Synopsys Posts Financial Results for Third Quarter Fiscal Year 2009

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 A recording of the call will be available by calling +1-800-475-6701 (+1-320-365-3844 for international callers), access code 109824, beginning at 5:30 p.m. Pacific Time today. A webcast replay will also be available on the website from approximately 5:30 p.m. Pacific Time today through the time Synopsys announces its results for the fourth quarter and fiscal 2009 in December 2009. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and chief executive officer, and Brian Beattie, chief financial officer, on its website following the call. In addition, Synopsys makes additional financial information available in a financial supplement also posted on the corporate website.

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 (available in the Investor Relations section of Synopsys' website at represent Synopsys' expectations and beliefs as of the date of this release only. Although this press release, copies of the prepared remarks of the chief executive officer and chief financial officer made during the call and the financial supplement will remain available on Synopsys' website through the date of the fourth quarter and fiscal 2009 earnings call in December 2009, 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 2009 or comment to analysts or investors on, or otherwise update, the targets given in this earnings release.

Availability of Final Financial Statements

Synopsys will include final financial statements for the third quarter in its Quarterly Report on Form 10-Q to be filed by September 10, 2009.

About Synopsys

Synopsys, Inc. (NASDAQ: SNPS) is a world leader in electronic design automation (EDA), supplying the global electronics market with the software, intellectual property (IP) and services used in semiconductor design, verification and manufacturing. Synopsys' comprehensive, integrated portfolio of implementation, verification, IP, manufacturing and field-programmable gate array (FPGA) solutions helps address the key challenges designers and manufacturers face today, such as power and yield management, software-to-silicon verification and time-to-results. These technology-leading solutions help give Synopsys customers a competitive edge in bringing the best products to market quickly while reducing costs and schedule risk. Synopsys is headquartered in Mountain View, California, and has more than 65 offices located throughout North America, Europe, Japan, Asia and India. Visit Synopsys online at

Forward-Looking Statements

The statements made in this press release regarding projected financial results in the sections entitled "Financial Targets," and "Reconciliation of 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:

    --  continued downturn and uncertainty in the global economy in general, and
        weakness in the semiconductor and electronics industries;
    --  failure of customers to pay license fees as scheduled;
    --  lower-than-expected research and development spending by semiconductor
        and electronic systems companies;
    --  competition in the market for Synopsys' products and services;
    --  lower-than-anticipated new IC design starts;
    --  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
    --  changes in the mix of time-based licenses and upfront licenses;
    --  lower-than-expected orders;
    --  the terms of a final settlement, if any, with the IRS regarding the
        2002-2004 returns, and
    --  difficulties in the integration of the products and operations of
        acquired companies or assets into Synopsys' products and operations.

In addition, Synopsys' actual expenses, earnings per share and tax rate on a GAAP and non-GAAP basis for the fiscal quarter ending October 31, 2009 and actual expenses, earnings per share, tax rate, cash flow from operations and other projections on a GAAP and non-GAAP basis for fiscal year 2009 could differ materially from the targets stated under "Financial Targets" above for a number of reasons, including, but not limited to, (i) a determination by Synopsys that any portion of its goodwill or intangible assets have become impaired, (ii) application of the actual consolidated GAAP and non-GAAP tax rates for such periods, or judgment by management, based upon the status of pending audits and settlements to increase or decrease an income tax asset or liability, (iii) integration and other acquisition-related expenses including amortization of intangible assets associated with future acquisitions, if any, (iv) changes in the anticipated amount of employee share-based compensation expense recognized on Synopsys' financial statements, (v) actual change in the fair value of Synopsys' non-qualified deferred compensation plan obligations, (vi) increases or decreases to estimated capital expenditures, (vii) changes driven by new accounting rules, regulations, interpretations or pronouncements, (viii) general economic conditions, and (ix) other risks as detailed in our SEC filings, including those described in the "Risk Factors" section in our Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2009. Furthermore, Synopsys' actual tax rates applied to income for the fourth quarter and fiscal year 2009 could differ from the targets given in this press release as a result of a number of factors, including the actual geographic mix of revenue during the quarter and year, and actions by the government. Finally, Synopsys' targets for outstanding shares in the fourth quarter and fiscal year 2009 could differ from the targets given in this press release as a result of higher than expected employee stock plan issuances or stock option exercises, acquisitions and the extent of Synopsys' stock repurchase activity.

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 otherwise required by law.

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

    Lisa L. Ewbank
    Synopsys, Inc.

    Yvette Huygen
    Synopsys, Inc.

