000
of amortization of intangible assets and $791,000 of stock-based
compensation expense. Non-GAAP net income for the quarter ended
December 31, 2007, which excludes the deferred tax asset benefit,
intangible asset amortization expense and stock-based compensation
expense was $2.6 million, or $0.10 per diluted share. For the
comparable quarter in 2006, non-GAAP net income, excluding
intangible amortization expense and stock-based compensation
expense was $2.6 million, or $0.10 per diluted share. A
reconciliation of GAAP to non-GAAP net income is included with this
press release. For the year ended December 31, 2007, revenue grew
by 14% to $71.2 million from the $62.5 million reported for the
year ended December 31, 2006. On a GAAP basis, net income was $13.1
million, or $0.47 per diluted share, in 2007. The 2007 results
include the benefit of $9.4 million, or $0.34 per diluted share
related to the recognition of deferred tax assets noted above.
Excluding the benefit of the deferred tax assets, net income was
$3.6 million, or $0.13 per diluted share in 2007. For the year
ended December 31, 2006, GAAP net income was $3.2 million, or $0.11
per diluted share. For the year ended December 31, 2007, GAAP net
income included $2.5 million of amortization of intangible assets,
principally from the June 2007 acquisition of HARDI, and $3.2
million of stock-based compensation expense. For the year ended
December 31, 2006, GAAP net income included $916,000 of
amortization of intangible assets, $3.6 million of stock-based
compensation expense and a restructuring charge of $854,000.
Non-GAAP net income for 2007, which excludes the deferred tax asset
benefit, intangible asset amortization expense and stock-based
compensation expense was $9.4 million, or $0.34 per diluted share.
For 2006, non-GAAP net income, excluding intangible amortization
expense, stock-based compensation expense and a restructuring
charge, was $8.6 million, or $0.31 per diluted share. �I am pleased
to report outstanding bookings and revenue growth in each of our
three product categories in the fourth quarter of 2007 compared to
a year ago,� said Gary Meyers, president and chief executive
officer. �Our ASIC verification solution, ConfirmaTM, which
integrates our software with the HAPS hardware acquired through our
acquisition of Hardi in June 2007, presents us with the largest
market opportunity in our history. In addition, our FPGA synthesis
line continues to gain share and revenue from our ESL products is
growing at nearly a 50% rate, with a more than doubling of bookings
in 2007. We are in the process of introducing enhancements across
our product line, providing us with the prospects for another solid
year in 2008.� Business Outlook The following statements are based
on Synplicity�s current expectations. We do not intend to update,
confirm or change this guidance until our first quarter 2008
earnings conference call. For the quarter ending March 31, 2008:
Revenue is expected to be in the range of $17.5 million to $18.5
million. GAAP net income per share is expected to be in the range
of $0.00 to $0.02 per diluted share. GAAP net income is expected to
include $811,000 of stock-based compensation expense and $850,000
of intangible assets amortization. For the year ending December 31,
2008: Revenue is expected to be in the range of $80.0 million to
$83.0 million. GAAP net income per share is expected to be in the
range of $0.13 to $0.19 per diluted share. GAAP net income is
expected to include $3.2 million of stock-based compensation
expense and $3.4 million of intangible assets amortization. The
income tax provision for 2008 is expected to be about 30% of pretax
GAAP income. Audio Webcast The Company�s earnings call will be
webcast on February 5, 2008 at 2:00 p.m. Pacific, and may be
accessed at http://investor.synplicity.com. The Company will
discuss the fourth quarter and full year 2007 results. Following
completion of the call, a rebroadcast of the webcast will be
available at http://investor.synplicity.com through March 31, 2008.
