Press Releases

Synopsys Posts Financial Results for Third Quarter of Fiscal 2005
PRNewswire-FirstCall
MOUNTAIN VIEW, Calif.

Synopsys, Inc. (NASDAQ: SNPS), a world leader in semiconductor design software, today reported results for its third quarter ended July 31, 2005.

For the third quarter of fiscal 2005, Synopsys reported revenue of $251.5 million, a 3% increase compared to the second quarter of fiscal 2005, and an 11% decrease from $281.7 million in the third quarter of fiscal 2004. For the nine-month period ended July 31, 2005, revenue was $737.1 million, a decrease of 14% from revenue of $861.5 million for the same period in fiscal 2004. The year-over-year comparisons reflect the company's shift to an almost-fully ratable license model initiated in the fourth quarter of fiscal 2004, under which most of the company's license revenue is recognized over time rather than upfront in the quarter shipped. As a result, in the most recent quarter more than 90% of revenue came from backlog.

"I am very pleased to report that in our third quarter, we continued in the strong direction set in the first half of the year, making excellent progress on our objectives to increase revenue, improve operating margin and grow earnings under a more predictable and stable business model," said Aart de Geus, Chairman and Chief Executive Officer of Synopsys.

GAAP Results

On a generally accepted accounting principles (GAAP) basis, for the third quarter of fiscal 2005 net income was $17.3 million, or $0.12 per share, compared to a loss of ($0.03) per share in the second quarter of fiscal 2005. In the third quarter of last year, net income was $41.8 million, or $0.26 per share. Third quarter fiscal 2005 results include a $33 million litigation settlement received in connection with the acquisition of Nassda Corporation, which closed in May 2005.

GAAP net loss for the nine-month period ended July 31, 2005 was ($2.0) million, or ($0.01) per share, compared to net income of $102.7 million, or $0.63 per share, for the same period in 2004.

Non-GAAP Results

On a non-GAAP basis, net income for the third quarter of fiscal 2005 was $15.2 million, or $0.10 per share, compared to $0.09 per share in the second quarter of 2005. In the third quarter of last year, non-GAAP net income was $53.2 million, or $0.33 per share.

Non-GAAP net income for the nine-month period ended July 31, 2005 was $42.6 million, or $0.29 per share, compared to $164.6 million, or $1.01 per share, for the same period in 2004. Non-GAAP net income consists of GAAP net income excluding, to the extent incurred in a particular quarter or period, amortization of intangible assets and deferred stock compensation, in-process research and development charges, integration and other acquisition-related expenses, facilities and workforce realignment charges, and other significant items which, in the opinion of management are extraordinary.

The decreases in GAAP and non-GAAP net income for these periods were due primarily to lower revenues as a result of our shift to a more than 90% ratable license model.

Financial Targets

Synopsys also announced its operating model targets for the fourth quarter and full fiscal year 2005. These targets constitute forward-looking information and are based on current expectations. For a discussion of factors that could cause actual results to differ materially from these targets, see "Forward-Looking Statements" below.

  Fourth Quarter of Fiscal 2005 Targets:

   *    Revenue: $248 million - $258 million
   *    GAAP expenses: $243 million - $254 million
   *    Non-GAAP expenses: $227 million - $237 million
   *    Other income and expense: $0 million - $4 million
   *    Fully diluted outstanding shares: 142 million - 150 million
   *    Tax rate applied in non-GAAP net income calculations: 29%
   *    GAAP earnings: ($0.02) - $0.01 per share
   *    Non-GAAP earnings: $0.07 - $0.11 per share
   *    Revenue from backlog:  more than 90% of revenue

  Full-Year Fiscal Year 2005 Targets

   *    Revenue: $985 million - $995 million
   *    Fully diluted outstanding shares: 142 million - 150 million
   *    Tax rate applied in non-GAAP net income calculations: 31%
   *    GAAP earnings: ($0.03) - $0.00 per share
   *    Non-GAAP earnings: $0.36 - $0.40 per share
   *    We continue to expect GAAP cash flow from operations to be
        approximately $200 million

These targets supersede all fiscal 2005 financial targets previously published by Synopsys.

