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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-19807
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SYNOPSYS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 56-1546236
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
700 EAST MIDDLEFIELD ROAD
MOUNTAIN VIEW, CA 94043
(Address of principal executive offices)
TELEPHONE: (650) 584-5000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13, or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
71,509,137 shares of Common Stock as of June 2, 2000
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SYNOPSYS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED APRIL 30, 2000
TABLE OF CONTENTS
PART I.........................................................................3
ITEM 1. FINANCIAL STATEMENTS...................................................3
CONDENSED CONSOLIDATED BALANCE SHEETS.....................................3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME...............................4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS...........................5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS......................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.............................................10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.............18
PART II. OTHER INFORMATION....................................................19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................21
SIGNATURES....................................................................22
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PART I
ITEM 1. FINANCIAL STATEMENTS
SYNOPSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
APRIL 30, OCTOBER 31,
2000 1999
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 150,611 $ 309,394
Short-term investments 466,101 399,995
----------- -----------
Cash and short-term investments 616,712 709,389
----------- -----------
Accounts receivable, net of allowances of
$8,504 and $10,563, respectively 160,365 130,253
Prepaid expenses, deferred taxes and other 61,282 66,814
----------- -----------
Total current assets 838,359 906,456
----------- -----------
Property and equipment, net 141,302 135,118
Long-term investments 83,037 57,651
Intangible assets, net 53,451 56,240
Other assets 31,957 22,818
----------- -----------
Total assets $ 1,148,106 $ 1,178,283
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 88,098 $ 98,976
Current portion of long-term debt 12,303 8,658
Accrued income taxes 63,321 50,146
Deferred revenue 140,010 126,758
----------- -----------
Total current liabilities 303,732 284,538
----------- -----------
Long-term debt 1,497 11,304
Deferred compensation 15,017 9,844
Stockholders' equity:
Preferred stock, $.01 par value; 2,000,000 shares
authorized; no shares outstanding -- --
Common stock, $.01 par value; 400,000,000 shares
authorized; 68,381,000 and 70,750,000 shares
outstanding, respectively 684 708
Additional paid-in capital 556,034 542,052
Retained earnings 398,480 349,192
Treasury stock, at cost (147,315) (28,589)
Accumulated other comprehensive income 19,977 9,234
----------- -----------
Total stockholders' equity 827,860 872,597
----------- -----------
Total liabilities and stockholders' equity $ 1,148,106 $ 1,178,283
=========== ===========
The accompanying notes are an integral part of these financial statements.
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SYNOPSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------- ----------------------
APRIL 30, MARCH 31, APRIL 30, MARCH 31,
2000 1999 2000 1999
-------- -------- -------- --------
Revenue:
Product $123,033 $116,680 $253,582 $226,639
Service 81,820 73,506 168,139 143,773
-------- -------- -------- --------
Total revenue 204,853 190,186 421,721 370,412
-------- -------- -------- --------
Cost of revenue:
Product 10,653 8,311 20,939 15,906
Service 19,273 16,381 37,872 30,492
-------- -------- -------- --------
Total cost of revenue 29,926 24,692 58,811 46,398
-------- -------- -------- --------
Gross margin 174,927 165,494 362,910 324,014
-------- -------- -------- --------
Operating expenses:
Research and development 45,962 39,182 90,229 80,118
Sales and marketing 70,395 58,476 137,391 114,054
General and administrative 14,033 10,873 26,282 21,965
Amortization of intangible assets 3,690 1,470 7,211 1,470
In-process research and development -- 16,267 1,750 16,267
-------- -------- -------- --------
Total operating expenses 134,080 126,268 262,863 233,874
-------- -------- -------- --------
Operating income 40,847 39,226 100,047 90,140
Other income, net 9,694 9,708 18,634 18,192
-------- -------- -------- --------
Income before provision for income taxes 50,541 48,934 118,681 108,332
Provision for income taxes 16,967 22,313 40,004 41,320
-------- -------- -------- --------
Net income $ 33,574 $ 26,621 $ 78,677 $ 67,012
======== ======== ======== ========
Basic earnings per share:
Net income $ 0.49 $ 0.38 $ 1.12 $ 0.96
======== ======== ======== ========
Weighted average common shares 69,153 70,286 70,054 69,739
======== ======== ======== ========
Diluted earnings per share:
Net income $ 0.47 $ 0.36 $ 1.08 $ 0.92
======== ======== ======== ========
Weighted average common shares
and equivalents 71,089 73,873 72,964 73,207
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
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SYNOPSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
SIX MONTHS ENDED
-----------------------------
APRIL 30, MARCH 31,
2000 1999
----------- -----------
Cash flows provided by operating activities:
Net income $ 78,677 $ 67,012
Adjustments to reconcile net income to cash flows
provided by operating activities:
Depreciation and amortization 29,404 23,722
Tax benefit associated with stock options 9,563 18,893
Provision for doubtful accounts and sales returns (2,059) (192)
Interest accretion on notes payable 390 448
Deferred taxes (2,664) 426
Gain on sale of long-term investments (5,091) (9,282)
In-process research and development 1,750 16,267
Net changes in operating assets and liabilities:
Accounts receivable (27,187) (12,066)
Prepaid expenses and other current assets 372 894
Intangible assets, net 135 174
Other assets (9,574) (3,555)
Accounts payable and accrued liabilities (11,694) (15,680)
Accrued income taxes 12,997 (5,145)
Deferred revenue 12,546 9,190
Deferred compensation 5,173 3,670
----------- -----------
Net cash provided by operating activities 92,738 94,776
----------- -----------
Cash flows from investing activities:
Expenditures for property and equipment (27,388) (38,224)
Purchases of short-term investments (1,264,268) (2,847,672)
Sales and maturities of short-term investments 1,198,305 2,720,369
Proceeds from sale of long-term investments 8,647 10,947
Purchases of long-term investments (7,998) (3,885)
Acquisitions, net of cash acquired (5,646) (34,786)
Capitalization of software development costs (500) (500)
----------- -----------
Net cash used in investing activities (98,848) (193,751)
----------- -----------
Cash flows from financing activities:
Payments of debt obligations (7,200) (9,477)
Purchases of treasury stock (182,891) --
Issuances of long-term debt 727 --
Issuances of common stock 39,171 62,536
----------- -----------
Net cash (used in) provided by financing activities (150,193) 53,059
----------- -----------
Effect of exchange rate changes on cash (2,480) (116)
Net decrease in cash and cash equivalents (158,783) (46,032)
Cash and cash equivalents, beginning of period 309,394 164,548
----------- -----------
Cash and cash equivalents, end of period $ 150,611 $ 118,516
=========== ===========
The accompanying notes are an integral part of these financial statements.