                              SYNOPSYS, INC.
            Unaudited Consolidated Statements of Operations (1)
                 (in thousands, except per share amounts)

                                 Three Months Ended   Nine Months Ended
                                      July 31,             July 31,
                                            ------------------    -----------------
                                                                          2009          2008              2009          2008
                                                                          ----          ----              ----          ----
            Time-based  license                  $284,401  $289,250      $853,449  $835,330
            Upfront  license                            18,972      20,558          53,293      45,293
            Maintenance  and  service            41,804      34,320        115,025    103,523
                                                                      ------      ------        -------    -------
                    Total  revenue                      345,177    344,128    1,021,767    984,146
        Cost  of  revenue:
            License                                            44,173      44,654        128,288    126,761
            Maintenance  and  service            17,410      16,110          48,037      48,156
            Amortization  of  intangible
              assets                                              8,452        6,262          24,153      17,111
                                                                        -----        -----          ------      ------
                  Total  cost  of  revenue          70,035      67,026        200,478    192,028
                                                                      ------      ------        -------    -------
        Gross  margin                                    275,142    277,102        821,289    792,118
        Operating  expenses:
            Research  and  development        104,989    104,394        305,792    292,183
            Sales  and  marketing                    77,973      86,816        237,877    247,073
            General  and  administrative      27,735      26,512          83,608      76,524
            In-process  research  and
              development                                        400        4,800            1,000        4,800
            Amortization  of  intangible
              assets                                              2,956        4,548            9,683      17,730
                                                                        -----        -----            -----      ------
                  Total  operating
                    expenses                                214,053    227,070        637,960    638,310
                                                                    -------    -------        -------    -------
        Operating  income                              61,089      50,032        183,329    153,808
        Other  income,  net                              5,384        2,947          17,928        9,428
                                                                        -----        -----          ------        -----
        Income  before  income  taxes          66,473      52,979        201,257    163,236
        Provision  (benefit)  for
          income  taxes                                    19,037      (4,770)        53,104      19,655
                                                                      ------      ------          ------      ------
        Net  income                                        $47,436    $57,749      $148,153  $143,581
                                                                    =======    =======      ========  ========

        Net  income  per  share:
            Basic                                                  $0.33        $0.41            $1.04        $1.00
                                                                        =====        =====            =====        =====
            Diluted                                              $0.32        $0.39            $1.02        $0.97
                                                                        =====        =====            =====        =====

        Shares  used  in  computing  per
          share  amounts:
            Basic                                              144,138    142,536        143,093    143,450
                                                                    =======    =======        =======    =======
            Diluted                                          146,063    147,486        144,699    147,760
                                                                    =======    =======        =======    =======

        (1)    Synopsys'  third  quarter  ended  on  the  Saturday  nearest  July  31.    For
                  presentation  purposes,  the  Unaudited  Consolidated  Statements  of
                  Operations  refer  to  a  calendar  month  end.

                                                            SYNOPSYS,  INC.
                                  Unaudited  Consolidated  Balance  Sheets  (1)
                                  (in  thousands,  except  par  value  amounts)

                                                                                              July  31,      October  31,
                                                                                                  2009                  2008
                                                                                              --------      -----------
        Current  assets:
            Cash  and  cash  equivalents                                  $622,281          $577,632
            Short-term  investments                                          460,258            373,669
                                                                                                  -------            -------
                              Total  cash,  cash  equivalents
                                and  short-term  investments          1,082,539            951,301
            Accounts  receivable,  net                                      136,760            147,365
            Deferred  income  taxes                                            136,073            133,609
            Income  taxes  receivable                                          44,091              49,859
            Other  current  assets                                                49,494              40,156
                                                                                                    ------              ------
                              Total  current  assets                        1,448,957        1,322,290
        Property  and  equipment,  net                                    144,928            145,087
        Goodwill                                                                          933,560            899,640
        Intangible  assets,  net                                              102,676            114,760
        Long-term  deferred  income  taxes                            160,090            177,386
        Other  long-term  assets                                                87,533              83,315
                                                                                                    ------              ------
                              Total  assets                                      $2,877,744      $2,742,478
                                                                                            ==========      ==========