GAAP Reconciliation

Synopsys' management evaluates and makes operating decisions about its business operations primarily based on the bookings, revenue and direct, ongoing and recurring costs of those operations. Management does not believe amortization of intangible assets and deferred stock compensation, in-process research and development charges, integration and other acquisition-related expenses, facilities and workforce realignment charges and other significant extraordinary items are ongoing and recurring operating costs of its core software and service business operations. Therefore, management adjusts the following GAAP financial measures included in this earnings release to exclude such costs, to the extent incurred in a particular quarter: total cost of revenue, gross margin, total operating expenses, operating (loss) income, (loss) income before (benefit from) provision for income taxes, (benefit from) provision for income taxes, net (loss) income and net (loss) income per share.

For each such measure, excluding these costs provides management with more consistent, comparable information about the Company's core profitability. For example, since the Company does not acquire businesses on a predictable cycle, management would have difficulty evaluating the Company's profitability as measured by gross margin, operating margin, income before taxes and net income on a period-to-period basis unless it excluded acquisition-related charges. Similarly, the Company does not undertake significant restructuring or realignments on a predictable cycle, and thus excludes associated charges in order to enable better and more consistent evaluations of the Company's operating expenses before and after such actions are taken. Management also uses these measures to help it make budgeting decisions, for example, as between product development expenses (which affect cost of revenue and gross margin) and research and development, sales and marketing and general and administrative expenses (which affect operating expenses and operating margin). Finally, the availability of such information helps management track performance to both internal and externally communicated financial targets and to its competitors' operating results.

Management recognizes that the use of these non-GAAP measures has certain limitations, including the fact that management must exercise judgment in determining whether certain types of charges, such as those relating to workforce reductions executed in the ordinary course, should be excluded from non-GAAP results. However, management believes that, although it is important for investors to understand GAAP measures, providing investors with these non-GAAP measures gives them additional important information to enable them to assess, in a way management assesses, Synopsys' current and future continuing operations.

Reconciliation of Third Quarter Results

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP earnings per share and non-GAAP expenses for the third quarter of fiscal 2005.

       GAAP to Non-GAAP Reconciliation of Third Quarter Results

  Income Statement
  Reconciliation                 Three Months Ended  Nine Months Ended
  (in thousands)                      July 31,          July 31,
                                   2005     2004     2005      2004

  GAAP net income                $17,294  $41,828  $(2,003) $102,719
  Amortization of intangible
   assets and
  deferred stock compensation     24,451   34,092   98,330   102,927
  Merger termination fee              --       --       --    10,000
  In-process research and
   development                                 --    5,700        --
  Work force realignment charges
  at a lower cost than estimated      --       --       --       513
  Litigation settlement          (33,000)      --  (33,000)       --
  Tax effect                       6,442  (22,692) (26,429)  (51,525)
  Non-GAAP net income            $15,187  $53,228  $42,598  $164,634


  Earnings Per Share Reconciliation    Three Months Ended  Nine Months Ended
                                             July 31,          July 31,
                                          2005     2004     2005     2004

  GAAP earnings per share                  $0.12    $0.26   $(0.01)   $0.63
  Amortization of intangible assets and
   deferred stock compensation              0.17     0.21     0.67     0.63
  Merger termination fee                      --       --       --     0.06
  In-process research and development         --       --     0.04       --
  Work force realignment charges
   at a lower cost than estimated             --       --       --       --
  Litigation settlement                    (0.23)      --    (0.23)      --
  Tax effect                                0.04    (0.14)   (0.18)   (0.31)
  Non-GAAP earnings per share              $0.10    $0.33    $0.29    $1.01

