INVESTOR CONTACT:

Lisa L. Ewbank

Synopsys, Inc.

650-584-1901

EDITORIAL CONTACT:

Yvette Huygen

Synopsys, Inc.

650-584-4547

Synopsys Posts Financial Results for

Second Quarter of Fiscal 2006

MOUNTAIN VIEW, Calif. May 17, 2006 – Synopsys, Inc. (Nasdaq:SNPS), a world leader in semiconductor design software, today reported results for its second fiscal quarter ended April 30, 2006.

For the second quarter, Synopsys reported revenue of $274.8 million, a 12 percent increase compared to $244.3 million for the second quarter of fiscal 2005.

“Synopsys has delivered another strong quarter,” said Aart de Geus, chairman and CEO of Synopsys. “Our technology continues to demonstrate strong momentum and we again executed very well against our financial goals.”

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2006 was $5.4 million, or $0.04 per share, compared to a net loss of ($5.0) million, or ($0.03) per share, for the second quarter of fiscal 2005. GAAP net income for the current period includes employee stock-based compensation expense of $13.8 million due to the adoption of Statement of Financial Accounting Standards 123(R) (FAS 123(R))

in fiscal 2006. Net income prior to fiscal 2006 did not include employee stock-based compensation expense related to FAS 123(R).

Non-GAAP Results

On a non-GAAP basis, net income for the second quarter of fiscal 2006 was $24.5 million, or $0.17 per share, compared to non-GAAP net income of $12.7 million, or $0.09 per share, for the second quarter of fiscal 2005.

Non-GAAP net income consists of GAAP net income excluding employee stock-based compensation expense calculated in accordance with FAS 123(R) and, to the extent incurred in a particular quarter or period, amortization of intangible assets, 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 infrequent or non-recurring. See “GAAP to Non GAAP Reconciliation of Second Quarter 2006 Results” below.

Financial Targets

Synopsys also announced its operating model targets for the third quarter and full fiscal year 2006. 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.

Third Quarter of Fiscal 2006 Targets:

• Revenue: $270 million - $278 million

• GAAP expenses: $261 million - $274 million

• Non-GAAP expenses: $232 million - $242 million

• Other income and expense: $0 million – $4 million

• Fully diluted outstanding shares: 144 million - 150 million

• Tax rate applied in non-GAAP net income calculations: 30 percent

• GAAP earnings: $0.02 - $0.07 per share

• Non-GAAP earnings: $0.17 - $0.20 per share

• Revenue from backlog: more than 90 percent

Full-Year Fiscal Year 2006 Targets

• Revenue: $1,075 million - $1,090 million

• Fully diluted outstanding shares: 144 million - 150 million

• Tax rate applied in non-GAAP net income calculations: 31 percent

• GAAP earnings: $0.08 - $0.17 per share

• Non-GAAP earnings: $0.68 - $0.74 per share

• GAAP cash flow from operations: greater than $175 million

GAAP Reconciliation

Synopsys’ management evaluates and makes operating decisions about the Company’s 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, in-process research and development charges, integration and other acquisition-related expenses, facilities and workforce realignment charges and other significant infrequent items are ongoing and recurring operating costs of its core software, intellectual property and service business operations. In addition, while employee stock-based compensation expense calculated in accordance with FAS 123(R) constitutes an ongoing and recurring expense of the Company, such expense is excluded from non-GAAP results because it is not an expense that typically requires or will require cash settlement by the Company and because such expense is not used by management to assess the core profitability of the Company’s 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 income (loss), income (loss) before provision (benefit) for income taxes, provision (benefit) for income taxes, net income (loss) and net income (loss) 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 regular basis, and, as a result, 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 Second 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 second quarter fiscal 2006.

GAAP to Non-GAAP Reconciliation of Second Quarter Results

(in thousands, except per share amounts)

Income Statement Reconciliation (in thousands)	Three Months Ended April 30,						Six Months Ended April 30,
	2006			2005			2006			2005
GAAP net income (loss)	$	5,375		$	(4,972	)	$	7,072		$	(19,297	)
Adjustments:
Amortization of intangible assets	13,625			36,928			29,624			73,879
Stock-based compensation (1)	13,776			—			32,206			—
In-process research and development	—			—			800			5,700
Tax effect	(8,292		)	(19,233		)	(18,822		)	(32,871		)
Non-GAAP net income	$	24,484		$	12,723		$	50,880		$	27,411