8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

August 19, 2009

Date of Report (date of earliest event reported)

SYNOPSYS, INC.

(Exact name of Registrant as specified in charter)

Delaware	000-19807	56-1546236
(State or other jurisdiction	(Commission File Number)	(I.R.S. Employer)
of incorporation)	Identification No.)

700 East Middlefield Road

Mountain View, California 94043

(Address of principal executive offices)

Registrant’s telephone number, including area code: (650) 584-5000

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On August 19, 2009, Synopsys, Inc. issued a press release announcing the financial results of our third fiscal quarter ended July 31, 2009. A copy of this press release is furnished and attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Current Report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission by Synopsys, Inc. whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

The attached press release includes non-GAAP earnings per share, non-GAAP net income, targeted non-GAAP expenses and targeted non-GAAP earnings per share.

These non-GAAP measures are not in accordance with, or an alternative for, U.S. generally accepted accounting principles (“GAAP”) and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles and management exercises judgment in determining which items should be excluded in the calculation of non-GAAP measures. While we believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP, we believe that non-GAAP measures are valuable in analyzing our operations.  Management analyzes current and future results on a GAAP basis as well as a non-GAAP basis and also provides GAAP and non-GAAP measures in our earnings release.  The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.  The non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial measures. We believe that the presentation of non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to our financial condition and results of operations.

Synopsys’ management evaluates and makes decisions about our business operations primarily based on the revenue, orders, and direct, ongoing and recurring costs of those operations.  For our internal budgeting and resource allocation process, and in reviewing our financial results, we use non-GAAP financial measures that exclude: (i) the share-based compensation impact of Statement of Financial Accounting Standards No. 123—revised 2004 (“SFAS 123(R)”), “Share-Based Payment”; (ii) the amortization of acquired intangible assets and in-process research and development; (iii) other significant items, including the effect of a tax benefit from a settlement with the Internal Revenue Service; and (iv) the income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes.

We use these non-GAAP financial measures in making operating decisions because we believe the measures provide meaningful supplemental information regarding our operational performance and give us a better understanding of how we should invest in research and development and fund infrastructure and product and market strategies.  We use these measures to help us make budgeting decisions, for example, between product development expenses and research and development, sales and marketing and general and administrative expenses.  In addition, these non-GAAP financial measures facilitate our internal comparisons to our historical operating results, forecasted targets and comparisons to competitors’ operating results.

As described above, we exclude the following items from one or more of our non-GAAP measures:

(i)            Share-based compensation impact of SFAS 123(R).  We exclude share-based compensation expenses from our non-GAAP measures primarily because they are non-cash expenses.  We believe that it is useful to investors to understand the impact of share-based compensation to our

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operational performance, liquidity and ability to invest in research and development and fund acquisitions and capital expenditures. While share-based compensation expense constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense that typically requires or will require cash settlement by us and because such expense is not used by us to assess the core profitability of our business operations.  In addition, excluding this item from various non-GAAP measures facilitates comparisons to our competitors’ operating results.

(ii)           Amortization of acquired intangible assets and in-process research and development.  We incur amortization of acquired intangible assets which includes contract rights associated with certain executory contracts and core/developed technology, trademarks, trade names, customer relationships, covenants not to compete, and other intangibles related to acquisitions.  We amortize for accounting purposes the fair value of the intangible assets based on the pattern in which the economic benefits of the intangible assets will be consumed.  We exclude this item because this expense is non-cash in nature and because we believe the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding our operational performance, liquidity and ability to invest in research and development and fund acquisitions and capital expenditures.  We incur in-process research and development expenses when technological feasibility for acquired technology has not been established and no future alternative use for such technology exists.  In addition, excluding these items from various non-GAAP measures facilitates our internal comparisons to our historical operating results and comparisons to our competitors’ operating results.

(iii)          Other Significant Items. From time to time we are party to legal settlements.  We have excluded the effect of a tax benefit from a settlement with the Internal Revenue Service because we do not consider this matter to be part of the ongoing operation of our business and because of the singular nature of the claim underlying this matter.

(iv)          Income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes. Excluding the income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes assists investors in understanding the tax provision associated with those adjustments and the effect on net income.