  Shares used in calculation             145,671  160,346  146,120  162,638


  Reconciliation of Estimated Target Operating Results

The following tables reconcile the specific items excluded from GAAP in the calculation of target non-GAAP operating results for the periods indicated below:

 GAAP to Non-GAAP Reconciliation of Target Fourth Quarter and Fiscal Year
                               2005 Targets
                  (in thousands, except per share data)

                                                 Range for Three Months
                                                 Ending October 31, 2005
                                                  Low               High
  Target GAAP expenses                          $243,000          $254,000
  Adjustment:
    Estimated impact of amortization of
     intangible assets and deferred stock
     compensation                                (16,000)          (17,000)
  Target non-GAAP expenses                      $227,000          $237,000


                                                  Range for Three Months
                                                  Ending October 31, 2005
                                                   Low               High
  Target GAAP earnings per share                  $(0.02)            $0.01
  Adjustment:
    Estimated impact of amortization of
     intangible assets and deferred stock
     compensation per share                         0.11              0.12
    Income tax effect of non-GAAP adjustments      (0.02)            (0.02)
  Target non-GAAP earnings per share               $0.07             $0.11

  Shares used in calculation (midpoint
   of target range)                              146,000           146,000


                                                  Range for Fiscal Year
                                                  Ending October 31, 2005
                                                    Low              High
  Target GAAP earnings  per share                 $(0.03)              $--
  Adjustment:
    In-process research and development             0.04              0.04
    Estimated impact of amortization of
     intangible assets and deferred stock
     compensation per share                         0.78              0.79
    Litigation settlement                          (0.23)            (0.23)
    Income tax effect of non-GAAP adjustments      (0.20)            (0.20)
  Target non-GAAP earnings per share               $0.36              0.40

  Shares used in calculation (midpoint
   of target range)                              146,000           146,000


  Additional Financial Information Available on Synopsys Website

In connection with this earnings release, Synopsys is making available to investors supplemental financial information, which can be found on Synopsys' website at http://www.synopsys.com/corporate/invest/finsupp/q305.pdf . Synopsys currently intends to provide this information on a quarterly basis.

Earnings Call Open to Investors

Synopsys will hold a conference call for financial analysts and investors today at 2:00 p.m., Pacific Time. A live webcast of the call will be available at Synopsys' corporate website at http://www.synopsys.com/corporate/invest/invest.html . A recording of the call will be available by calling 1-800-230-1085 (612-288-0329 for international callers), access code 791814, beginning at 5:30 p.m. Pacific Time today. A webcast replay will also be available at http://www.synopsys.com/corporate/invest/invest.html from approximately 5:30 p.m. Pacific Time today through the time of the announcement of Synopsys' results for the fourth quarter of fiscal 2005 in November 2005. In addition, Synopsys will post copies of the prepared remarks of Aart de Geus, Chairman and Chief Executive Officer, and Rex Jackson, Acting Chief Financial Officer, Senior Vice President and General Counsel, on its website at http://www.synopsys.com/corporate/invest/invest.html following the call.

Effectiveness of Information

The targets included in this release, the statements made during the earnings conference call and the information contained in the financial supplement represent Synopsys' expectations and beliefs as of the date of this release only. Although this release, copies of the prepared remarks of the Chief Executive Officer and Acting Chief Financial Officer made during the call and the financial supplement will remain available on Synopsys' website through the date of the fourth quarter earnings call in November 2005, their continued availability through such date does not mean that Synopsys is reaffirming or confirming their continued validity. Synopsys does not currently intend to report on its progress during the fourth quarter of fiscal 2005 or comment to analysts or investors on, or otherwise update, the targets given in this earnings release until it releases such results in November 2005. Furthermore, Synopsys is under no obligation to (and expressly disclaims any such obligation to) update or alter any of the forward-looking statements made in this earnings release, the conference call or the financial supplement whether as a result of new information, future events or otherwise unless required by law.