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SYNOPSYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Synopsys, Inc. (Synopsys or the Company) is a leading supplier of
electronic design automation (EDA) solutions to the global electronics market.
The Company provides comprehensive design technologies to creators of advanced
integrated circuits, electronic systems, and systems on a chip. The Company also
provides consulting services and support to its customers to streamline the
overall design process and accelerate time-to-market.
The unaudited condensed consolidated financial statements have been
prepared by the Company and reflect all adjustments which are, in the opinion of
management, necessary for a fair presentation of the interim periods presented.
Such adjustments are of a normal recurring nature. The consolidated results of
operations for the interim periods presented are not necessarily indicative of
the results for any future interim period or for the entire fiscal year. Certain
information and footnote disclosures normally included in annual consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been omitted, although the Company believes that the disclosures
included are adequate to make the information presented not misleading. The
condensed consolidated financial statements and notes included herein should be
read in conjunction with the consolidated financial statements and notes for the
fiscal year ended September 30, 1999, included in the Company's 1999 Annual
Report on Form 10-K.
On July 15, 1999, the Board of Directors changed the Company's fiscal year
to end on the Saturday nearest to October 31. As a result, fiscal 2000 commenced
on October 31, 1999 and will end on October 28, 2000. The period from
October 3, 1999 through October 30, 1999 was accounted for as a transition
period, information on which was filed with the Company's quarterly report on
Form 10-Q for the first quarter of fiscal 2000.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the recorded amounts reported in the unaudited condensed
consolidated financial statements and accompanying notes. A change in the facts
and circumstances surrounding these estimates could result in a change to the
estimates and impact future operating results.
2. BUSINESS COMBINATIONS
Acquisitions
During the first quarter of fiscal 2000, the Company acquired Leda, S.A.
(Leda), a privately held provider of RTL coding-style-checkers, for a purchase
price of $7.7 million, including cash payments of $7.5 million. The purchase
price of the transaction was allocated to the acquired assets and liabilities
based on their estimated fair values as of the date of the acquisition. Amounts
allocated to developed technology, workforce and goodwill are being amortized on
a straight-line basis over a five-year period. Approximately $1.8 million was
allocated to in-process research and development and charged to operations
because the acquired technology had not reached technological feasibility and
had no alternative uses.
Pro forma results of operations have not been presented since the effects
of the acquisition were not material to the Company's consolidated financial
position, results of operations or cash flows for the periods presented.
3. STOCK REPURCHASE PROGRAM
In February 2000, the Board of Directors authorized a stock repurchase
program under which Synopsys' common stock with a market value of up to
$200.0 million may be acquired in the open market over a ten month period.
Repurchased shares are to be used for issuance under Synopsys' stock option and
employee stock plans and for other corporate purposes. During the second quarter
of fiscal 2000, the Company purchased 2,392,000 shares for an aggregate amount
of $99.9 million. During the first quarter of fiscal 2000, the Company purchased
1,330,000 shares for an aggregate amount of $83.0 million.
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4. COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
130, Reporting Comprehensive Income, as of the first quarter of fiscal 1999.
SFAS No. 130 has no impact on the Company's net income or total stockholders'
equity. The following table sets forth the components of comprehensive income,
net of income tax expense:
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- -----------------------
APRIL 30, MARCH 31, APRIL 30, MARCH 31,
2000 1999 2000 1999
-------- -------- -------- --------
(in thousands) (unaudited) (unaudited)
Net income $ 33,574 $ 26,621 $ 78,677 $ 67,012
Foreign currency translation adjustment (1,976) (485) (2,480) (116)
Unrealized gain (loss) on investments 5,332 (193) 16,278 4,415
Reclassification adjustment for
(losses) included in net income (1,873) (2,614) (3,055) (4,841)
-------- -------- -------- --------
Total comprehensive income $ 35,057 $ 23,329 $ 89,420 $ 66,470
======== ======== ======== ========
5. EARNINGS PER SHARE
Basic earnings per share is computed using the weighted-average number of
common shares. Diluted earnings per share is computed using the weighted-average
number of common and dilutive potential common shares outstanding during the
period. Dilutive potential common shares consist of employee stock options using
the treasury stock method.
The following table sets forth the computation of basic and diluted
earnings per share:
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- -----------------------
APRIL 30, MARCH 31, APRIL 30, MARCH 31,
2000 1999 2000 1999
-------- -------- -------- --------
(in thousands) (unaudited) (unaudited)
NUMERATOR:
Numerator for basic and diluted earnings
per share -
Net income $ 33,574 $ 26,621 $ 78,677 $ 67,012
======== ======== ======== ========
DENOMINATOR:
Denominator for basic earnings per share -
weighted-average shares 69,153 70,286 70,054 69,739
Effect of dilutive securities:
Employee stock options 1,936 3,587 2,910 3,468
-------- -------- -------- --------
Dilutive potential common shares 71,089 73,873 72,964 73,207
======== ======== ======== ========
Basic earnings per share:
Net income $ 0.49 $ 0.38 $ 1.12 $ 0.96
======== ======== ======== ========
Diluted earnings per share:
Net income $ 0.47 $ 0.36 $ 1.08 $ 0.92
======== ======== ======== ========
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6. EFFECT OF NEW ACCOUNTING STANDARDS
In December 1998, the AICPA issued SOP 98-9, Modification of SOP 97-2,
Software Revenue Recognition, With Respect to Certain Transactions, which amends
SOP 97-2 and supercedes SOP 98-4. The Company adopted SOP 98-9 in the first
quarter of fiscal 2000. The Company modified certain aspects of its license and
pricing structure so that the impact of SOP 98-9 on its revenue recognition
practices was not significant.
