SOURCE: Symyx Technologies, Inc.

Symyx Technologies, Inc.

February 11, 2009 16:48 ET

Symyx Technologies Reports Fourth Quarter and Full-Year 2008 Financial Results

SUNNYVALE, CA--(Marketwire - February 11, 2009) - Symyx Technologies, Inc. (NASDAQ: SMMX) today reported financial results for the fourth quarter and year ended December 31, 2008.

Fourth Quarter 2008

--  Revenue:  $42.6 million
--  GAAP loss per share:  ($2.87)
--  Non-GAAP diluted earnings per share:  $0.03, excluding items discussed
    below of $2.90 per share
--  Cash, cash equivalents and marketable securities:  $66.4 million,
    versus $45.5 million at the end of 2007
    

Year Ended December 31, 2008

--  Revenue:  $159.0 million
--  GAAP loss per share:  ($3.16)
--  Non-GAAP loss per share:  ($0.16), excluding items discussed below
    which net to $3.00 per share
    

Fourth-quarter revenue was $42.6 million, compared with $48.5 million for the fourth quarter of 2007. Higher year-over-year revenue in the company's software business was offset by lower research services revenues primarily due to the mid-2008 expiration of the company's principal agreement with Exxon-Mobil, and lower tools revenues as sales were negatively impacted by worsening market conditions.

Fourth-quarter GAAP net loss was ($97.6 million), or ($2.87) per share, compared with a net loss of ($3.3 million), or ($0.10) per share, for the fourth quarter of 2007.

Fourth-quarter GAAP results include a $5.0 million restructuring charge, a non-cash $90.3 million impairment charge to goodwill, intangibles and other long-lived assets, non-cash $3.4 million amortization of intangible assets from acquisitions and a non-cash $12.5 million valuation allowance against certain deferred tax assets. These items collectively reduced earnings per share by $2.90.

Excluding the items noted above, on a non-GAAP basis, Symyx's net income for the fourth quarter was $0.9 million, or $0.03 per share, as compared to non-GAAP net income of $0.2 million, or $0.01 per share, for the fourth quarter of 2007. Non-GAAP results for the fourth quarter of 2007 exclude $3.2 million of amortization of intangibles from acquisitions and a $2.5 million charge related to in-process research and development in connection with the company's acquisition of MDL Information Systems, Inc.

Fiscal 2008 GAAP net loss was ($106.6 million), or ($3.16) per share, compared with net income of $18.8 million, or $0.56 per diluted share, for 2007. Full-year 2008 GAAP results include $13.3 million of amortization of intangibles from acquisitions, the remaining items noted for the fourth quarter above, and a $4.9 million gain from the sale of the company's equity interest in Ilypsa, Inc. These items collectively reduced 2008 earnings per share by $3.00. Full-year 2007 GAAP results include $6.1 million of amortization of intangibles from acquisitions, a $2.5 million charge related to in-process research and development in connection with the company's acquisition of MDL, and a $40.8 million gain from the sale of the company's equity interest in Ilypsa.

For 2008, excluding the items noted for 2008 above, Symyx's non-GAAP loss was ($5.3 million), or ($0.16) per share. For 2007, excluding the items noted for 2007 above, Symyx's non-GAAP loss was ($0.3 million), or ($0.01) per share.

A reconciliation of Symyx's non-GAAP results to GAAP is provided in the financial statements portion of this release.

Symyx ended the year with $66.4 million in cash, cash equivalents and marketable securities, compared with $45.5 million at the end of 2007. The company has no debt.

"As widely reported, economic conditions remain difficult, negatively impacting major capital purchases and other significant customer buying decisions," said Isy Goldwasser, Symyx Technologies' Chief Executive Officer. "We have adjusted our business operations accordingly, taking steps in the fourth quarter to optimize our resources and streamline our operations. We believe these initiatives strengthen the company's position for 2009 and should enable us to maintain the company on a course to achieve non-GAAP profitability in 2009."

In the fourth quarter, Symyx realigned and restructured its business operations to drive performance, improve operating efficiencies and increase cash flow during 2009. The company combined Symyx Tools and Symyx Research to create its High Productivity Research (HPR) business unit, and established dedicated sales forces within Symyx Software and Symyx HPR to improve market focus and sales execution. In addition, as previously announced, the company took measures to reduce 2009 expenses by an estimated $15 million as compared to 2008, including a 15% workforce reduction commencing in December 2008.