For those without access to the Internet, a replay of the call will
be available from 5:00 p.m. Pacific on February 5, 2008 through
February 18, 2008. To listen to a replay, call (719) 457-0820,
access code 4360504. Use of Non-GAAP Financial Measures This press
release includes financial measures for net income and net income
per share that exclude certain non-cash and other charges and that
have not been calculated in accordance with GAAP. These measures
differ from GAAP in that they exclude a tax benefit from the
recognition of deferred tax assets in 2007, amortization of
intangible assets, stock-based compensation and, in 2006, a
restructuring charge. The Company has provided these measurements
in addition to GAAP financial results because it believes they
provide a consistent basis for comparison between quarters and
years that is not influenced by other activities and therefore are
helpful to understanding the Company�s underlying operational
results. Further, these non-GAAP measures are some of the primary
measures the Company�s management uses for planning and
forecasting. These measures should not be considered an alternative
to GAAP and these non-GAAP measures may not be comparable to
information provided by other companies. About Synplicity
Synplicity�, Inc. (Nasdaq: SYNP) is a leading supplier of
innovative software and hardware solutions for the design and
verification of semiconductors that serve a wide range of
communications, military/aerospace, consumer, semiconductor,
computer, and other electronic systems markets. Synplicity's FPGA
implementation tools provide outstanding performance, cost and
time-to-market benefits by simplifying, improving and automating
design planning, logic synthesis and physical synthesis for FPGA
and DSP designs. The combination of the company's ASIC verification
and FPGA-based prototyping software tools and HAPS ASIC prototyping
hardware, provide designers with a comprehensive at-speed ASIC /
ASSP verification flow known as the ConfirmaTM platform which
dramatically accelerates functional verification of FPGAs and
ASICs. Synplicity is the number one supplier of FPGA synthesis
tools and its physical synthesis and ASIC verification technology
are the recipients of several prestigious industry awards.
Synplicity products support industry-standard design languages
(VHDL and Verilog) and run on popular platforms. The company
operates in over 20 facilities worldwide and is headquartered in
Sunnyvale, California. For more information visit
http://www.synplicity.com. Forward-Looking Statements This press
release contains forward-looking statements including, but not
limited to, statements regarding the Company�s FPGA market focus
and development of products, growth in revenue, the Company�s
execution and results, estimated net income, net income per share,
non-GAAP operating expenses, the effective tax rate and certain
expenses for 2008. These statements relate to future events and
involve known and unknown risks, uncertainties and other factors
that may cause Synplicity�s actual financial results, levels of
activity, performance or achievements to differ materially from
those expressed or implied by the forward-looking statements
including the finalization of the 2007 audit of its financial
statements, continued demand for Synplicity�s FPGA products,
Synplicity�s ability to increase revenue from its FPGA products,
the integration of HARDI and its products as well as employee
retention. For additional information and considerations regarding
the risks faced by Synplicity, see its annual report on Form 10-K
for the year ended December 31, 2006, as filed with the Securities
and Exchange Commission, as well as other periodic reports filed
with the SEC from time to time. Although Synplicity believes that
the expectations reflected in the forward-looking statements are
reasonable, Synplicity cannot guarantee future results, levels of
activity, performance or achievements. In addition, neither
Synplicity nor any other person assumes responsibility for the
accuracy or completeness of these forward-looking statements.