In June 1999, the Financial Accounting Standards Board (FASB) issued SFAS
No. 137, Accounting for Derivative Instruments and Hedging Activities, Deferral
of the Effective Date of SFAS No. 133, which amends the effective date of SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No.
133 establishes accounting and reporting standards for derivative instruments
and hedging activities and requires the Company to recognize all derivatives as
either assets or liabilities on the balance sheet and measure them at fair
value. Gains and losses resulting from changes in fair value would be accounted
for based on the intended use of the derivative and whether it is designated and
qualifies for hedge accounting. The Company will adopt SFAS No. 133 for its
first quarter of fiscal 2001. The Company has not determined the impact that
SFAS No. 133 will have on its financial statements and believes that such a
determination will not be meaningful until closer to the date of the initial
adoption.
In March 2000, the Emerging Issues Task Force (EITF) published their
consensus on EITF Issue No. 00-2, Accounting for Web Site Development Costs,
which requires that costs incurred during the development of web site
applications and infrastructure, involving developing software to operate the
web site, including graphics that affect the "look and feel" of the web page and
all costs relating to software used to operate a web site should be accounted
for under Statement of Position 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use, (SOP 98-1). However, if a plan
exists or is being developed to market the software externally, the costs
relating to the software should be accounted for pursuant to FASB Statement No.
86, Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed (SFAS No. 86). The Company will adopt EITF No. 00-2 in the
fourth quarter of fiscal 2000.
In March 2000, the EITF published their consensus on EITF Issue No. 00-3,
Application of AICPA Statement of Position 97-2, Software Revenue Recognition,
to Arrangements That Include the Right to Use Software Stored on Another
Entity's Hardware. The Issue states that a software element covered by SOP 97-2
is only present in a hosting arrangement if the customer has the contractual
right to take possession of the software at any time during the hosting period
without significant penalty and it is feasible for the customer to either run
the software on its own hardware or contract with another party unrelated to the
vendor to host the software. The Company recently introduced a software hosting
service. Synopsys hosting services agreements now in place do not grant
customers the right to take possession of hosted software without an additional
charge.
In March 2000, the FASB issued Interpretation No. 44, Accounting for
Certain Transactions involving Stock Compensation, an interpretation of APB
Opinion No. 25. This Interpretation clarifies the application of Opinion 25 for
certain issues including: (a) the definition of employee for purposes of
applying Opinion 25, (b) the criteria for determining whether a plan qualifies
as a noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
combination. In general, this Interpretation is effective July 1, 2000. We do
not expect the adoption of Interpretation No. 44 to have a material effect on
our consolidated financial position or results of operations.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial
Statements. SAB 101 provides guidance on applying generally accepted accounting
principles to revenue recognition issues in financial statements. The Company
will adopt SAB 101 as required in the first quarter of fiscal 2001 and is
evaluating the effect that such adoption may have on its consolidated results of
operations and financial position. The SEC is expected to release an
interpretation on SAB 101 in a question-and-answer format and there are
uncertainties as to the impact this may have on the Company.
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7. SEGMENT DISCLOSURE
In 1999, Synopsys adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS No. 131 requires disclosures of certain
information regarding operating segments, products and services, geographic
areas of operation and major customers. The method for determining what
information to report under SFAS No. 131 is based upon the "management
approach," or the way that management organizes the operating segments within a
company, for which separate financial information is available that is evaluated
regularly by the Chief Operating Decision Maker (CODM) in deciding how to
allocate resources and in assessing performance. Synopsys' CODM is the Chief
Executive Officer and Chief Operating Officer.
The Company provides comprehensive design technology products and consulting
services in the electronic design automation software industry. The CODM
evaluates the performance of the Company based on profit or loss from operations
before income taxes not including amortization of intangible assets and
in-process research and development. For the purpose of making operating
decisions, the CODM primarily considers financial information presented on a
consolidated basis accompanied by disaggregated information about revenues by
geographic region. There are no differences between the accounting policies used
to measure profit and loss for the Company segments and those used on a
consolidated basis. Revenue is defined as revenues from external customers.
Prior period amounts have been restated to conform to the current composition of
the Company segments.
The disaggregated financial information reviewed by the CODM is as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- -----------------------
APRIL 30, MARCH 31, APRIL 30, MARCH 31,
2000 1999 2000 1999
-------- -------- -------- --------
(in thousands) (unaudited) (unaudited)
Revenue:
Product $123,033 $116,680 $253,582 $226,639
Service 81,820 73,506 168,139 143,773
-------- -------- -------- --------
Total revenue $204,853 $190,186 $421,721 $370,412
======== ======== ======== ========
Gross margin $174,927 $165,494 $362,910 $324,014
Operating income before amortization of
intangible assets and in-process
research and development $ 44,537 $ 56,963 $109,008 $107,877
Reconciliation of the Company's segment profit and loss to the Company's
income before provision for income taxes is as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- -----------------------
APRIL 30, MARCH 31, APRIL 30, MARCH 31,
2000 1999 2000 1999
-------- -------- -------- --------
(in thousands) (unaudited) (unaudited)
Operating income before amortization of
intangible assets and in-process
research and development $ 44,537 $ 56,963 $ 109,008 $ 107,877
Amortization of intangible assets (3,690) (1,470) (7,211) (1,470)
In-process research and development -- (16,267) (1,750) (16,267)
--------- ---------- ---------- ----------
Operating income $ 40,847 $ 39,226 $ 100,047 $ 90,140
========= ========== ========== ==========
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934. Such
forward-looking statements include the statements concerning expected cash flows
from acquired technology, projections regarding acquired companies, effects of
foreign currency hedging, adequacy of the Company's cash as well as statements
including the words "projects," "expects," "believes," "anticipates" or similar
expressions. Actual results could differ materially from those anticipated in
such forward-looking statements as a result of certain factors, including those
set forth under "Factors That May Affect Future Results."