"The necessary operating adjustments we made throughout the second half of the year preserved a strong overall performance on cash," said Rex Jackson, Symyx's Chief Financial Officer. "With the severe deterioration of the global economic outlook and, to a lesser degree, our decision to streamline our operations, we recorded significant non-cash charges in our fourth quarter. Looking forward, we are committed to continued positive cash flow in 2009, improving our operating margins, strengthening our balance sheet and maintaining the platform to support our initiatives."

Revenue by Business Area

By business area, revenue consisted of (in thousands):

                     Three Months Ended    Twelve Months Ended
                        December 31,           December 31,
                     -------------------   -------------------
                       2008      2007        2008      2007
                     --------- ---------   --------- ---------
Symyx HPR            $  18,060 $  32,634   $  64,845 $  93,179
Symyx Software          24,518    15,861      94,200    31,893
                     --------- ---------   --------- ---------
  Total              $  42,578 $  48,495   $ 159,045 $ 125,072
                     ========= =========   ========= =========

Symyx First Quarter and Full-Year 2009 Financial Outlook

For the first quarter of 2009, Symyx forecasts revenue of $33-$37 million, and non-GAAP EPS of ($0.07)-($0.03). For the full year, Symyx forecasts revenue of $145-$155 million, and non-GAAP diluted EPS of $0.00-$0.10.

Non-GAAP Information

Symyx's non-GAAP results and forecasts exclude amortization of intangibles from acquisitions and other acquisition-related items, and exclude significant non-recurring items such as impairments and restructuring expenses.

Symyx has prepared non-GAAP data applicable to the three- and twelve-month periods ended December 31, 2008 and December 31, 2007 to supplement the company's results determined under U.S. generally accepted accounting principles (GAAP). Symyx uses non-GAAP financial measures in analyzing financial results because it believes they are useful to investors in evaluating the company's ongoing operational performance. These financial measures facilitate making period-to-period comparisons exclusive of the impact of certain events, such as those related to acquisitions and impairments, which might otherwise obscure the results of the company's core businesses when compared to historical performance. In addition, presentation of these non-GAAP financial measures enables investors to evaluate Symyx's performance under both the GAAP and non-GAAP measures management and the company's Board of Directors use to evaluate Symyx's performance.

Reconciliation of the non-GAAP financial measures included in this press release to the most directly comparable GAAP financial measures are set forth in the text of, and in the accompanying exhibits to, this press release. Non-GAAP amounts are not meant as a substitute for financial data determined under applicable GAAP, but are included solely for informational purposes. Symyx's non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Symyx's non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

Today's Conference Call and Webcast

Symyx plans to hold a teleconference to discuss its fourth quarter and full-year results at 5:00 p.m. ET/2:00 p.m. PT today. To participate, please dial 877-856-1962 (U.S. and Canada) or 719-325-4822 (international). A phone replay will be available for one-year after the live call by dialing 888-203-1112 (U.S. and Canada) and 719-457-0820 (international), reservation number 4934278.

About Symyx

Symyx Technologies, Inc. (NASDAQ: SMMX) enables global leaders in life sciences, chemicals and energy, and consumer and industrial products to optimize and accelerate their scientific research and development. Through its expertise in scientific informatics management, workflow optimization, and micro-scale, parallel experimentation, Symyx helps companies transform their R&D operations to minimize the time their scientists spend on routine, repetitive tasks and to maximize their return on R&D investments. Symyx software, tools, and research services enable scientists to design, execute, analyze, and report experimental results faster, easier and less expensively. Information about Symyx, including reports and other information filed by Symyx with the Securities and Exchange Commission, is available at www.symyx.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of applicable securities laws under Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, including statements about Symyx's expectations relating to fiscal 2009 financial results and efforts to improve operating efficiencies and achieve profitability, are based upon Symyx's current expectations, and involve risks and uncertainties. Symyx's actual results could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation: (1) current material uncertainty in domestic and global economic conditions and in international financial markets may cause customers to further delay or cancel significant purchases; (2) in response to such uncertainty and economic conditions, Symyx may determine it is necessary to take additional measures to reduce its operating expenses, which may lead to further restructuring charges and cash outlays; (3) failure to timely execute against existing contracts in order to recognize committed revenue as planned; (4) inaccurate assessment of demand for Symyx's offerings or failure to close new contracts with customers as forecasted; (5) failure to transition customers to the company's Isentris platform and electronic notebook products as quickly as estimated or to execute on software development roadmaps as planned; (6) loss of key customers, and (7) risks inherent in acquisitions and subsequent integration efforts. These and other risk factors are discussed under "Risk Factors" in Symyx's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2008 filed with the SEC on November 7, 2008. Symyx expressly disclaims any obligation or undertaking to release publicly any updates or revisions to these forward-looking statements, except as the law may require.