Availability of Final Financial Statements

Synopsys will include final financial statements for the third quarter of fiscal 2005 in its Quarterly Report on Form 10-Q to be filed in September 2005.

About Synopsys

Synopsys, Inc. is a world leader in electronic design automation (EDA) software for semiconductor design. The company delivers technology-leading semiconductor design and verification platforms and IC manufacturing software products to the global electronics market, enabling the development and production of complex systems-on-chips. Synopsys also provides intellectual property and design services to simplify the design process and accelerate time-to-market for its customers. Synopsys is headquartered in Mountain View, California and has offices in more than 60 locations throughout North America, Europe, Japan and Asia. Visit Synopsys online at http://www.synopsys.com/ .

Forward-Looking Statements

The statements made in this press release regarding projected financial results in the sections entitled "Financial Targets," and "GAAP Reconciliation -- Reconciliation of Estimated Target Operating Results" and certain statements made in the earnings conference call are forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those described by these statements due to a number of uncertainties, including but not limited to the risk of:

   *    weakness or continued budgetary caution in the semiconductor or
        electronic systems industries;
   *    lower-than-expected research and development spending by
        semiconductor and electronic systems companies;
   *    lower-than-anticipated purchases or delays in purchases of software
        or consulting services by Synopsys' customers, including delays in
        the renewal, or non-renewal, of Synopsys' license arrangements with
        major customers;
   *    unexpected changes in the mix of time-based licenses and upfront
        licenses;
   *    lower-than-expected bookings of licenses on which revenue is
        recognized upfront;
   *    lower-than-anticipated new IC design starts;
   *    competition in the market for Synopsys' products and services;
   *    failure to continue to improving Synopsys' existing products;
   *    failure to successfully develop additional intellectual property
        blocks for Synopsys' IP business or to develop and integrate its
        design for manufacturing products;
   *    difficulties in the ongoing integration of the products and
        operations of acquired companies or assets into Synopsys' products
        and operations; and
   *    continued downward pressure on maintenance orders, adversely
        affecting Synopsys' future level of service revenue.

In addition, Synopsys' target operating expenses and earnings per share on a GAAP basis for the fiscal quarter ending October 31, 2005 and target earnings per share and estimated operating cash flow on a GAAP basis for full fiscal year 2005 could differ materially from the targets stated under "Financial Targets" above for a number of reasons, including (i) a determination by Synopsys that any portion of its intangible assets have become impaired, (ii) changes in deferred stock compensation expenses caused by employee terminations, (iii) application of the actual consolidated GAAP tax rate for such periods, (iv) integration and other acquisition-related expenses, amortization of additional intangible assets and deferred stock compensation associated with future acquisitions, if any, and (v) increases or decreases to estimated capital expenditures.

For further discussion of these and other factors that may cause results to differ from those projected in this release, readers are referred to the reports which Synopsys has filed with the Securities and Exchange Commission, and which are available at www.sec.gov, particularly the information contained in Part I, Item 2 of Synopsys' Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2005 filed with the SEC on June 2, 2005 under the caption entitled "Factors That May Affect Future Results." Synopsys is under no obligation to (and expressly disclaims any such obligation to) update or alter these forward-looking statements whether as a result of new information, future events or otherwise.

NOTE: Synopsys is a registered trademark of Synopsys, Inc. Any other trademarks mentioned in this release are the intellectual property of their respective owners.