Item 9.01 Financial Statements and Exhibits

(d)  Exhibits

99.1 Press release dated August 19, 2009 containing Synopsys, Inc.’s results of operations for the third fiscal quarter ended July 31, 2009.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 19, 2009	SYNOPSYS, INC.
	/s/ Brian E. Cabrera
	Brian E. Cabrera
	Vice President, General Counsel
	and Corporate Secretary

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Exhibit Index

Exhibit Number	Exhibit Title
99.1	Press release dated August 19, 2009 containing Synopsys, Inc.’s results of operations for the third fiscal quarter ended July 31, 2009.

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EX-99.1

Exhibit 99.1

PRESS RELEASE

INVESTOR CONTACT:

Lisa L. Ewbank

Synopsys, Inc.

650-584-1901

EDITORIAL CONTACT:

Yvette Huygen

Synopsys, Inc.

650-584-4547

yvetteh@synopsys.com

Synopsys Posts Financial Results for Third Quarter Fiscal Year 2009

MOUNTAIN VIEW, Calif. — August 19, 2009 — Synopsys, Inc. (Nasdaq: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its third quarter ended July 31, 2009.

For the third quarter of fiscal 2009, Synopsys reported revenue of $345.2 million compared to $344.1 million for the third quarter of fiscal 2008.

“Synopsys again made excellent progress towards delivering on our year’s objectives,” said Aart de Geus, chairman and CEO of Synopsys.  “We are actively working with customers to help them successfully navigate the economic recovery, and are positioning ourselves for even greater strength in the future.”

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal 2009 was $47.4 million, or $0.32 per share, compared to $57.7 million, or $0.39 per share, for the third quarter of fiscal 2008, which included a $17.3 million tax benefit associated with the settlement of an IRS tax issue for fiscal years 2000 and 2001.

Non-GAAP Results

On a non-GAAP basis, net income for the third quarter of fiscal 2009 was $68.3 million, or $0.47 per share, compared to non-GAAP net income of $64.5 million, or $0.44 per share, for the third quarter of fiscal 2008.  Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

Financial Targets

Synopsys also provided its financial targets for the fourth quarter and full fiscal year 2009.  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.

Fourth Quarter of Fiscal Year 2009 Targets:

·Revenue: $335 million - $343 million

·GAAP expenses: $297 million - $313 million

·Non-GAAP expenses: $272 million - $282 million

·Other income and expense: $0 - $3 million

·Tax rate applied in non-GAAP net income calculations: approximately 26 percent

·Fully diluted outstanding shares: 146 million - 149 million

·GAAP earnings per share: $0.14 - $0.21

·Non-GAAP earnings per share: $0.29 - $0.33

·Revenue from backlog: greater than 90 percent

Full-Year Fiscal Year 2009 Targets:

·Revenue: approximately $1.357 billion - $1.365 billion

·Other income and expense: $11 million - $14 million

·Tax rate applied in non-GAAP net income calculations: approximately 27 percent

·Fully diluted outstanding shares: 144 million — 146.5 million

·GAAP earnings per share: $1.16 - $1.23

·Non-GAAP earnings per share: $1.71 - $1.75

·Cash flow from operations: $190 million - $210 million (excludes potential impact of a tentative settlement with the Internal Revenue Service, described below)

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In the second quarter, the Company reached a tentative settlement with the IRS that would resolve a dispute regarding its 2002-2004 returns, primarily associated with the acquisition of Avant!.  The tentative settlement is subject to further approval by the government.  If approved, we expect it to result in a cash payment to the IRS of approximately $50 million, most likely within the next 12 months.  If the tentative settlement is approved, this payment would be fully offset by tax reductions in future years.

GAAP Reconciliation

Synopsys continues to provide all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures.  Accordingly, Synopsys presents non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Synopsys’ operating results in a manner that focuses on what Synopsys believes to be its ongoing business operations and what Synopsys uses to evaluate its ongoing operations and for internal planning and forecasting purposes.  Synopsys’ management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.  Synopsys’ management believes it is useful for itself and investors to review, as applicable, both GAAP information that includes: (i) share-based compensation; (ii) the amortization of acquired intangible assets and in-process research and development charges; (iii) other significant items, including the effect of a tax benefit from a settlement with the Internal Revenue Service, and (iv) the income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes; and the non-GAAP measures that exclude such information in order to assess the performance of Synopsys’ business and for planning and forecasting in subsequent periods.  Whenever Synopsys uses such a non-GAAP financial measure, it provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure.  Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed below.