Symyx is a registered trademark of Symyx Technologies, Inc. All rights reserved.

                         SYMYX TECHNOLOGIES, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except per share amounts)
                                (unaudited)


                              Three Months Ended      Twelve Months Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2008        2007        2008        2007
                            ----------  ----------  ----------  ----------

Revenue:
  Service                   $   17,755  $   18,397  $   74,892  $   59,026
  Product                       10,630      18,207      25,033      34,906
  License fees, content and
   royalties                    14,193      11,891      59,120      31,140
                            ----------  ----------  ----------  ----------
     Total revenue              42,578      48,495     159,045     125,072
                            ----------  ----------  ----------  ----------

Costs:
  Cost of service                6,209       3,661      21,093       8,995
  Cost of products sold          4,066       6,739      10,444      14,367
  Cost of license fees,
   content and royalties         1,548       1,687       5,876       1,687
 Amortization of
  intangible assets
  arising from
  business combinations          1,924       1,773       7,355       3,873
                            ----------  ----------  ----------  ----------
    Total costs of revenue      13,747      13,860      44,768      28,922

                            ----------  ----------  ----------  ----------
  Gross profit                  28,831      34,635     114,277      96,150
                            ----------  ----------  ----------  ----------

Operating expenses:
  Research and development      16,135      22,081      75,365      66,186
  Sales, general and
   administrative               12,693      13,293      54,589      41,935
    Acquired in-process
     research and development        -       2,500           -       2,500
    Restructuring costs          4,952           -       4,952           -
    Impairment of goodwill
     and long-lived assets      90,330           -      90,330           -
  Amortization of
   intangible assets
   arising from
   business combinations         1,471       1,472       5,903       2,253
                            ----------  ----------  ----------  ----------
     Total operating
      expenses                 125,581      39,346     231,139     112,874
                            ----------  ----------  ----------  ----------

Loss from operations           (96,750)     (4,711)   (116,862)    (16,724)
Gain from sale of equity
 interest in Ilypsa, Inc.            -           -       4,939      40,826
Interest and other income
 (expense), net                   (569)        388         135       5,694
                            ----------  ----------  ----------  ----------

Income (loss) before income
 tax provision and equity
 in loss                       (97,319)     (4,323)   (111,788)     29,796

Income tax provision              (234)        980       5,173     (10,698)
Equity in loss from
 investment in Visyx
 Technologies Inc.                   -          14           -        (314)
                            ----------  ----------  ----------  ----------

Net income (loss)           $  (97,553) $   (3,329) $ (106,615) $   18,784
                            ==========  ==========  ==========  ==========

Basic net income (loss) per
 share                      $    (2.87) $    (0.10) $    (3.16) $     0.57
                            ==========  ==========  ==========  ==========

Shares used in computing
 basic net income (loss)
 per share                      33,938      33,457      33,747      33,199
                            ==========  ==========  ==========  ==========

Diluted net income (loss)
 per share                  $    (2.87) $    (0.10) $    (3.16) $     0.56
                            ==========  ==========  ==========  ==========

Shares used in computing
 diluted net income (loss)
 per share                      33,938      33,457      33,747      33,557
                            ==========  ==========  ==========  ==========


                SELECTED CONSOLIDATED BALANCE SHEET INFORMATION
                                (in thousands)

                           December 31,            December 31,
                               2008                    2007
                            ----------              ----------
                            (unaudited)              (Note 1)

Cash, cash equivalents and
 marketable securities      $   66,415              $   45,472

Accounts receivable, net    $   11,993              $   23,047

Goodwill and other
 intangible assets, net     $   93,247              $  180,515

Total assets                $  224,515              $  314,982

Deferred revenue            $   30,292              $   15,905

Stockholders' equity        $  152,085              $  252,241

Note 1: The selected consolidated balance sheet information at December 31,
2007 has been derived from the audited financial statements at that date
but does not include all of the information and footnotes required by U.S.
generally accepted accounting principles for complete financial statements.