   INVESTOR CONTACT:
   Lisa L. Ewbank
   Synopsys, Inc.
   650-584-1901

   EDITORIAL CONTACT:
   Yvette Huygen
   Synopsys, Inc.
   650-584-4547


                              SYNOPSYS, INC.
        Unaudited Condensed Consolidated Statements of Income (1)
                  (in thousands, except per share data)


                                        Three Months Ended July 31, 2005
                                            GAAP                  Non-GAAP
                                           Basis    Adjustments    Basis
  Revenue:
    Time-based license                    $188,742         --    $188,742
    Upfront license                         16,171         --      16,171
    Service                                 46,537         --      46,537
        Total revenue                      251,450         --     251,450
  Cost of revenue:
    License                                 25,268         --      25,268
    Maintenance and services                17,812         --      17,812
    Amortization of intangible assets
      and deferred stock compensation       16,285    (16,285)         --
       Total cost of revenue                59,365    (16,285)     43,080
  Gross margin                             192,085     16,285     208,370
  Operating expenses:
    Research and development                81,948         --      81,948
    Sales and marketing                     83,160         --      83,160
    General and administrative              25,122         --      25,122
    Amortization of intangible assets
      and deferred stock compensation        8,166     (8,166)         --
       Total operating expenses            198,396     (8,166)    190,230
  Operating (loss) income                   (6,311)    24,451      18,140
  Other income, net                         35,895    (33,000)      2,895
  Income before provision for income taxes  29,584     (8,549)     21,035
  Provision for income taxes                12,290     (6,442)      5,848
  Net income                               $17,294    $(2,107)    $15,187
  Basic earnings per share:
    Net income per share                     $0.12                  $0.11
    Weighted-average common shares         143,862                143,862
  Diluted earnings per share:
    Net income per share                     $0.12                  $0.10
    Weighted-average common shares
    and equivalents                        145,671                145,671


                                      Three Months Ended July 31, 2004
                                           GAAP                  Non-GAAP
                                          Basis    Adjustments    Basis
  Revenue:
    Time-based license                   $164,398        --     $164,398
    Upfront license                        62,352        --       62,352
    Service                                54,931        --       54,931
        Total revenue                     281,681        --      281,681
  Cost of revenue:
    License                                23,377        --       23,377
    Maintenance and services               15,379                 15,379
    Amortization of intangible assets
      and deferred stock compensation      25,562   (25,562)          --
       Total cost of revenue               64,318   (25,562)      38,756
  Gross margin                            217,363    25,562      242,925
  Operating expenses:
    Research and development               68,471                 68,471
    Sales and marketing                    70,395                 70,395
    General and administrative             28,194                 28,194
    Amortization of intangible assets
      and deferred stock compensation       8,530    (8,530)          --
       Total operating expenses           175,590    (8,530)     167,060
  Operating (loss) income                  41,773    34,092       75,865
  Other income, net                         1,277        --        1,277
  Income before provision for income taxes 43,050    34,092       77,142
  Provision for income taxes                1,222    22,692       23,914
  Net income                              $41,828   $11,400      $53,228
  Basic earnings per share:
    Net income per share                    $0.27                  $0.34
    Weighted-average common shares        155,199                155,199
  Diluted earnings per share:
    Net income per share                    $0.26                  $0.33
    Weighted-average common shares
    and equivalents                       160,346                160,346

(1) The Company's fiscal year and third quarter ends on the Saturday nearest to October 31 and July 31, respectively.

For presentation purposes, the unaudited condensed consolidated financial statements refer to a calendar month end.

                              SYNOPSYS, INC.
        Unaudited Condensed Consolidated Statements of Income (1)
                  (in thousands, except per share data)


