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 21, 2014

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 21, 2014, Synopsys, Inc. issued a press release announcing the financial results of its second fiscal quarter ended May 3, 2014. 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 measures that are not in accordance with, or an alternative for, U.S. generally accepted accounting principles (“GAAP”). 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, GAAP measures 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) acquisition-related costs; (iv) other significant items, including facilities restructuring charges and the effect of tax and legal settlements; and (v) the income tax effect of non-GAAP pre-tax adjustments as well as unusual or infrequent tax adjustments.

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, among 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 include contract rights, 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 and liquidity and our 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 and liquidity and our 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) Acquisition-related costs. In connection with our business combinations, we incur significant expenses which we would not have otherwise incurred as part our business operations. These expenses include compensation expenses, professional fees and other direct expenses, and restructuring activities, including employee severance and other exit costs, as well as changes to the fair value of contingent consideration related to the acquired company. We exclude such expenses, which we would not have otherwise incurred, as they are related to acquisitions and have no direct correlation to the operation of our business.

Additionally, business combination accounting principles require us to measure acquired inventory at fair value. The fair value of acquired inventory increases the acquired company’s cost of manufacturing to include a portion of any expected gross profit margin. The non-GAAP inventory fair value adjustment excludes the expected gross profit margin. We believe this adjustment better reflects the costs we would have expended to produce such inventory on our own.

(iv) Other significant items. From time to time, in order to control costs, we restructure our operations. Certain restructuring costs are infrequent and not ongoing and therefore we do not consider them to be part of the ongoing operation of our business. For this reason, we have excluded adjustments relating to the closure of a facility obtained through our acquisition of another company. Additionally, from time to time we are party to legal settlements. We exclude the effects of litigation settlements and benefits from tax settlements with the Internal Revenue Service and other tax authorities because we do not consider these matters to be part of the ongoing operation of our business and because of the singular nature of the claims underlying these matters.

(v) Income tax effect of non-GAAP pre-tax adjustments as well as unusual or infrequent tax adjustments. 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. We exclude other unusual or infrequent tax adjustments because we do not consider these matters to be part of the ongoing operation of our business.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Exhibit Title
99.1	Press release dated May 21, 2014 containing Synopsys, Inc.’s results of operations for its second fiscal quarter ended May 3, 2014.

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.

	SYNOPSYS, INC.
Dated: May 21, 2014	By:	/S/    BRIAN M. BEATTIE
		Brian M. Beattie
		Chief Financial Officer

INDEX TO EXHIBITS

Exhibit Number	Exhibit Title
99.1	Press release dated May 21, 2014 containing Synopsys, Inc.’s results of operations for its second fiscal quarter ended May 3, 2014.

EX-99.1

Exhibit 99.1

PRESS RELEASE

INVESTOR CONTACT:

Lisa L. Ewbank

Synopsys, Inc.

650-584-1901

Synopsys-ir@synopsys.com

EDITORIAL CONTACT:

Yvette Huygen

Synopsys, Inc.

650-584-4547

yvetteh@synopsys.com

Synopsys Posts Financial Results for Second Quarter Fiscal Year 2014

Q2 2014 Financial Highlights

• Revenue: $517.7 million

• GAAP earnings per share: $0.40

• Non-GAAP earnings per share: $0.65

MOUNTAIN VIEW, Calif. – May 21, 2014 – Synopsys, Inc. (Nasdaq: SNPS), a global leader providing software, IP and services used to accelerate innovation in chips and electronic systems, today reported results for its second quarter of fiscal year 2014.

For the second quarter of fiscal year 2014, Synopsys reported revenue of $517.7 million, compared to $499.3 million for the second quarter of fiscal 2013, an increase of 3.7 percent.

“Our fiscal second quarter results were very strong, driven by robust business in all key areas,” said Aart de Geus, chairman and co-CEO of Synopsys. “In addition, we introduced several important new products, including IC Compiler II, a game-changer in digital design, and we completed the acquisition of Coverity, bringing us into the emerging market of software quality, test and security.”

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2014 was $63.3 million, or $0.40 per share, compared to $68.7 million, or $0.44 per share, for the second quarter of fiscal 2013.

