Synopsys Posts Financial Results for Fiscal Second Quarter 2003

MOUNTAIN VIEW, Calif. May 21, 2003 – Synopsys Inc., (Nasdaq: SNPS), the world leader in integrated circuit (IC) design software, today reported its second quarter results for the period that ended May 3, 2003.

For the second quarter of fiscal 2003, Synopsys reported revenue of $292.0 million, a 57% increase over revenue of $185.6 million in the second quarter of fiscal 2002. Net income on an earnings before goodwill (EBG) basis was $61.2 million, a 144% increase over EBG net income of $25.1 million in the second quarter of fiscal 2002. EBG per share was $0.80, a 105% increase over EBG per share of $0.39 in the second quarter of fiscal 2002. EBG represents earnings on a fully-diluted basis excluding, to the extent incurred in any particular quarter, amortization of intangible assets and deferred compensation, in-process research and development expenses and one-time or extraordinary expenses relating to acquisitions, such as integration expenses.

On a generally accepted accounting principles (GAAP) basis, for the second quarter of fiscal 2003, net income was $22.3 million, or $0.29 per share, compared to net income of $21.4 million, or $0.33 per share, for the second quarter of fiscal 2002. The difference between net income on an EBG basis and on a GAAP basis for the second quarter of fiscal 2003 was primarily due to charges relating to the acquisition of Numerical Technologies, Inc., which was completed during the quarter, and the amortization of intangibles related to prior acquisitions.

“Despite a tough economic backdrop, our second quarter was the largest orders quarter in Synopsys’ history,” said Aart de Geus, chairman and CEO of Synopsys. “We are pleased with the Company’s current momentum and look forward to achieving strong financial results during the remainder of fiscal 2003.”

Outlook

Synopsys also announced its operating model targets for the third quarter of fiscal year 2003 and for full year fiscal 2003.

Third quarter of fiscal year 2003 targets (EBG basis):

• Revenue: $288 - $303 million;
• Total expenses: $207 - $214 million;
• Other income: $6 - $9 million;
• Fully diluted outstanding shares: 75 - 79 million;
• Pro forma tax rate: 32.5%;
• Earnings per share: $0.77 - $0.82;
• Perpetual licenses as a percentage of product bookings: 20% - 25%; and
• Average length of ratable licenses: 3.3 – 3.6 years.

Fiscal year 2003 targets (EBG basis):

• Revenue: between $1.130 - $1.180 billion;
• Earnings per share: $2.95 - $3.10;
• Perpetual licenses as a percentage of product bookings: 20%-25%;
• Average length of ratable licenses: 3.0 - 3.35 years.