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Reconciliation of Third Quarter Fiscal Year 2009 Results

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP net income and earnings per share for the periods indicated below.

GAAP to Non-GAAP Reconciliation of Third Quarter Results

(Unaudited and in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	July 31,						July 31,
	2009			2008			2009			2008
GAAP net income	$	47,436		$	57,749		$	148,153		$	143,581
Adjustments:
Amortization of intangible assets	11,408			10,810			33,836			34,841
Share-based compensation	13,995			17,321			42,799			50,806
In-process research and development	400			4,800			1,000			4,800
Tax benefit from IRS settlement	—			(17,253		)	—			(17,253		)
Tax effect	(4,941		)	(8,923		)	(19,991		)	(26,595		)
Non-GAAP net income	$	68,298		$	64,504		$	205,797		$	190,180

	Three Months Ended						Nine Months Ended
	July 31,						July 31,
	2009			2008			2009			2008
GAAP earnings per share	$	0.32		$	0.39		$	1.02		$	0.97
Adjustments:
Amortization of intangible assets	0.08			0.07			0.23			0.24
Share-based compensation	0.10			0.12			0.30			0.34
In-process research and development	0.00			0.03			0.01			0.03
Tax benefit from IRS settlement	—			(0.12		)	—			(0.12		)
Tax effect	(0.03		)	(0.05		)	(0.14		)	(0.17		)
Non-GAAP earnings per share	$	0.47		$	0.44		$	1.42		$	1.29
Shares used in calculation	146,063			147,486			144,699			147,760

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Reconciliation of Target Operating Results

The following tables reconcile the specific items excluded from GAAP in the calculation of target non-GAAP operating results for the periods indicated below:

GAAP to Non-GAAP Reconciliation of Fourth Quarter Fiscal Year 2009 Targets

(in thousands, except per share amounts)

	Range for Three Months
	Ending October 31, 2009
	Low			High
Target GAAP expenses	$	297,000		$	313,000
Adjustment:
Estimated impact of amortization of intangible assets	(11,000		)	(13,000		)
Estimated impact of share-based compensation	(14,000		)	(18,000		)
Target non-GAAP expenses	$	272,000		$	282,000

	Range for Three Months
	Ending October 31, 2009
	Low			High
Target GAAP earnings per share	$	0.14		$	0.21
Adjustment:
Estimated impact of amortization of intangible assets	0.09			0.07
Estimated impact of share-based compensation	0.12			0.09
Net non-GAAP tax effect	(0.06		)	(0.04		)
Target non-GAAP earnings per share	$	0.29		$	0.33
Shares used in non-GAAP calculation (midpoint of target range)	147,500			147,500

GAAP to Non-GAAP Reconciliation of Fiscal Year 2009 Targets

	Range for Fiscal Year
	Ending October 31, 2009
	Low			High
Target GAAP earnings per share	$	1.16		$	1.23
Adjustment:
Estimated impact of amortization of intangible assets	0.33			0.32
Estimated impact of share-based compensation	0.43			0.40
In-process research and development	0.01			0.01
Net non-GAAP tax effect	(0.22		)	(0.21		)
Target non-GAAP earnings per share	$	1.71		$	1.75
Shares used in non-GAAP calculation (midpoint of target range)	145,250			145,250

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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 http://www.synopsys.com/.  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 www.synopsys.com) 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.

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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 http://www.synopsys.com/.

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 customers;

·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.

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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.

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

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SYNOPSYS, INC.

Unaudited Consolidated Statements of Operations (1)

(in thousands, except per share amounts)

	Three Months Ended July 31,					Nine Months Ended July 31,
	2009		2008			2009		2008
Revenue:
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.

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SYNOPSYS, INC.

Unaudited Consolidated Balance Sheets (1)

(in thousands, except par value amounts)

	July 31, 2009			October 31, 2008
ASSETS:
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
LIABILITIES AND STOCKHOLDERS’ EQUITY:
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 and141,786 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 end.

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SYNOPSYS, INC.

Unaudited Consolidated Statements of Cash Flows (1)

(in thousands)

	Nine Months Ended July 31,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
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
CASH FLOWS FROM INVESTING ACTIVITIES:
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		)
CASH FLOWS FROM FINANCING ACTIVITIES:
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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