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

Date of Report (date of earliest event reported): May 19, 2010

SYNOPSYS, INC.

(Exact name of Registrant as specified in charter)

Delaware	000-19807	56-1546236
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer 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:

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

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

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

¨ Pre-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 May 19, 2010, Synopsys, Inc. issued a press release announcing the financial results of the second fiscal quarter ended April 30, 2010. 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 amortization of acquired intangible assets; (ii) the impact of stock compensation; (iii) in-process research and development expenses; (iv) acquisition-related costs; (v) other significant items, including the effect of a tax benefit from a settlement with the Internal Revenue Service; and (vi) 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) Amortization of acquired intangible assets. We incur expenses from 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 the intangible assets over their economic lives. 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.

(ii) Stock compensation impact. We exclude stock 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 stock compensation to our operational performance, liquidity and ability to invest in research and development and fund acquisitions and capital expenditures. While stock 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.

(iii) In-process research and development expenses. We incurred costs relating to in-process research and development projects when technological feasibility for the acquired technology had not been established and no future alternative use for such technology existed. For accounting purposes in the prior years, such costs were expensed as incurred. Excluding these items from various non-GAAP measures facilitates our internal comparisons to our historical operating results and comparisons to our competitors’ operating results.

(iv) Acquisition-related costs. In connection with our business combinations, we incur compensation expenses, professional fees and other direct expenses related to restructuring activities of the acquired company. We exclude such expenses as they are primarily related to acquisitions and have no direct correlation to the operation of our business.

(v) Legal settlements. 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.

(vi) 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 May 19, 2010 containing Synopsys, Inc.’s results of operations for the second fiscal quarter ended April 30, 2010.

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: May 19, 2010	SYNOPSYS, INC.
	/s/ Brian E. Cabrera
	Brian E. Cabrera
	Vice President, General Counsel
	and Corporate Secretary

Exhibit Index

Exhibit Number	Exhibit Title
99.1	Press release dated May 19, 2010 containing Synopsys, Inc.’s results of operations for the second fiscal quarter ended April 30, 2010.

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 Second Quarter Fiscal Year 2010

MOUNTAIN VIEW, Calif. – May 19, 2010 – Synopsys, Inc. (Nasdaq: SNPS), a world leader in software and IP for semiconductor design, verification and manufacturing, today reported results for its second quarter of fiscal year 2010.

For the second quarter of fiscal 2010, Synopsys reported revenue of $338.1 million compared to $336.8 million for the second quarter of fiscal 2009.

“Synopsys again delivered solid results this quarter,” said Aart de Geus, chairman and CEO of Synopsys. “While the customer backdrop remains cautious, we continue to execute well on our strategy to address customer needs ranging from mainstream to the most advanced silicon design flows, all the way to the rapidly growing IP and systems space. This quarter we made particular progress in the latter, where we believe we have an especially promising outlook.”

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2010 was $39.5 million, or $0.26 per share, compared to $48.3 million, or $0.33 per share, for the second quarter of fiscal 2009.

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Non-GAAP Results

On a non-GAAP basis, net income for the second quarter of fiscal 2010 was $61.9 million, or $0.41 per share, compared to non-GAAP net income of $65.9 million, or $0.45 per share, for the second quarter of fiscal 2009.

Financial Targets

Synopsys also provided its financial targets for the third quarter and full fiscal year 2010. These targets do not include future acquisition-related expenses that may be incurred in fiscal 2010. 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 Year 2010 Targets:

• Revenue: $330 million - $338 million

• GAAP expenses: $275 million - $292 million

• Non-GAAP expenses: $251 million - $261 million

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

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

• Fully diluted outstanding shares: 149 million - 154 million

• GAAP earnings per share: $0.21 - $0.27

• Non-GAAP earnings per share: $0.36 - $0.38

• Revenue from backlog: greater than 90 percent

Full-Year Fiscal Year 2010 Targets:

• Revenue: $1.340 billion - $1.355 billion

• Other income and expense: $4 million - $8 million

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

• Fully diluted outstanding shares: 149 million - 154 million

• GAAP earnings per share: $1.56 - $1.75

• Non-GAAP earnings per share: $1.52 - $1.62

• Cash flow from operations: $205 million - $225 million

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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) the amortization of acquired intangible assets; (ii) the impact of stock compensation; (iii) in-process research and development expenses, (iv) acquisition-related costs; (v) other significant items, including the effect of a tax benefit from a settlement with the Internal Revenue Service, and (vi) 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 Second Quarter Fiscal Year 2010 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 Second Quarter Fiscal Year 2010 Results

(Unaudited and in thousands, except per share amounts)

