SYNOPSYS, INC.

Unaudited Consolidated Statements of Operations (1)

(in thousands, except per share amounts)

 Three Months Ended January 31

2012

2011

Revenue:

 Time-based license

$               355,894

$               295,609

 Upfront license

28,512

26,535

 Maintenance and service

41,090

42,500

     Total revenue

425,496

364,644

Cost of revenue:

 License

57,722

50,523

 Maintenance and service

18,744

20,547

 Amortization of intangible assets

13,388

13,235

    Total cost of revenue

89,854

84,305

Gross margin

335,642

280,339

Operating expenses:

 Research and development

132,875

120,740

 Sales and marketing

95,404

79,324

 General and administrative

33,839

29,865

 Amortization of intangible assets

3,521

3,748

    Total operating expenses

265,639

233,677

Operating income

70,003

46,662

Other income, net

3,826

5,670

Income before income taxes

73,829

52,332

Provision for income taxes

17,135

4,106

Net income

$                 56,694

$                 48,226

Net income per share:

 Basic

$                     0.39

$                     0.32

 Diluted

$                     0.39

$                     0.31

Shares used in computing per share amounts:

 Basic

143,882

149,016

 Diluted

147,113

153,640

(1)  Synopsys' first quarter of fiscal 2012 has an extra week ending February 4, 2012.  For presentation purposes, the first quarter refers to a calendar month ending January 31.

SYNOPSYS, INC.

Unaudited Consolidated Balance Sheets (1)

(in thousands, except par value amounts)

January 31, 2012

October 31, 2011

ASSETS:

Current assets:

 Cash and cash equivalents

$                       811,339

$                       855,077

 Short-term investments

132,150

148,997

          Total cash, cash equivalents and short-term investments

943,489

1,004,074

 Accounts receivable, net

213,763

203,124

 Deferred income taxes

58,670

58,536

 Income taxes receivable

22,369

25,545

 Prepaid and other current assets

51,359

46,776

         Total current assets

1,289,650

1,338,055

Property and equipment, net

157,219

159,517

Goodwill

1,295,485

1,289,286

Intangible assets, net

181,515

196,031

Long-term deferred income taxes

267,078

281,056

Other long-term assets

108,053

103,389

          Total assets

$                    3,299,000

$                    3,367,334

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:

 Accounts payable and accrued liabilities

$                       204,543

$                       302,176

 Accrued income taxes

6,630

3,079

 Deferred revenue

652,655

703,555

          Total current liabilities

863,828

1,008,810

Long-term accrued income taxes

82,203

92,940

Other long-term liabilities

111,031

108,076

Long-term deferred revenue

70,133

56,208

          Total liabilities

1,127,195

1,266,034

Stockholders' equity:

 Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding

-

-

 Common stock, $0.01 par value: 400,000 shares authorized; 143,943 and

     143,308 shares outstanding, respectively

1,439

1,433

 Capital in excess of par value

1,540,528

1,521,327

 Retained earnings

1,001,409

957,517

 Treasury stock, at cost: 13,321 and 13,956 shares, respectively

(347,416)

(358,032)

 Accumulated other comprehensive loss

(24,155)

(20,945)

          Total stockholders' equity

2,171,805

2,101,300

          Total liabilities and stockholders' equity

$                    3,299,000

$                    3,367,334

(1)  Synopsys' first quarter of fiscal 2012 has an extra week ending February 4, 2012.  For presentation purposes,  the first quarter refers to a calendar month ending January 31.

SYNOPSYS, INC.

Unaudited Consolidated Statements of Cash Flows (1)

(in thousands)

  Three Months Ended January 31

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$               56,694

$               48,226

Adjustments to reconcile net income to net cash provided by operating

   activities:

Amortization and depreciation

31,965

31,676

Stock compensation

16,248

15,247

Allowance for doubtful accounts

497

550

Write-down of long-term investments

-

908

Deferred income taxes

14,533

3,371

Net changes in operating assets and liabilities, net of

acquired assets and liabilities:

Accounts receivable

(11,102)

10,614

Prepaid and other current assets

(8,972)

(14,786)

Other long-term assets

(3,457)

(4,920)

Accounts payable and other liabilities

(93,556)

(83,276)

Income taxes

(5,161)

(16,829)

Deferred revenue

(37,007)

(30,414)

Net cash used in operating activities

(39,318)

(39,633)

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sales and maturities of short-term investments

34,039

19,049

Purchases of short-term investments

(18,179)

(23,957)

Purchases of property and equipment

(11,016)

(10,217)

Cash paid for acquisitions, net of cash acquired

(5,623)

(2,741)

Capitalization of software development costs

(735)

(713)

Net cash used in investing activities

(1,514)

(18,579)

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments on capital leases

(1,081)

(655)

Issuances of common stock

41,106

52,464

Purchase of equity forward contract

(20,000)

-

Purchases of treasury stock

(20,000)

(64,997)

Net cash provided by (used in) financing activities

25

(13,188)

Effect of exchange rate changes on cash and cash equivalents

(2,931)

(3,395)

Net change in cash and cash equivalents

(43,738)

(74,795)

Cash and cash equivalents, beginning of the year

855,077

775,407

Cash and cash equivalents, end of the year

$             811,339

$             700,612

(1)  Synopsys' first quarter of fiscal 2012 has an extra week ending February 4, 2012.  For presentation purposes, the first quarter refers to a calendar month ending January 31.