RESULTS OF OPERATIONS
Business Combinations. During the first quarter of fiscal 2000, the Company
acquired Leda, for a purchase price of $7.7 million, including cash payments of
$7.5 million. The purchase price of the transaction was allocated to the
acquired assets and liabilities based on their estimated fair values as of the
date of the acquisition. Amounts allocated to developed technology, workforce
and goodwill are being amortized on a straight-line basis over a five-year
period. Approximately $1.8 million was allocated to in-process research and
development and charged to operations because the acquired technology had not
reached technological feasibility and had no alternative uses.
Revenue. Revenue for the second quarter of fiscal 2000 increased 7.7% to
$204.9 million from $190.2 million in the second quarter of fiscal 1999. Revenue
for the first half of fiscal 2000 increased 13.9% to $421.7 million from
$370.4 million for the comparable period in fiscal 1999. The increase in product
revenue for both periods was primarily attributable to increased sales of
physical synthesis, verilog simulation, and intellectual property (IP) products.
The percentage of the Company's total revenue attributed to products decreased
slightly to 60.1% for the second quarter of fiscal 2000 compared to 61.4% for
the second quarter of fiscal 1999. Product revenue as a percentage of total
revenue for the first half of fiscal 2000 was 60.1%, compared to 61.2% for the
comparable period in fiscal 1999.
International revenue as a percentage of total revenue increased to 43.7%
in the second quarter of fiscal 2000 from 41.3% in the second quarter of fiscal
1999. This increase is primarily a result of relatively greater revenue growth
in Europe than North America in the second quarter of fiscal 2000. For the first
half of fiscal 2000, international revenue was 40.3% of total revenue, compared
to 38.4% for the comparable period in fiscal 1999. This increase is primarily
attributable to revenue growth in Europe and Asia Pacific.
Cost of Revenue. Cost of revenue as a percentage of total revenue increased
slightly to 14.6% in the second quarter of fiscal 2000 from 13.0% for the
comparable period in fiscal 1999. For the first half of fiscal 2000, cost of
revenue as a percentage of total revenue was 13.9% compared to 12.5% for the
comparable period in fiscal 1999. The increase in both periods presented is
primarily a result of higher royalty expense and increased product support costs
associated with our service business. Cost of revenue includes personnel and
related costs, production costs, product packaging, documentation, amortization
of capitalized software development and purchased software costs, and costs of
the Company's system products.
Research and Development. Research and development expenses as a percentage
of total revenue increased to 22.4% in the second quarter of fiscal 2000 from
20.6% in the second quarter of fiscal 1999, and increased in absolute dollars to
$46.0 million from $39.2 million. Research and development expenses were
$90.2 million for the first half of fiscal 2000 in absolute dollars, compared to
$80.1 million for the comparable period in fiscal 1999. As a percentage of total
revenue, research and development decreased to 21.4% in the first half of fiscal
2000 compared to 21.6% for the comparable period in fiscal 1999. The increase in
absolute dollars for all periods presented was primarily attributable to
increases in personnel and personnel-related costs, and consulting expenses.
Sales and Marketing. Sales and marketing expenses as a percentage of total
revenue increased to 34.4% in the second quarter of fiscal 2000 from 30.7% in
the second quarter of fiscal 1999, and increased in absolute dollars to
$70.4 million from $58.5 million. The increase in absolute dollars was primarily
the result of additional spending in advertising, trade shows and hiring
personnel to help expedite the company's efforts to market and sell its Physical
Synthesis products. Sales and marketing expenses were 32.6% of total revenue for
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the first half of fiscal 2000, compared to 30.8% for the comparable period in
fiscal 1999. In absolute dollars, sales and marketing expenses were
$137.4 million for the first half of fiscal 2000, compared to $114.1 million for
the comparable period in fiscal 1999. The increase, as a percentage of total
revenue and absolute dollars, was primarily due to increases in personnel-
related costs.
General and Administrative. General and administrative expenses as a
percentage of total revenue increased to 6.9% in the second quarter of fiscal
2000 from 5.7% in the second quarter of fiscal 1999, and increased in absolute
dollars to $14.0 million from $10.9 million. General and administrative expenses
were 6.2% of total revenue for the first half of fiscal 2000, compared to 5.9%
for the comparable period in fiscal 1999 and increased in absolute dollars to
$26.3 million from $22.0 million. The increase, as a percentage of total revenue
and in absolute dollars for all periods presented, was primarily due to
increases in bad debt expense, personnel costs, facility expenditures and patent
and proxy services.
Amortization of Intangible Assets. Amortization of intangible assets
represents the excess of the aggregate purchase price over the fair value of the
tangible and identifiable intangible assets acquired by the Company. Under the
Company's accounting policies, intangible assets as of April 30, 2000, including
goodwill, are being amortized over the estimated useful life of four to
five-year periods. The Company assesses the recoverability of goodwill by
determining whether the amortized asset over its useful life may be recovered
through estimated useful cash flows. Amortization of intangible assets charged
to operations in the second quarter of fiscal 2000 was $3.7 million and for the
first half of fiscal 2000 was $7.2 million. Amortization of intangible assets
for both the second quarter and first half of fiscal 1999 was $1.5 million.