Synplicity disclaims any obligation to update information contained
in any forward-looking statement. Synplicity and HAPS are
registered trademarks of Synplicity, Inc. All other brands or
products are the trademarks or registered trademarks of their
owners. � SYNPLICITY, INC.CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands) � December 31, December 31, 2007 2006 (1) (unaudited)
Assets: Current assets: Cash and cash equivalents and short-term
investments $ 42,991 $ 65,397 Restricted cash 2,700 - Accounts
receivable, net 15,513 10,323 Inventories 1,377 - Prepaid expenses
1,807 1,233 Other current assets � 3,406 � � 914 � Total current
assets 67,794 77,867 Restricted cash 2,700 - Property and
equipment, net 3,206 2,472 Goodwill 8,692 1,272 Intangible assets,
net 10,189 1,035 Other assets � 8,333 � � 1,163 � Total assets $
100,914 � $ 83,809 � � Liabilities and Shareholders� Equity:
Current liabilities: Accounts payable $ 2,081 $ 1,299 Accrued
liabilities 1,714 1,537 Accrued compensation 5,258 4,360 Deferred
revenue � 18,616 � � 18,409 � Total current liabilities 27,669
25,605 Other liabilities 351 89 Deferred income taxes 2,902 -
Shareholders' equity: Common stock 61,320 62,699 Retained earnings
(accumulated deficit) 8,837 (4,255 ) Accumulated other
comprehensive loss � (165 ) � (329 ) Total shareholders� equity �
69,992 � � 58,115 � Total liabilities and shareholders� equity $
100,914 � $ 83,809 � (1) Derived from audited financial statements
SYNPLICITY, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in
thousands, except per share data) (unaudited) � � Three Months
Ended Twelve Months Ended December 31, December 31, � 2007 � � �
2006 � 2007 � � � 2006 Revenue: License and systems $ 8,966 $ 5,349
$ 26,148 $ 17,867 Maintenance 7,417 6,871 27,994 27,192 Bundled
license and services � 3,690 � � 4,197 � 17,024 � � 17,484 Total
revenue 20,073 16,417 71,166 62,543 Cost of revenue:(2) Cost of
license and systems 1,229 38 2,672 153 Cost of maintenance 450 362
1,695 1,641 Cost of bundled license and services 75 163 364 457
Amortization of intangible assets � 581 � � 248 � 1,847 � � 916
Total cost of revenue � 2,335 � � 811 � 6,578 � � 3,167 Gross
profit 17,738 15,606 64,588 59,376 Operating expenses:(2) Research
and development 6,536 5,266 24,797 23,386 Sales and marketing 7,781
6,818 27,638 25,412 General and administrative 2,183 2,142 8,642
8,073 Amortization of intangible assets from acquisition 298 - 669
- Restructuring charge � - � � - � - � � � 854 Total operating
expenses � 16,798 � � 14,226 � 61,746 � � 57,725 Income from
operations 940 1,380 2,842 1,651 Other income, net � 392 � � 810 �
2,417 � � 2,728 Income before income taxes 1,332 2,190 5,259 4,379
Income tax provision (benefit) � (9,014 ) � 596 � (7,833 ) � 1,204
Net income $ 10,346 � $ 1,594 $ 13,092 � $ 3,175 Net income per
share: Basic and diluted net income per share $ 0.39 � $ 0.06 $
0.49 � $ 0.12 Shares used in basic per share calculation � 26,493 �
� 26,851 � 26,684 � � 26,902 Diluted net income per share $ 0.38 �
$ 0.06 $ 0.47 � $ 0.11 Shares used in diluted per share calculation
� 27,319 � � 27,839 � 27,607 � � 27,793 (2) Amortization of
stock-based compensation expense relates to the following: Three
Months Ended � Year Ended December 31, December 31, � 2007 � � 2006
� 2007 � � 2006 Cost of maintenance $ 24 $ 21 $ 88 $ 106 Research
and development 348 318 1,410 1,630 Sales and marketing 217 218 879
956 General and administrative 213 234 865 941 SYNPLICITY, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (in thousands, except
per share data) (unaudited) Net Income � � � � Three Months Ended
Year Ended December 31, December 31, � 2007 � � � 2006 � 2007 � �
2006 GAAP net income $ 10,346 $ 1,594 $ 13,092 $ 3,175 Amortization
of intangible assets 879 248 2,516 916 Stock-based compensation
expense 802 791 3,242 3,633 Deferred tax benefit (9,410 ) - (9,410
) - Restructuring charge � - � � - � - � � 854 Non-GAAP net income
$ 2,617 � $ 2,633 $ 9,440 � $ 8,578 Non-GAAP net income per share:
Non-GAAP net income per common share $ 0.10 � $ 0.09 $ 0.34 � $
0.31 Shares used in non-GAAP per share calculation � 27,319 � �
27,839 � 27,607 � � 27,793 �
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