                                        Nine Months Ended July 31, 2005
                                            GAAP                  Non-GAAP
                                           Basis    Adjustments    Basis
  Revenue:
    Time-based license                    $550,807         --    $550,807
    Upfront license                         44,152         --      44,152
    Service                                142,134         --     142,134
        Total revenue                      737,093         --     737,093
  Cost of revenue:
    License                                 73,316         --      73,316
    Maintenance and services                53,264         --      53,264
    Amortization of intangible assets
     and deferred stock compensation        72,483    (72,483)         --
       Total cost of revenue               199,063    (72,483)    126,580
  Gross margin                             538,030     72,483     610,513
  Operating expenses:
    Research and development               234,890         --     234,890
    Sales and marketing                    247,929         --     247,929
    General and administrative              74,656         --      74,656
    In-process research and development      5,700     (5,700)         --
    Amortization of intangible assets
     and deferred stock compensation        25,847    (25,847)         --
       Total operating expenses            589,022    (31,547)    557,475
  Operating (loss) income                  (50,992)   104,030      53,038
  Other income (expense), net               42,416    (33,000)      9,416
  (Loss) income before (benefit from)
   provision for income taxes               (8,576)    71,030      62,454
  (Benefit from ) provision for  income
   taxes                                    (6,573)    26,429      19,856
  Net income                               $(2,003)   $44,601     $42,598
  Basic earnings per share:
    Net income per share                    $(0.01)                 $0.29
    Weighted-average common shares         144,910                144,910
  Diluted earnings per share:
    Net income per share                    $(0.01)                 $0.29
    Weighted-average common shares
    and equivalents                        144,910                146,120


                                       Nine Months Ended July 31, 2004
                                           GAAP                  Non-GAAP
                                          Basis    Adjustments    Basis
  Revenue:
    Time-based license                   $497,942        --     $497,942
    Upfront license                       197,654        --      197,654
    Service                               165,953        --      165,953
        Total revenue                     861,549        --      861,549
  Cost of revenue:
    License                                61,350       197       61,547
    Maintenance and services               52,471       111       52,582
    Amortization of intangible assets
     and deferred stock compensation       76,517   (76,517)          --
       Total cost of revenue              190,338   (76,209)     114,129
  Gross margin                            671,211    76,209      747,420
  Operating expenses:
    Research and development              208,944       754      209,698
    Sales and marketing                   216,026       580      216,606
    General and administrative             95,805   (12,155)      83,650
    In-process research and development        --        --           --
    Amortization of intangible assets
     and deferred stock compensation       26,410   (26,410)          --
       Total operating expenses           547,185   (37,231)     509,954
  Operating (loss) income                 124,026   113,440      237,466
  Other income (expense), net               1,133        --        1,133
  (Loss) income before (benefit from)
   provision for income taxes             125,159   113,440      238,599
  (Benefit from ) provision for  income
   taxes                                   22,440    51,525       73,965
  Net income                             $102,719   $61,915     $164,634
  Basic earnings per share:
    Net income per share                    $0.66                  $1.06
    Weighted-average common shares        155,437                155,437
  Diluted earnings per share:
    Net income per share                    $0.63                  $1.01
    Weighted-average common shares
    and equivalents                       162,638                162,638

(1) The Company's fiscal year and third quarter ends on the Saturday nearest to October 31 and July 31, respectively.

For presentation purposes, the unaudited condensed consolidated financial statements refer to a calendar month end.

                              SYNOPSYS, INC.
           Unaudited Condensed Consolidated Balance Sheets (1)
                              (in thousands)


                                          July 31,   October 31,
                                            2005        2004
  ASSETS:
  Current assets:
    Cash and cash equivalents             $319,954    $346,709
    Short-term investments                 179,460     232,320
    Total cash, cash equivalents and
     short-term investments                499,414     579,029
    Accounts receivable, net of
     allowances of $4,112 and $7,113,
     respectively                          108,673     132,258
    Deferred income taxes                  126,587     125,601
    Income taxes receivable                 46,522      46,583
    Prepaid expenses and other current
     assets                                 20,607      29,562
            Total current assets           801,803     913,033
  Property and equipment, net              174,918     178,155
  Long-term investments                      9,143      12,831
  Goodwill                                 764,080     593,706
  Intangible assets, net                   158,020     198,069
  Long-term deferred taxes                 154,970     146,360
  Other assets                              59,529      50,033
             Total assets               $2,122,463  $2,092,187