In-process Research and Development. The Company incurred in-process
research and development charges of $1.8 million in the first six months of
fiscal 2000 related to the acquisition of Leda. The purchase price totaled
$7.7 million, including cash payments of $7.5 million. The purchase price of the
transaction was allocated to the acquired assets and liabilities based on their
estimated fair values as of the date of the acquisition. Amounts allocated to
developed technology, workforce and goodwill are being amortized on a
straight-line basis over a five-year period. Approximately $1.8 million was
allocated to in-process research and development and charged to operations
because the acquired technology had not reached technological feasibility and
had no alternative uses. The in-process research and development projects were
estimated to be approximately 71% complete in the aggregate, and the expected
aggregate cost to complete the projects was estimated at $0.6 million. During
the valuation process, core developed technology was identified in addition to
the in-process research and development projects. The core developed technology
was valued separately using a discount rate of 20% and is being amortized over
its estimated useful life. The fair value of the in-process technology was based
on a discounted cash flow model, similar to the traditional "Income Approach",
which discounts expected future cash flows to present value, net of tax. In
discounting the estimated cash flows, a discount rate of 30% was used, based on
the risks associated with achieving such projected cash flows upon successful
completion of the acquired projects, expected incremental revenues and expenses
associated with the projects utilizing the acquired technology, and risks and
uncertainties in incorporating the acquired technology into the Company's
development projects. In developing cash flow projections, revenues were
forecasted based on relevant factors, including aggregate revenue growth rates
for the business as a whole, characteristics of the potential market for the
technology and the anticipated life of the technology. Projected annual revenues
for the in-process research and development projects were assumed to ramp up
initially and decline significantly at the end of the in-process technology's
economic life. Operating expenses and resulting profit margins were forecasted
based on the characteristics and cash flow generating potential of the acquired
in-process technology. Gross profit percentage and tax rate were assumed to
approximate the Company's corporate gross profit percentage average and its
effective tax rate. Associated risks include the inherent difficulties and
uncertainties in completing each project and thereby achieving technological
feasibility, and risks related to the impact of potential changes in market
conditions and technology.
As of April 30, 2000, the Company's research and development expenditures
since the acquisition of Leda in fiscal 2000 have not differed materially from
expectations. The projections the Company used in performing its valuations with
respect to each acquisition are still valid, in all material respects; however,
there can be no assurance that the projected results will be achieved. With
respect to the Company's acquisitions completed in fiscal 1999, management
believes that the projections the Company used in performing its valuations with
respect to each acquisition are still valid, in all material respects, however,
there can be no assurance that the projected results will be achieved.
Management expects to continue the development of each project and believes that
there is a reasonable chance of successfully completing such development
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efforts. However, there is risk associated with the completion of the
in-process projects and there can be no assurance that any project will meet
with either technological or commercial success. Failure to successfully develop
and commercialize these in-process projects would result in the loss of the
expected economic return inherent in the fair value allocation. Additionally,
the value of other intangible assets acquired may become impaired. The risks
associated with the research and development are still considered high and no
assurance can be made that upcoming products will meet market expectations.
Other Income, net. Other income, net for the second quarter of fiscal 2000
remained flat at $9.7 million in comparison to the second quarter of fiscal 1999
and decreased as a percentage of total revenue to 4.7% from 5.1%. For the first
half of fiscal 2000, other income, net was $18.6 million, compared to
$18.2 million for the comparable period in fiscal 1999. Other income, net
decreased as a percentage of total revenue to 4.4% in the second quarter of
fiscal 2000 from 4.9% in the second quarter of fiscal 1999. The increase in
absolute dollars was primarily due to higher interest income for the fiscal 2000
periods presented compared to fiscal 1999 periods.
Interest Rate Risk. The Company's exposure to market risk for changes in
interest rates relate primarily to its investment portfolio. The Company does
not use derivative financial instruments for speculative or trading purposes
with respect to its cash and short-term investments. The Company places its
investments in a mix of tax exempt and taxable instruments that meet high credit
quality standards, as specified in the Company's investment policy. The policy
also limits the amount of credit exposure to any one issue, issuer and type of
instrument. The Company does not anticipate any material loss with respect to
its investment portfolio.
The following table presents the carrying value and related
weighted-average interest rates for the Company's investment portfolio. The
carrying value approximates fair value at April 30, 2000. In accordance with the
Company's investment policy, all investments mature in fifteen months or less.
Principal (Notional) Amounts in U.S. Dollars:
Carrying Average
(in thousands, except interest rates) Amount Interest Rate
---------- -------------
Cash equivalents- fixed rate $ 31,997 4.08%
Short-term investments - fixed rate 466,101 4.22%
----------
Total investment securities $ 498,098 4.21%
Money market funds - variable rate 21,507 4.72%
----------
Total interest bearing instruments $ 519,605 4.23%
==========
Foreign Currency Risk. At the present time, the Company hedges only those
currency exposures associated with certain assets and liabilities denominated in
nonfunctional currencies and does not generally hedge anticipated foreign
currency cash flows. Hedging activities are undertaken by the Company and are
intended to offset the impact of currency fluctuations on these balances. The
success of this activity depends upon estimations of intercompany balances
denominated in various currencies, primarily the Japanese yen and the Euro. The
Company had contracts for the sale and purchase of foreign currencies with a
notional value expressed in U.S. dollars of $66.5 million. These contracts were
denominated in currencies that approximated the fair value of such contracts and
their underlying transactions as of April 30, 2000. There can be no assurance in
the future that these hedging transactions will be effective.
The following table provides information about the Company's foreign
exchange forward contracts at April 30, 2000. Due to the short-term nature of
these contracts, the contract rate approximates the weighted-average contractual
foreign currency exchange rate and the amount in U.S. dollars approximates the
fair value of the contract at April 30, 2000. These forward contracts mature in
approximately thirty days.
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Short-Term Forward Contracts to Sell and Buy Foreign Currencies
in U.S. Dollars Related to Intercompany Balances:
Contract
(in thousands, except for average contract rates) Amount Rate
------ -------
Forward Contract (Notional Value)
Japanese yen $42,808 105.12
Euro 23,712 0.91
The unrealized gains/losses on the outstanding forward contracts at
April 30, 2000 are expected to be substantially offset by the effect of the
changes on the underlying transactions. The realized gains/losses on these
contracts as they matured were not material to the Company's consolidated
financial position, results of operations, or cash flows for the periods
presented.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and short-term investments were $616.7 million, a
decrease of $92.7 million from October 31, 1999. The decrease is primarily a
result of cash outflows for investing and financing activities, mainly
repurchase of treasury stock of $182.9 million, capital expenditures of
$27.4 million, purchases of long-term investments of $8.0 million and cash paid
on debt obligations of $7.2 million. These outflows were partially offset by
cash generated by operations of $92.7 million and through investing and
financing activities, mainly the exercise of stock options and purchases of
stock through the employee stock purchase plan of $39.2 million and proceeds
from the sale of long-term investments of $8.6 million.
Accounts receivable increased 23% from $130.3 million at October 31, 1999
to $160.4 million at April 30, 2000. Days sales outstanding in receivables
increased to 70 days as of April 30, 2000 from 65 days at January 31, 2000.