	Three Months Ended April 30,						Six Months Ended April 30,
	2010			2009			2010			2009
GAAP net income	$	39,549		$	48,288		$	172,335		$	100,717
Adjustments:
Amortization of intangible assets		11,814			10,620			22,464			22,428
Stock compensation		13,466			14,661			30,700			28,804
In-process research and development		—			—			—			600
Acquisition-related costs		6,120			—			7,166			—
Tax benefit from IRS settlement		—			—			(91,649	)		—
Tax effect		(9,015	)		(7,666	)		(16,663	)		(15,050	)
Non-GAAP net income	$	61,934		$	65,903		$	124,353		$	137,499
	Three Months Ended April 30,						Six Months Ended April 30,
	2010			2009			2010			2009
GAAP net income per share	$	0.26		$	0.33		$	1.14		$	0.70
Adjustments:
Amortization of intangible assets		0.08			0.07			0.15			0.16
Stock compensation		0.09			0.10			0.20			0.19
In-process research and development		—			—			—			0.01
Acquisition-related costs		0.04			—			0.05			—
Tax benefit from IRS settlement		—			—			(0.61	)		—
Tax effect		(0.06	)		(0.05	)		(0.11	)		(0.11	)
Non-GAAP net income per share	$	0.41		$	0.45		$	0.82		$	0.95
Shares used in calculation		152,482			145,421			151,635			144,024

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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 Third Quarter Fiscal Year 2010 Targets

(in thousands, except per share amounts)

	Range for Three Months Ending July 31, 2010
	Low			High
Target GAAP expenses	$	275,000		$	292,000
Adjustment:
Estimated impact of amortization of intangible assets		(10,000	)		(13,000	)
Estimated impact of stock compensation		(14,000	)		(18,000	)
Target non-GAAP expenses	$	251,000		$	261,000
	Range for Three Months Ending July 31, 2010
	Low			High
Target GAAP earnings per share	$	0.21		$	0.27
Adjustment:
Estimated impact of amortization of intangible assets		0.09			0.06
Estimated impact of stock compensation		0.12			0.09
Net non-GAAP tax effect		(0.06	)		(0.04	)
Target non-GAAP earnings per share	$	0.36		$	0.38
Shares used in non-GAAP calculation (midpoint of target range)		151,500			151,500

GAAP to Non-GAAP Reconciliation of Fiscal Year 2010 Targets

	Range for Fiscal Year Ending October 31, 2010
	Low			High
Target GAAP earnings per share	$	1.56		$	1.75
Adjustment:
Estimated impact of amortization of intangible assets		0.33			0.26
Estimated impact of stock compensation		0.40			0.35
Acquisition-related costs		0.05			0.05
Tax benefit from IRS settlement		(0.61	)		(0.61	)
Net non-GAAP tax effect		(0.21	)		(0.18	)
Target non-GAAP earnings per share	$	1.52		$	1.62
Shares used in non-GAAP calculation (midpoint of target range)		151,500			151,500

5

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 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 156545, beginning at 4:00 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 third quarter fiscal 2010 in August 2010. 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 third quarter fiscal 2010 earnings call in August 2010, 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 third quarter of fiscal 2010 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 second quarter fiscal 2010 in its quarterly report on Form 10-Q to be filed by June 10, 2010.

6

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 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; 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 July 31, 2010 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 2010 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 costs including amortization of intangible assets and costs formerly capitalized but now expensed due to new accounting guidance related to business combinations, (iv) changes in the anticipated amount of employee stock 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 guidance, (viii) general economic conditions, and (ix) other risks as detailed in our SEC filings, including those described in the “Risk Factors” section in our latest Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2010. Furthermore, Synopsys’ actual tax rates applied to income for the third quarter and fiscal year 2010 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 third quarter and fiscal year 2010 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.

###

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 April 30,				Six Months Ended April 30,
	2010		2009 (2)		2010			2009 (2)
Revenue:
Time-based license	$	288,672	$	287,315	$	561,147		$	574,991
Upfront license		12,715		12,675		33,161			28,378
Maintenance and service		36,719		36,845		73,965			73,221
Total revenue		338,106		336,835		668,273			676,590
Cost of revenue:
License		44,930		42,292		86,144			84,115
Maintenance and service		15,268		15,048		31,778			30,627
Amortization of intangible assets		8,829		7,679		16,686			15,701
Total cost of revenue		69,027		65,019		134,608			130,443
Gross margin		269,079		271,816		533,665			546,147
Operating expenses:
Research and development		113,050		102,996		214,282			200,803
Sales and marketing		79,363		82,520		158,979			159,904
General and administrative		28,713		28,691		54,566			55,873
In-process research and development		—		—		—			600
Amortization of intangible assets		2,985		2,941		5,778			6,727
Total operating expenses		224,111		217,148		433,605			423,907
Operating income		44,968		54,668		100,060			122,240
Other income, net		8,905		10,445		11,155			12,544
Income before income taxes		53,873		65,113		111,215			134,784
Provision (benefit) for income taxes		14,324		16,825		(61,120	)		34,067
Net income	$	39,549	$	48,288	$	172,335		$	100,717
Net income per share:
Basic	$	0.27	$	0.34	$	1.17		$	0.71
Diluted	$	0.26	$	0.33	$	1.14		$	0.70
Shares used in computing per share amounts:
Basic		148,890		143,275		147,860			142,562
Diluted		152,482		145,421		151,635			144,024