  LIABILITIES AND STOCKHOLDERS' EQUITY:
  Current liabilities:
    Accounts payable and accrued
     liabilities                          $211,119    $184,146
    Current portion of long-term debt          282          --
    Accrued income taxes                   197,315     188,096
    Deferred revenue                       415,448     368,913
             Total current liabilities     824,164     741,155
  Deferred compensation and other
   liabilities                              61,139      51,794
  Long-term deferred revenue                34,986      34,189
  Stockholders' equity:
    Common stock,  $0.01 par value per
     share; 400,000 shares authorized;
     144,192 and 147,378 shares
     outstanding, respectively               1,442       1,474
    Additional paid-in capital           1,256,806   1,240,568
    Retained earnings                      190,390     202,146
    Treasury stock, at cost; 12,953 and
     9,759 shares, respectively           (229,500)   (175,762)
    Deferred stock compensation             (1,887)     (2,732)
    Restricted stock                          (687)         --
    Accumulated other comprehensive loss   (14,390)       (645)
           Total stockholders' equity    1,202,174   1,265,049
           Total liabilities and
            stockholders' equity        $2,122,463  $2,092,187

(1) The Company's fiscal year and third quarter ends on the Saturday nearest to October 31 and July 31, respectively.

For presentation purposes, the unaudited condensed consolidated financial statements refer to a calendar month end.

                              SYNOPSYS, INC.
      Unaudited Condensed Consolidated Statements of Cash Flows (1)
                              (in thousands)

                                                 Nine Months Ended July 31,
                                                   2005           2004
  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                      $(2,003)       $102,719
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Amortization and depreciation                  140,077        144,530
    Deferred taxes                                (22,058)             --
    In-process research and development              5,700             --
    Write-down of long-term investments              2,564          1,901
    Provision for doubtful accounts and
     sales returns                                 (3,594)             --
    Net change in unrecognized gains and
     losses on foreign exchange contracts         (13,995)       (11,142)
    Gain on sale of short- and long-term
     investments                                       323          (867)
    Net changes in operating assets and liabilities:
     Accounts receivable                            47,825         58,134
     Income taxes receivable                            61         22,795
     Prepaid expenses and other current assets       9,647       (10,779)
     Other assets                                  (9,317)       (13,449)
     Accounts payable and accrued liabilities      (2,268)       (49,042)
     Accrued income taxes                          (5,481)       (19,286)
     Deferred revenue                               37,851        (6,097)
     Deferred compensation and other liabilities     9,681         11,053
    Net cash provided by operating activities      195,013        230,470
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sales and maturities of
     short-term investments                        252,417        795,643
    Purchases of short-term investments          (200,256)      (821,655)
    Proceeds from sale of long-term investments         --            412
    Purchases of long-term investments                  --        (6,144)
    Purchases of property and equipment, net      (34,728)       (35,073)
    Cash paid for acquisitions, net of cash
     received                                    (171,420)       (39,730)
    Capitalization of software development costs   (2,215)        (2,056)
    Net cash used in investing activities        (156,202)      (108,603)
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from credit facility                   75,000        200,000
    Payments on credit facility                   (75,000)      (200,000)
    Issuances of common stock                       24,421        141,892
    Purchases of treasury stock                   (88,385)      (288,336)
     Net cash used in financing activities        (63,964)      (146,444)
  Effect of exchange rate changes on cash          (1,444)          (497)
  Net decrease in cash and cash equivalents       (26,597)       (25,074)
  Cash and cash equivalents, beginning of period   346,709        524,308
  Cash and cash equivalents, end of period        $320,112       $499,234

(1)The Company's fiscal year and third quarter ends on the Saturday nearest to October 31 and July 31, respectively.

For presentation purposes, the unaudited condensed consolidated financial statements refer to a calendar month end.

SOURCE: Synopsys, Inc.

CONTACT: investors, Lisa L. Ewbank, +1-650-584-1901, or editorial,
Yvette Huygen, +1-650-584-4547, both of Synopsys, Inc.

Web site: http://www.synopsys.com/