At April 30, 2000, the Company had two foreign exchange lines of credit
available totaling $120.0 million which expire in July 2000 and October 2000.
The Company's management believes that its current cash, cash equivalents,
short-term investments, lines of credit, and cash generated from operations will
satisfy its expected working capital and capital expenditure requirements for at
least the next twelve months.
YEAR 2000 READINESS
The failure of a computer program to accurately recognize and process date
information beginning on January 1, 2000 is referred to as a "Year 2000
problem." The Company completed its project to address potential Year 2000
problems as scheduled. As a result, the possibility of significant interruptions
of normal operations has been reduced. As of April 29, 2000, to the Company's
knowledge, the Company's products and computing and communications
infrastructure systems have not experienced significant Year 2000 problems. The
Company is not aware that any of its major vendors or service providers have
experienced significant Year 2000 problems. Accordingly, the Company believes
its critical internal systems will not be subject to Year 2000 problems.
However, there is no guarantee that the Company has discovered all possible
failure points. Specific factors contributing to this uncertainty include
failure to identify all systems that might be affected by Year 2000 problems and
lack of certainty as to the Year 2000 compliance status of third parties whose
systems or operations could affect the Company. Year 2000 contingency plans are
complete.
EUROPEAN MONETARY UNIT
Synopsys sales to European customers are primarily U.S. dollar based.
However, we recognize the potential importance of the newly introduced European
Monetary Unit (EMU) to our customers residing in the European union and have
selected the Euro as the functional currency for our European treasury center.
Our information systems are capable of functioning in multiple currencies.
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FACTORS THAT MAY AFFECT FUTURE RESULTS
Our Revenue and Earnings May Fluctuate. Many factors affect our revenue and
earnings, and as a result revenue and earnings may fluctuate. Among these
factors are customer product and service demand, product license terms, and the
timing of revenue recognition on products and services sold. The following
specific factors could affect our revenues and earnings in a particular quarter
or over several quarterly or annual periods:
o Our orders have been seasonal. Historically, our first fiscal quarter
has been our weakest, with a book-to-bill ratio less than 1. The
recent change in our fiscal year (see note 1 in accompanying notes to
consolidated financial statements) may affect the seasonal pattern of
our revenues.
o Our products are complex, and before buying them customers spend a
great deal of time reviewing and testing them. Our customers'
evaluation and purchase cycles do not necessarily match our quarterly
periods, and if by the end of any quarter we have not sold enough new
licenses, our orders and revenues could be below our plan. Like many
companies in the software industry, in the past we have received a
disproportionate volume of orders in the last week of a quarter, and
recognized a disproportionate amount of revenue in the last week of a
quarter. In addition, a large proportion of our business is
attributable to our largest customers. As a result, if any order, and
especially a large order, is delayed beyond the end of a fiscal
period, our orders and revenue for that period could be below our
plan.
o In November 1999, we introduced, and in May 2000, we released for
general sale, Physical Compiler, a new product that is intended to
address the design challenges of the most advanced ICs. We expect that
Physical Compiler will generally be sold as an upgrade to Design
Compiler, our principal logic synthesis product. The market for
Physical Compiler is potentially very large, but the introduction of
Physical Compiler, like the introduction of any new product, may have
a negative effect on demand for existing products, as customers
purchasing or evaluating the new product may defer or reduce their
purchases of existing products.
o The accounting rules we are required to follow require us to recognize
revenue only when certain criteria are met. Orders for software
support and professional services yield revenue over multiple quarters
(often extending beyond the current fiscal year) or upon completion of
performance rather than at the time of sale. The specific terms agreed
to with a customer may have the effect of requiring deferral of
product revenue in whole or in part or, alternatively, of requiring us
to accelerate the recognition of such revenue for products to be used
over multiple years. As a result, for a given quarter it is possible
for us to fall short in our revenue and/or earnings plan even while
orders and backlog remain on plan or, conversely, to meet our revenue
and/or earnings plan even though orders are under plan, because of
revenue produced by backlog and deferred revenue.
o Our product license mix is changing. Over the past two quarters, the
proportion of product revenues derived from perpetual licenses has
declined from 55% to 23%, and the proportion of product revenues
derived from shorter term time-based or term-licenses has increased
from 45% to 77%. Time-based and term licenses generally have terms of
three years. Consistent with current revenue recognition rules,
product revenue from these licenses is recognized in the quarter of
booking and support revenue is recognized ratably over the term of the
license. These shorter term licenses represent a potential source of
renewable license revenue; although there is also a risk that
customers will not renew their licenses at the end of the term. In
addition, since a short term license generally costs less than a
perpetual license, there is a risk that customers who purchase such
licenses may spend less in the aggregate, over the term of the
license, than if they had been required to purchase perpetual
licenses. Our short term licenses are not subscription licenses,
however, and with minor exceptions customers cannot license new
products developed or acquired during the term of their original
license without making an additional purchase.
Our Industry is Highly Competitive. The EDA industry is highly competitive.
Synopsys' competitors continue to offer aggressive discounts on their products,
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in particular on synthesis and simulation products, and there is significant
price competition. As a result, in some cases the sales cycle has lengthened, as
customers evaluate the lower priced products, and in other cases we have lowered
prices in order to secure a sale.
We compete against other EDA vendors, and with customers' internally
developed design tools and internal design capabilities, for a share of the
overall EDA budgets of our potential customers. In general, competition is based
on product quality and features, post-sale support, price and, as discussed
below, the ability to offer a complete design flow. Our competitors include
companies that offer a broad range of products and services, such as Cadence,
Mentor and Avant!, as well as companies, including numerous start-up companies,
that offer products focused on a discrete phase of the integrated circuit design
process.
In order to compete successfully, we must continue to enhance our products
and bring to market new products that address the needs of our customers. We
also will have to expand our consulting services business. The failure to
enhance existing products, develop and/or acquire new products or expand our
ability to offer consulting services could have a material adverse effect on our
business, financial condition and results of operations. Moreover, there is no
guarantee that the expenditures required in connection with these activities
will yield additional revenues.
