SYNOPSYS, INC.

Unaudited Consolidated Statements of Operations⁽¹⁾

(in thousands, except per share amounts)

Three Months Ended 

Twelve Months Ended

October 31,

October 31,

2021

2020

2021

2020

Revenue:

  Time-based products

$                688,116

$                606,598

$              2,633,763

$              2,365,199

  Upfront products

274,265

244,155

861,063

735,572

  Maintenance and service

190,038

174,686

709,367

584,510

      Total revenue

1,152,419

1,025,439

4,204,193

3,685,281

Cost of revenue:

  Products

152,437

142,838

542,114

487,307

  Maintenance and service

68,992

69,991

271,202

254,931

  Amortization of intangible assets

13,297

11,720

48,461

52,452

     Total cost of revenue

224,549

861,777

794,690

Gross margin

917,693

800,890

3,342,416

2,890,591

Operating expenses:

  Research and development

413,864

339,566

1,504,823

1,279,022

  Sales and marketing

197,681

176,499

712,491

632,010

  General and administrative

88,960

79,796

322,988

284,530

  Amortization of intangible assets 

8,646

9,284

33,919

38,829

  Restructuring charges

18,254

(387)

33,405

36,059

     Total operating expenses

727,405

604,758

2,607,626

2,270,450

Operating income

190,288

196,132

734,790

620,141

Other income (expense), net

8,790

(4,095)

70,724

18,018

Income before income taxes

199,078

192,037

805,514

638,159

Provision (benefit) for income taxes

(2,059)

(4,989)

49,155

(25,288)

Net income

201,137

197,026

756,359

663,447

Net income (loss) attributed to non-controlling interest

(310)

(429)

(1,157)

(900)

Net income attributed to Synopsys

$                201,447

$                197,455

$                757,516

$                664,347

Net income per share:

  Basic

$                     1.32

$                     1.30

$                     4.96

$                     4.40

  Diluted

$                     1.28

$                     1.26

$                     4.81

$                     4.27

Shares used in computing per share amounts:

  Basic

152,932

152,349

152,698

151,135

  Diluted

157,243

156,825

157,340

155,706

(1) Synopsys' fourth quarter of fiscal year 2021 and 2020 ended on October 30, 2021 and October 31, 2020, respectively. For presentation purposes, we refer to the closest
calendar month end.

SYNOPSYS, INC.

Unaudited Consolidated Balance Sheets ⁽¹⁾

(in thousands, except par value amounts)

October 31, 2021

October 31, 2020

ASSETS:

Current assets:

  Cash and cash equivalents

$                     1,432,840

$                     1,235,653

  Short-term investments

147,949

-

          Total cash, cash equivalents & short-term investments

$                     1,580,789

$                     1,235,653

  Accounts receivable, net

568,501

780,709

  Inventories, net

229,023

192,333

  Income taxes receivable and prepaid taxes

32,411

32,355

  Prepaid and other current assets

397,617

308,167

          Total current assets

2,808,341

2,549,217

Property and equipment, net

472,398

483,818

Operating lease right-of-use assets, net

493,251

465,818

Goodwill

3,575,785

3,365,114

Intangible assets, net

279,132

254,322

Deferred income taxes

612,655

497,546

Other long-term assets

510,698

414,227

           Total assets

$                     8,752,260

$                     8,030,062

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:

  Accounts payable and accrued liabilities

$                        694,748

$                        623,664

  Operating lease liabilities, current

79,678

73,173

  Accrued income taxes

46,443

27,738

  Deferred revenue

1,517,623

1,388,263

  Short-term debt

74,992

27,084

           Total current liabilities

2,413,484

2,139,922

Operating lease liabilities, non-current

487,003

462,411

Long-term accrued income taxes

27,893

25,178

Long-term deferred revenue

136,303

104,850

Long-term debt

25,094

100,823

Other long-term liabilities

363,540

284,511

           Total liabilities

3,453,317

3,117,695

Stockholders' equity:

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

-

-

  Common stock, $0.01 par value: 400,000 shares authorized; 153,062 and

      152,618 shares outstanding, respectively

1,531

1,528

  Capital in excess of par value

1,576,363

1,653,166

  Retained earnings

4,549,713

3,795,397

  Treasury stock, at cost: 4,198 and 4,643 shares, respectively

(782,866)

(488,613)

  Accumulated other comprehensive income (loss) 

(49,604)

(54,074)

           Total Synopsys stockholders' equity

5,295,137

4,907,404

  Non-controlling interest

3,806

4,963

           Total stockholders' equity

5,298,943

4,912,367

           Total liabilities and stockholders' equity

$                     8,752,260

$                     8,030,062

(1) Synopsys' fiscal year 2021 and 2020 ended on October 30, 2021 and October 31, 2020, respectively. For presentation purposes,
we refer to the closest calendar month end.

SYNOPSYS, INC.