        Current  liabilities:
            Accounts  payable  and  accrued  liabilities    $221,249          $289,769
            Accrued  income  taxes                                                13,051              14,496
            Deferred  revenue                                                      581,792            604,718
                                                                                                  -------            -------
                              Total  current  liabilities                  816,092            908,983
        Long-term  accrued  income  taxes                              168,008            152,745
        Deferred  compensation  and  other  liabilities      93,939              76,970
        Long-term  deferred  revenue                                        36,787              75,409
                                                                                                    ------              ------
                              Total  liabilities                              1,114,826        1,214,107
        Stockholders'  equity:
            Preferred  stock,  $0.01  par  value:  2,000
              shares  authorized;  none  outstanding                          -                        -
            Common  stock,  $0.01  par  value:  400,000
              shares  authorized;  144,295  and
              141,786  shares  outstanding,
              respectively                                                                1,442                1,418
            Capital  in  excess  of  par  value                      1,488,013        1,471,031
            Retained  earnings                                                    568,639            434,057
            Treasury  stock,  at  cost:  12,976  and
              15,485  shares,  respectively                            (287,305)        (342,856)
            Accumulated  other  comprehensive  loss                (7,871)          (35,279)
                                                                                                    ------            -------
                              Total  stockholders'  equity            1,762,918        1,528,371
                                                                                              ---------        ---------
                              Total  liabilities  and
                                stockholders'  equity                    $2,877,744      $2,742,478
                                                                                            ==========      ==========

        (1)    Synopsys'  third  and  fourth  quarter  ended  on  the  Saturday  nearest
                  July  31  and  October  31,  respectively.    For  presentation  purposes,
                  the  Unaudited  Consolidated  Balance  Sheets  refer  to  a  calendar  month

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

                                                                                                  Nine  Months  Ended  July  31,
                                                                                                              2009            2008
                                                                                                              ----            ----
            Net  income                                                                        $148,153    $143,581
            Adjustments  to  reconcile  net  income  to  net
              cash  provided  by  operating  activities:

                        Amortization  and  depreciation                          74,581        73,535
                        Share-based  compensation                                    42,799        50,807
                        Allowance  for  doubtful  accounts                        2,735              429
                        Write-down  of  long-term  investments                6,333              394
                        (Gain)  loss  on  sale  of  investments                    (610)      (1,347)
                        Deferred  income  taxes                                          15,801        18,852
                        Net  change  in  deferred  gains  and
                          losses  on  cash  flow  hedges                              17,949          5,169
                        In-process  research  and  development                1,000          4,800
                        Net  changes  in  operating  assets  and
                          liabilities,  net  of  acquired  assets
                          and  liabilities:
                                Accounts  receivable                                      10,690        (8,761)
                                Prepaid  and  other  current  assets            10,315      (11,277)
                                Other  long-term  assets                                      981                64
                                Accounts  payable  and  accrued
                                  liabilities                                                  (87,473)    (26,767)
                                Accrued  income  taxes                                    (4,778)    (33,974)
                                Deferred  revenue                                          (62,723)        2,626
                                Deferred  compensation  and  other
                                  liabilities                                                        (504)      (2,928)
                                                                                                                ----        ------
                        Net  cash  provided  by  operating
                          activities                                                            175,249      215,203

                        Proceeds  from  sales  and  maturities  of
                          short-term  investments                                    223,994      512,797
                        Purchases  of  short-term  investments          (310,323)  (436,144)
                        Proceeds  from  sales  of  long-term
                          investments                                                                      -                77
                        Purchases  of  long-term  investments                    (671)      (7,694)
                        Purchases  of  property  and  equipment            (24,634)    (26,500)
                        Cash  paid  for  acquisitions,  net  of
                          cash  acquired                                                      (48,248)  (181,018)
                        Capitalization  of  software  development
                          costs                                                                        (2,228)      (2,114)
                                                                                                            ------        ------
                        Net  cash  used  in  investing  activities      (162,110)  (140,596)

                        Principal  payments  on  capital  leases            (1,675)      (1,453)
                        Proceeds  from  credit  facilities                        1,279                  -
                        Payment  on  credit  facility                                    (260)                -
                        Issuances  of  common  stock                                  28,237        56,600
                        Purchases  of  treasury  stock                                        -    (170,052)
                                                                                                              -----    --------
                        Net  cash  provided  by  (used  in)
                          financing  activities                                          27,581    (114,905)
            Effect  of  exchange  rate  changes  on  cash  and
              cash  equivalents                                                                3,929          6,460
                                                                                                              -----          -----
            Net  change  in  cash  and  cash  equivalents                  44,649      (33,838)
            Cash  and  cash  equivalents,  beginning  of
              period                                                                                577,632      579,327
                                                                                                          -------      -------
            Cash  and  cash  equivalents,  end  of  period            $622,281    $545,489
                                                                                                        ========    ========

        (1)    Synopsys'  third  quarter  ended  on  the  Saturday  nearest  July  31.    For
                  presentation  purposes,  the  Unaudited  Consolidated  Statements  of  Cash
                  Flows  refer  to  a  calendar  month  end.

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