Technology advances and customer requirements are fueling a change in the
nature of competition among EDA vendors. Increasingly, EDA companies compete on
the basis of "design flows" involving integrated logic and physical design tools
rather than on the basis of individual "point" tools performing a discrete phase
of the design process. The need to offer products linking logic and physical
design will become increasingly important as IC complexity increases, chip
production moves increasingly to 0.18 micron and below, and system-on-a-chip
designs become more prevalent. We offer a wide range of logic design tools but
have only recently introduced our first physical design tools. We are working on
completing our design flow, although there is no assurance that we will be able
to do so. The market for physical design tools is dominated by Cadence and
Avant! Both companies have acquired logic synthesis technology and are offering
products linking synthesis to their physical design products. If we are
unsuccessful in developing a complete design flow on a timely basis or in
convincing customers to adopt our physical design products and methodology, our
competitive position could be significantly weakened.
Another area of potential competition is the internet. A number of
start-ups and established companies, including Synopsys, have begun to make EDA
software available via the internet or through other remote methods. The degree
to which Synopsys' competitors will succeed and their effects on our business
cannot be predicted.
Our Revenue Growth Depends on New Physical Synthesis and Non-Synthesis
Products. Historically, much of our growth and a significant portion of our
revenue has been attributable to the strength of Design Compiler and our related
traditional logic synthesis products. Opportunities for growth in market share
in this area are limited, and revenues from our traditional synthesis products
are expected to grow more slowly than our target for overall revenue growth. In
order to meet our revenue plan, revenue from our new physical synthesis products
(Physical Compiler, Chip Architect and FlexRoute), non-synthesis design creation
products, certain high level verification products, deep submicron products and
professional services must grow faster than our overall revenue growth target.
If revenue growth for these products fails to meet our goals, it is unlikely
that we will meet our overall revenue growth target.
In order to sustain revenue growth over the long term, we will have to
introduce new products that are accepted by a broad range of customers and to
significantly expand our consulting services business. Product success is
difficult to predict. The introduction of new products and growth of a market
for such products cannot be assured. In the past we, like all companies, have
had products that have failed to meet our revenue expectations. Expanding
revenue from consulting services will require us to recruit, hire and train a
large number of skilled employees, and to implement management controls on
bidding and executing on consulting engagements. The consulting business is
significantly different from the software business, however, and increasing
consulting orders and revenue while achieving an adequate level of profit can be
difficult. There can be no assurance that we will be successful in expanding
revenue from existing or new products at the desired rate or in expanding our
services business, and the failure to do so would have a material adverse effect
on our business, financial condition and results of operations.
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Businesses We Acquire May Not Perform as Projected. We have acquired or
merged with a number of companies in recent years including EPIC Design
Technology, Inc., Viewlogic, Systems Science, Inc., Everest, Gambit, Smartech,
Stanza, Apteq and Leda, and as part of our efforts to increase revenue and
expand our product and services offerings we may acquire additional companies.
In addition to direct costs, acquisitions pose a number of risks, including
potential dilution of earnings per share, delays and other problems of
integrating the acquired products and employees into our business, the failure
to realize expected synergies or cost savings, the failure of acquired products
to achieve projected sales, the drain on management time for acquisition-related
activities, possible adverse effects on customer buying patterns due to
uncertainties resulting from an acquisition, and assumption of unknown
liabilities. While we attempt to review proposed acquisitions carefully and
negotiate terms that are favorable to Synopsys, there is no assurance that any
individual acquisition will have the projected effect on our performance.
Our Business Depends on the Semiconductor and Electronics Businesses. Our
business has benefited from the rapid worldwide growth of the semiconductor
industry. Demand for our products is largely dependent upon the commencement of
new design projects by semiconductor manufacturers and their customers and the
increasing complexity of designs. Demand for EDA products may also be affected
by mergers in the semiconductor and systems industries, which may reduce the
aggregate level of purchases of our products and services by the combined
companies. Faltering growth in the semiconductor and systems industries, a
reduced number of design starts, shifts in the types of integrated circuits
manufactured, tightening of customers' operating budgets or consolidation among
our customers could have a material adverse effect on our business, financial
condition and results of operations.
Continued Stagnation of International Economies Could Adversely Affect Our
Performance. A significant portion of our revenue is derived from outside the
United States, and thus there is a risk that our revenue and earnings could be
reduced as a result of changes in foreign currency exchange rates, regional or
worldwide economic weakness or political instability. Revenue from Japan and
Asia Pacific have been adversely affected over the past two years by weakness of
the Japanese economy and the Asian currency crisis and subsequent economic
stagnation. In the current and future quarters:
o If the Japanese economy remains weak, revenue from Japan and the rest
of Asia could be adversely affected. In addition, weakness or
significant fluctuations in the value of the yen could adversely
affect revenue from Japan.
o Our revenue from Korea will depend on continued recovery from that
country's economic crisis. Although Korea's economy generally appears
to be recovering, this has not yet resulted in the resumption of
significant purchases by large Korean customers. In addition, two of
our four largest Korean customers recently merged, which may result in
a lower level of orders from the combined company than we might have
received if the two companies remained separate.
o The recent decline in the value of the Euro versus the dollar may
negatively affect our European customers and thus our revenue from
Europe.
Our Success Depends on Recruiting and Retaining Key Personnel. Our success
is dependent on technical and other contributions of key employees. We
participate in a dynamic industry, with significant start-up activity, and our
headquarters is in Silicon Valley, where skilled technical, sales and management
employees are in high demand. There are a limited number of qualified EDA
engineers, and the competition for such individuals is intense. Experience at
Synopsys is highly valued in the EDA industry, and our employees are recruited
aggressively by our competitors and by start-up companies, including those in
internet-related businesses. Our salaries are competitive in the market, but
under certain circumstances, start-up companies can offer more attractive stock
option packages. As a result, we have experienced, and may continue to
experience, significant employee turnover. There can be no assurance that we
will continue to recruit and retain highly qualified technical and managerial
personnel. Failure to successfully recruit and retain such personnel could have
a material adverse effect on our business, financial condition and results of
operations.