Unaudited Consolidated Statements of Cash Flows ⁽¹⁾

(in thousands)

Twelve Months Ended

October 31,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income attributed to Synopsys

$             757,516

$             664,347

Adjustments to reconcile net income to net cash provided by

Amortization and depreciation

203,676

209,986

Reduction of operating lease right-of-use assets

86,645

82,895

Amortization of capitalized costs to obtain revenue contracts

64,698

61,185

Stock-based compensation

345,272

248,584

Allowance for doubtful accounts

18,515

20,875

Deferred income taxes

(128,583)

(111,526)

Other non-cash

14,702

3,425

Net changes in operating assets and liabilities, net of

acquired assets and liabilities:

Accounts receivable

201,706

(236,806)

Inventories

(48,046)

(55,024)

Prepaid and other current assets

(102,174)

(11,298)

Other long-term assets

(153,037)

(83,367)

Accounts payable and accrued liabilities

125,133

113,773

Operating lease liabilities

(82,581)

(78,578)

Income taxes

28,855

14,120

Deferred revenue

160,325

148,722

Net cash provided by operating activities

1,492,622

991,313

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sales and maturities of short-term investments

12,850

-

Purchases of short-term investments

(161,732)

-

Proceeds from sales of long-term investments

-

2,151

Purchases of long-term investments

(7,591)

(2,762)

Purchases of property and equipment

(93,764)

(154,717)

Cash paid for acquisitions, net of cash acquired

(296,017)

(201,045)

Capitalization of software development costs

(1,976)

(4,045)

Other 

(800)

-

Net cash used in investing activities

(549,030)

(360,418)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from credit facilities

-

276,489

Repayment of debt

(28,061)

(288,879)

Issuances of common stock

210,719

197,403

Payments for taxes related to net share settlement of equity awards

(138,950)

(82,225)

Purchase of equity forward contract

(35,000)

-

Purchases of treasury stock

(753,081)

(242,078)

Other

(4,375)

(1,316)

Net cash used in financing activities

(748,748)

(140,606)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

2,369

17,154

Net change in cash, cash equivalents and restricted cash

197,213

507,443

Cash, cash equivalents and restricted cash, beginning of year

1,237,970

730,527

Cash, cash equivalents and restricted cash, end of period

$           1,435,183

$           1,237,970

(1) Synopsys' fiscal year 2021 and 2020 ended on October 30, 2021 and October 31, 2020, respectively. For presentation purposes, we
refer to the closest calendar month end.

SYNOPSYS, INC.

Business Segment Reporting ⁽¹⁾

(in millions)

Three Months

Three Months

Twelve Months

Twelve Months

Ended

Ended

Ended

Ended

October 31, 2021 ⁽³⁾

October 31, 2020 ⁽³⁾

October 31, 2021 ⁽³⁾

October 31, 2020 ⁽³⁾

Revenue by segment

- Semiconductor & System Design

$                            1,042.4

$                               934.6

$                 3,810.4

$                 3,327.2

% of Total

90.5%

91.1%

90.6%

90.3%

- Software Integrity

$                               110.0

$                                 90.8

$                    393.8

$                    358.1

% of Total

9.5%

8.9%

9.4%

9.7%

Total segment revenue

$                            1,152.4

$                            1,025.4

$                 4,204.2

$                 3,685.3

Adjusted operating income by segment

- Semiconductor & System Design

$                               326.6

$                               293.5

$                 1,243.1

$                    990.8

- Software Integrity

$                                 13.3

$                                   6.2

$                      38.3

$                      40.8

Total adjusted segment operating income

$                               339.9

$                               299.7

$                 1,281.4

$                 1,031.6

Adjusted operating margin by segment

- Semiconductor & System Design

31.3%

31.4%

32.6%

29.8%

- Software Integrity

12.1%

6.8%

9.7%

11.4%

Total adjusted segment operating margin

29.5%

29.2%

30.5%

28.0%

Total Adjusted Segment Operating Income Reconciliation ⁽¹⁾⁽²⁾

(in millions)

Three Months

Three Months

Twelve Months

Twelve Months

Ended

Ended

Ended

Ended

October 31, 2021 ⁽³⁾

October 31, 2020 ⁽³⁾

October 31, 2021 ⁽³⁾

October 31, 2020 ⁽³⁾

GAAP total operating income – as reported

$                              190.3

$                              196.1

$                   734.8

$                   620.1

Other expenses managed at consolidated level

-Amortization of intangible assets

21.9

21.0

82.4

91.3

-Stock compensation

96.7

78.4

345.3

248.6

-Non-qualified deferred compensation plan

8.9

1.3

71.6

21.5

-Acquisition-related costs

3.8

3.3

15.4

14.1

-Restructuring

18.3

(0.4)

33.4

36.1

-Legal matters

-

-

(1.5)

-

Total adjusted segment operating income

$                              339.9

$                              299.7

$             1,281.4

$                 1,031.6

(1) Synopsys manages the business on a long-term, annual basis, and considers quarterly fluctuations of revenue and profitability as normal elements of our business. Amounts may not foot
due to rounding.

(2) These segment results are consistent with the information required by ASC 280, Segment Reporting . They are presented to reflect the information that is considered by Synopsys' chief
operating decision makers (CODMs) to evaluate the operating performance of its segments. The CODMs do not allocate certain operating expenses managed at a consolidated level to our
reportable segments, and as a result, the reported operating income and operating margin do not include these unallocated expenses as shown in the table above. Amounts may not foot due to
rounding.

(3) Synopsys' fourth quarter of fiscal year 2021 and 2020 ended on October 30, 2021 and October 31, 2020, respectively. For presentation purposes, we refer to the closest calendar month end.