(1) Synopsys’ second quarter ended on the Saturday nearest April 30. For presentation purposes, the Unaudited Consolidated Statements of Operations refer to a calendar month end.

(2) For the three and six months ended April 30, 2009, Synopsys reclassifed $3.3 million and $5.9 million from upfront license to time-based licensed revenue to conform to the current year presentation which had no impact on total revenue.

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SYNOPSYS, INC.

Unaudited Consolidated Balance Sheets (1)

(in thousands, except par value amounts)

	April 30, 2010			October 31, 2009
ASSETS:
Current assets:
Cash and cash equivalents	$	669,431		$	701,613
Short-term investments		409,023			466,713
Total cash, cash equivalents and short-term investments		1,078,454			1,168,326
Accounts receivable, net		149,654			127,010
Deferred income taxes		70,229			73,453
Income taxes receivable		36,294			51,191
Prepaid and other current assets		45,263			43,820
Total current assets		1,379,894			1,463,800
Property and equipment, net		140,630			146,910
Goodwill		998,910			932,691
Intangible assets, net		119,806			96,810
Long-term deferred income taxes		270,365			205,396
Other long-term assets		95,731			93,247
Total assets	$	3,005,336		$	2,938,854
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable and accrued liabilities	$	186,802		$	255,095
Accrued income taxes		28,024			5,508
Deferred revenue		505,771			553,990
Total current liabilities		720,597			814,593
Long-term accrued income taxes		88,132			157,354
Other long-term liabilities		100,220			88,002
Long-term deferred revenue		38,226			34,739
Total liabilities		947,175			1,094,688
Stockholders’ equity:
Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding		—			—
Common stock, $0.01 par value: 400,000 shares authorized; 149,802 and 146,945 shares outstanding, respectively		1,498			1,469
Capital in excess of par value		1,512,888			1,500,166
Retained earnings		725,102			574,980
Treasury stock, at cost: 7,463 and 10,326 shares, respectively		(165,266	)		(228,618	)
Accumulated other comprehensive loss		(16,061	)		(3,831	)
Total stockholders’ equity		2,058,161			1,844,166
Total liabilities and stockholders’ equity	$	3,005,336		$	2,938,854

(1) Synopsys’ second quarter ended on the Saturday nearest April 30. 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)

	Six Months Ended April 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	172,335		$	100,717
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation		50,219			49,728
Stock compensation		30,704			28,803
Allowance for doubtful accounts		(742	)		2,723
Write-down of long-term investments		—			2,960
Gain on sale of investments		(2,420	)		(324	)
Deferred income taxes		(38,549	)		7,612
In-process research and development		—			600
Net changes in operating assets and liabilities, net of acquired assets and liabilities:
Accounts receivable		(20,626	)		(46,707	)
Prepaid and other current assets		11,373			(3,047	)
Other long-term assets		(3,997	)		(617	)
Accounts payable and other liabilities		(68,672	)		(105,639	)
Accrued income taxes		(48,157	)		(5,959	)
Deferred revenue		(45,235	)		(88,065	)
Net cash provided by (used in) operating activities		36,233			(57,215	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of short-term investments		188,650			123,041
Purchases of short-term investments		(131,748	)		(119,227	)
Purchases of property and equipment		(13,793	)		(14,734	)
Cash paid for acquisitions, net of cash acquired		(130,872	)		(27,333	)
Capitalization of software development costs		(1,415	)		(1,485	)
Net cash used in investing activities		(89,178	)		(39,738	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases		(1,346	)		(984	)
Issuances of common stock		73,210			26,652
Purchases of treasury stock		(50,257	)		—
Net cash provided by financing activities		21,607			25,668
Effect of exchange rate changes on cash and cash equivalents		(844	)		52
Net change in cash and cash equivalents		(32,182	)		(71,233	)
Cash and cash equivalents, beginning of period		701,613			577,632
Cash and cash equivalents, end of period	$	669,431		$	506,399

(1) Synopsys’ second quarter ended on the Saturday nearest April 30. For presentation purposes, the Unaudited Consolidated Statements of Cash Flows refer to a calendar month end.

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