Dependence on Proprietary Technology. Our success is dependent, in part,
upon our proprietary technology and other intellectual property rights. There
can be no assurance that our competitors will not independently develop or
acquire similar techniques or gain access to our proprietary technology or that
we can protect our rights to our technology. We rely on confidentiality
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agreements with collaborators, employees, vendors and consultants to protect
our proprietary technology. There can be no assurance that these agreements will
not be breached, that we would have adequate remedies for any breach or that our
trade secrets will not otherwise become known or be independently developed by
competitors. Failure to obtain or maintain patent or trade secret protection,
for any reason, could have a material adverse effect on our business, financial
condition and results of operations.
Fixed Operating Expenses. We expect to continue to increase operating
expenses in order to generate and support continued growth in revenue. If we
were unsuccessful in generating such revenue, our business, financial condition
and results of operations could be materially adversely affected. Net income in
a given quarter or fiscal year may be disproportionately affected by a reduction
in revenue growth because only a small portion of our expenses varies with
revenue.
Anti-Takeover Provisions. We have adopted a number of provisions that could
have anti-takeover effects. The Board of Directors has adopted a Preferred
Shares Rights Plan, commonly referred to as a "poison pill." In addition, the
Board of Directors has the authority, without further action by its
stockholders, to issue additional shares of Common Stock and to fix the rights
and preferences of, and to issue authorized but undesignated shares of Preferred
Stock. These and other provisions of Synopsys' Restated Certificate of
Incorporation and Bylaws and the Delaware General Corporation Law may have the
effect of deterring hostile takeovers or delaying or preventing changes in
control or management of Synopsys, including transactions in which the
stockholders of the Company might otherwise receive a premium for their shares
over then current market prices.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Information relating to quantitative and qualitative disclosure about
market risk is set forth under the captions "Interest Rate Risk" and "Foreign
Currency Risk" in Item 2, Management's Discussion and Analysis of Financial
Condition and Results of Operations. Such information is incorporated herein by
reference.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On March 3, 2000, the Annual Meeting of Stockholders of Synopsys, Inc. was
held in Mountain View, California. Six matters were submitted to the
stockholders for action or approval.
1. The stockholders elected nine directors to hold office for a one-year term
or until their respective successors are elected. The votes for these
directors are set forth below.
Total Vote For Total Vote Withheld
Each Director From Each Director
-------------- -------------------
Aart J. de Geus 53,912,026 9,412,748
Andy D. Bryant 53,912,610 9,412,164
Chi-Foon Chan 53,915,601 9,409,173
Deborah A. Coleman 53,902,136 9,422,638
Harvey C. Jones, Jr. 53,908,377 9,416,397
William W. Lattin 53,913,692 9,411,082
A. Richard Newton 53,910,348 9,414,426
Sasson Somekh 53,912,640 9,412,134
Steven C. Walske 53,912,965 9,411,809
2. The stockholders approved an amendment to the Company's Amended and
Restated Certificate of Incorporation to increase the number of shares of
Common Stock that the Company is authorized to issue from 200,000,000 to
400,000,000 shares.
For Against Abstain Non-Votes
--- ------- ------- ---------
49,356,997 13,935,793 31,936 48
3. The stockholders approved an amendment to the Company's Employee Stock
Purchase Plan and International Employee Stock Purchase Plan to increase
the number of shares of Common Stock reserved for issuance thereunder by
1,200,000 shares.
For Against Abstain Non-Votes
--- ------- ------- ---------
46,716,263 10,454,170 66,522 6,087,819
4. The stockholders approved an amendment to the Company's 1992 Stock Option
Plan (the "1992 Plan") to change the limit on the number of options and/or
stock appreciation rights that may be granted to any one individual from
1,000,000 during the term of the 1992 Plan to 750,000 annually, except in
the case of an individual's initial employment with the Company, in which
case the individual may be granted an additional 250,000 options and/or
stock appreciation rights.
For Against Abstain Non-Votes
--- ------- ------- ---------
28,892,715 28,116,129 228,103 6,087,827
5. The stockholders voted upon but did not approve an amendment to the 1992
Plan that would have (i) increased the number of shares of Common Stock
authorized for issuance thereunder by 1,000,000 shares per year on the
dates of the 2000, 2001 and 2002 Annual Meetings of Stockholders and (ii)
extended the term of the 1992 Plan from January 2002 until January 2007.
For Against Abstain Non-Votes
--- ------- ------- ---------
22,432,393 34,583,095 221,459 6,087,827
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6. The stockholders approved a proposal to ratify the appointment of KPMG LLP
as the Company's independent auditors for the fiscal year ending
October 28, 2000.
For Against Abstain Non-Votes
--- ------- ------- ---------
56,756,765 6,513,569 54,440 0
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.) Exhibits
3.1 Certificate of Amendment of Fourth Amended and Restated
Certificate of Incorporation
10.1 1992 Stock Option Plan, as amended through March 3, 2000
10.2 Employee Stock Purchase Plan, as amended through
March 8, 2000*
10.3 International Employee Stock Purchase Plan, as amended through
March 8, 2000*
10.4 Schedule of Executive Employment Agreements
27.1 Financial Data Schedule
- ------------
* Incorporated by reference from exhibit to the Company's Registration Statement
on Form S-8 (File No. 333-38810) as filed with the Securities and Exchange
Commission on June 8, 2000.
(b.) Reports on Form 8-k
The Company filed a report on Form 8-K on February 18, 2000 announcing
its financial results for the quarter ended January 29, 2000 and a
stock repurchase program.
The Company filed a report on Form 8-K on May 19, 2000 announcing its
financial results for the quarter-end and six months ended
April 29, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNOPSYS, INC.
By: /s/ Richard Rowley
-------------------------------------
Richard Rowley
Vice President and Controller
(Principal Accounting Officer)
Date: June 13, 2000
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EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
3.1 Certificate of Amendment of Fourth Amended and Restated
Certificate of Incorporation
10.1 1992 Stock Option Plan, as amended through March 3, 2000
10.4 Schedule of Executive Employment Agreements
27.1 Financial Data Schedule