                         SYMYX TECHNOLOGIES, INC.
                Reconciliation of GAAP and Non-GAAP Income
                 (in thousands, except per share amounts)
                          (preliminary unaudited)


                            Three Months Ended December 31,
             -------------------------------------------------------------
                           2008                           2007
             -------------------------------  ----------------------------
             Operating       Net              Operating    Net
               Income      Income    Diluted    Income    Income   Diluted
               (Loss)      (Loss)      EPS      (Loss)    (Loss)     EPS
             ----------  ----------  -------  ---------  --------  -------

GAAP results $  (96,750) $  (97,553) $ (2.87) $  (4,711) $ (3,329) $ (0.10)

Adjustments
 Acquired
  in-process
  research
  and
  development         -           -               2,500     2,500
 Restructuring
  costs           4,952       4,952                   -         -
 Impairment
  of
  goodwill
  and
  long-lived
  assets         90,330      90,330                   -         -
 Amortization
  of intangible
  assets
  arising
  from business
  combinations    3,395       3,395               3,245     3,245
 Valuation
  allowance
  for
  deferred
  tax assets                 12,485                             -
 Tax effect
  of
  non-GAAP
  adjustments
  above                     (12,723)                       (2,232)
             ----------  ----------           ---------  --------
   Non-GAAP
    adjustments,
    net of
    tax          98,677      98,439     2.90      5,745     3,513     0.11
             ----------  ----------  -------  ---------  --------  -------
Non-GAAP
 results     $    1,927  $      886  $  0.03  $   1,034  $    184  $  0.01
             ==========  ==========  =======  =========  ========  =======

Shares used
 in
 computing
 diluted
 non-GAAP
 net income
 per share                            33,938                        33,480
                                     =======                       =======

                               Years Ended December 31,
             -------------------------------------------------------------
                           2008                           2007
             -------------------------------  ----------------------------
             Operating       Net              Operating    Net
               Income      Income    Diluted    Income    Income   Diluted
               (Loss)      (Loss)      EPS      (Loss)    (Loss)     EPS
             ----------  ----------  -------  ---------  --------  -------

GAAP results $ (116,862) $ (106,615) $ (3.16) $ (16,724) $ 18,784  $  0.56

Adjustments
 Restructuring
  costs           4,952       4,952                   -         -
 Impairment
  of
  goodwill
  and
  long-lived
  assets         90,330      90,330                   -         -
 Acquired
  in-process
  research
  and
  development         -           -               2,500     2,500
 Amortization
  of
  intangible
  assets
  arising
  from
  business
  combinations   13,258      13,258               6,126     6,126
 Gain from
  the sale
  of equity
  interest
  in Ilypsa,
  Inc.                       (4,939)                      (40,826)
 Valuation
  allowance
  for
  deferred
  tax assets                 12,485                             -
 Tax effect
  of
  non-GAAP
  adjustments
  above                     (14,815)                       13,081
             ----------  ----------           ---------  --------
   Non-GAAP
    adjustments,
    net of
    tax         108,540     101,271     3.00      8,626   (19,119)   (0.57)
             ----------  ----------  -------  ---------  --------  -------

Non-GAAP
 results     $   (8,322) $   (5,344) $ (0.16) $  (8,098) $   (335) $ (0.01)
             ==========  ==========  =======  =========  ========  =======
Shares used
 in
 computing
 diluted
 non-GAAP
 net loss
 per share                            33,747                        33,199
                                     =======                       =======

Contact Information

  • Contact:

    Rex S. Jackson
    Executive Vice President and CFO
    Symyx Technologies, Inc.
    (408) 773-4075
    Email Contact