I am running out of unique adjectives to describe Synopsys fiscal performance. To begin with, in spite of the skepticism displayed by some industry analysts, the acquisition of Magma went through on time and without problems. Secondly, Synopsys once again exceeded its financial target for the quarter.

Magma's Acquisition

The acquisition process was completed on February 22. The combination of Synopsys and Magma will enable the company to more rapidly meet the needs of leading-edge semiconductor designers for ever more sophisticated design tools.

The value of the transaction is approximately $523 million net of cash acquired, or $7.35 per Magma share in cash, which Synopsys will fund using a combination of cash and debt. Synopsys anticipates it to be modestly accretive to non-GAAP earnings per share in its fiscal 2012.

Along with Magma's senior management team, Magma President and COO Roy Jewell will work with Synopsys to ensure a smooth integration of the companies for customers and employees. Magma's founder, Chairman and CEO Rajeev Madhavan will not join Synopsys but will be available for advice as we transition the company.

1Q12 Fiscal Results

• Revenue for the first quarter of fiscal 2012 was $425.5 million, compared to $364.6 million for the first quarter of fiscal 2011 – an increase of 16.7 percent and well above Synopsys’ target range.
• Fiscal Q1 included an extra week, affecting both revenue and expenses. Even without the impact of the extra week of approximately $26 million, revenue growth was 10 percent.
• GAAP net income for the first quarter of fiscal 2012 was $56.69 million, or $0.39 per share, compared to $48.2 million, or $0.31 per share, for the first quarter of fiscal 2011.
• On a non-GAAP basis, net income for the first quarter of fiscal 2012 was $82.3 million, or $0.56 per share, compared to non-GAAP net income of $68.3 million, or $0.44 per share, for the first quarter of fiscal 2011.

Compared with the corresponding 2011 period, Synopsys Gross margin increased from $280,339 million to $335,642 million. The $55 million increase in Gross margin should be compared with the increase of $32 million in operating expenses. The result shows that Synopsys is getting more efficient and has not become complacent as by far the largest EDA company. Although Synopsys has used some of its cash in the acquisition of Magma, it still has over $800 million in cash on hand.

The company expects a healthy second quarter as well and set a target of $1.665 - $1.675 billion in revenue for its fiscal 2012 year which, if achieved, would translate in earning per share in the range of $1.33 - $1.48.