May 21, 2014 1

Non-GAAP Results

On a non-GAAP basis, net income for the second quarter of fiscal 2014 was $101.7 million, or $0.65 per share, compared to non-GAAP net income of $103.7 million, or $0.66 per share, for the second quarter of fiscal 2013.

Financial Targets

Synopsys also provided its financial targets for the third quarter and full fiscal year 2014. These targets do not include any future acquisition-related expenses that may be incurred in fiscal 2014. 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 2014 Targets:

• Revenue: $515 million - $525 million

• GAAP expenses: $450.5 million - $471 million

• Non-GAAP expenses: $400 million - $410 million

• Other income and expense: ($1) million - $1 million

• Tax rate applied in non-GAAP net income calculations: approximately 20 percent

• Fully diluted outstanding shares: 155 million - 159 million

• GAAP earnings per share: $0.30 - $0.38

• Non-GAAP earnings per share: $0.60 - $0.62

Full Fiscal Year 2014 Targets:

• Revenue: $2.05 billion - $2.075 billion

• Other income and expense: $10 million - $12 million

• Tax rate applied in non-GAAP net income calculations: approximately 21 percent

• Fully diluted outstanding shares: 155 million - 159 million

• GAAP earnings per share: $1.55 - $1.68

• Non-GAAP earnings per share: $2.45 - $2.50

• Cash flow from operations: $450 million - $475 million

May 21, 2014 2

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) acquisition-related costs, including inventory fair value adjustments, (iv) other significant items, including facilities restructuring charges and the effect of tax and legal settlements, and (v) the income tax effect of non-GAAP pre-tax adjustments as well as unusual or infrequent tax adjustments; 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 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.

May 21, 2014 3

Reconciliation of Second Quarter Fiscal Year 2014 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 2014 Results

(Unaudited and in thousands, except per share amounts)

	Three Months Ended April 30,						Six Months Ended April 30,
	2014			2013			2014			2013
GAAP net income	$	63,317		$	68,691		$	131,013		$	138,613
Adjustments:
Amortization of intangible assets		32,050			32,273			60,181			64,676
Stock compensation		18,824			15,529			36,941			33,229
Acquisition-related costs		4,374			1,992			5,449			3,828
Inventory fair value adjustment		—			—			—			1,809
Facility restructuring charges		—			302			—			30
Tax and other settlements		(2,040	)		—			(12,307	)		—
Tax adjustments		(14,830	)		(15,123	)		(26,495	)		(35,554	)
Non-GAAP net income	$	101,695		$	103,664		$	194,782		$	206,631
	Three Months Ended April 30,						Six Months Ended April 30,
	2014			2013			2014			2013
GAAP net income per share	$	0.40		$	0.44		$	0.83		$	0.89
Adjustments:
Amortization of intangible assets		0.20			0.21			0.38			0.42
Stock compensation		0.12			0.10			0.24			0.22
Acquisition-related costs		0.03			0.01			0.04			0.02
Inventory fair value adjustment		—			—			—			0.01
Facility restructuring charges		—			0.00			—			0.00
Tax and other settlements		(0.01	)		—			(0.08	)		—
Tax adjustments		(0.09	)		(0.10	)		(0.17	)		(0.23	)
Non-GAAP net income per share	$	0.65		$	0.66		$	1.24		$	1.33
Shares used in calculation		157,082			156,606			156,986			155,662

May 21, 2014 4

Reconciliation of Target Non-GAAP 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 2014 Targets

(in thousands, except per share amounts)

	Range for Three Months Ending July 31, 2014 (1)
	Low			High
Target GAAP expenses	$	450,500		$	471,000
Adjustments:
Estimated impact of amortization of intangible assets		(32,000	)		(39,000	)
Estimated impact of stock compensation		(18,500	)		(22,000	)
Target non-GAAP expenses	$	400,000		$	410,000
	Range for Three Months Ending July 31, 2014 (1)
	Low			High
Target GAAP earnings per share	$	0.30		$	0.38
Adjustments:
Estimated impact of amortization of intangible assets		0.25			0.20
Estimated impact of stock compensation		0.14			0.12
Net non-GAAP tax adjustments		(0.09	)		(0.08	)
Target non-GAAP earnings per share	$	0.60		$	0.62
Shares used in non-GAAP calculation (midpoint of target range)		157,000			157,000

GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2014 Targets

	Range for Fiscal Year Ending October 31, 2014 (1)
	Low			High
Target GAAP earnings per share	$	1.55		$	1.68
Adjustments:
Estimated impact of amortization of intangible assets		0.83			0.78
Estimated impact of stock compensation		0.54			0.50
Acquisition-related costs		0.04			0.04
Tax and other settlements		(0.08	)		(0.08	)
Net non-GAAP tax adjustments		(0.43	)		(0.42	)
Target non-GAAP earnings per share	$	2.45		$	2.50
Shares used in non-GAAP calculation (midpoint of target range)		157,000			157,000

(1) Synopsys’ third quarter and fiscal year end on August 2, and November 1, 2014, respectively. For presentation purposes, the periods refer to the closest calendar month end.

May 21, 2014 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 326039, 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 2014 in August 2014. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and co-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 co-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 year 2014 earnings call in August 2014, 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 2014 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 2014 in its quarterly report on Form 10-Q to be filed by June 12, 2014.

About Synopsys

Synopsys, Inc. (Nasdaq: SNPS) accelerates innovation in the global electronics market. As a leader in electronic design automation (EDA) and semiconductor IP, its software, IP and services help engineers address their design, verification, system and manufacturing challenges. Since 1986, engineers around the world have been using Synopsys technology to design and create billions of chips and systems. Learn more at http://www.synopsys.com.

May 21, 2014 6

Forward-Looking Statements

This press release and our upcoming earnings results conference call contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Any statements that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include but are not limited to: sections of this press release entitled “Financial Targets” and “Reconciliation of Target Non-GAAP Operating Results”; and statements regarding Synopsys’ business, acquisitions, products, technologies, business model, customer demand for our technology, and projected financial results and business objectives. These statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in our forward-looking statements. Accordingly, we caution stockholders and prospective investors not to place undue reliance on these statements. Such risks, uncertainties and factors include, but are not limited to:

• continued uncertainty in the global economy and its potential impact on the semiconductor and electronics industries;

• uncertainty in the growth of the semiconductor and electronics industry;

• increased competition in the market for Synopsys’ products and services including through consolidation in the industry and among our customers;

• changes in demand for Synopsys’ products due to fluctuations in demand for its customers’ products;

• Synopsys’ ability to realize the potential financial or strategic benefits of acquisitions it completes, including its recent acquisition of Coverity, Inc., and challenges in entering new markets in which Synopsys is not experienced and in the integration of the products and operations of acquired companies or assets into Synopsys’ products and operations, including possible delays in customer orders, potential loss of customers, key employees, partners or vendors, customer demand and support obligations for product offerings, and disruption of ongoing business operations and diversion of management attention;

May 21, 2014 7

• adverse changes in the relationships between Synopsys and key participants in the complex semiconductor ecosystem, including major foundries and intellectual property providers;

• litigation;

• lower-than-anticipated new IC design starts;

• lower-than-anticipated purchases or delays in purchases of products 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;

• variability in the timing of revenue recognition due to factors such as payment terms and the timing and value of contract renewals and professional services projects;

• lower-than-expected orders; and

• failure of customers to pay license fees as scheduled.

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, 2014; actual expenses, earnings per share, tax rate, and other projections on a GAAP and non-GAAP basis for fiscal year 2014; and cash flow from operations on a GAAP basis for fiscal year 2014 could differ materially from the targets stated under “Financial Targets” above for a number of reasons, including, but not limited to, (i) integration and other acquisition-related costs, (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) a determination by Synopsys that any portion of its goodwill or intangible assets have become impaired, (iv) changes in the anticipated amount of employee stock-based compensation expense recognized in 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) fluctuations in foreign currency exchange rates, (ix) litigation, (x) general economic conditions, and (xi) other risks as detailed in Synopsys’ SEC filings, including those described in the “Risk Factors” section in its latest Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2014. Furthermore, Synopsys’ actual tax rates applied to income for the third quarter and fiscal year 2014 could differ from the targets given in this press release as a

May 21, 2014 8

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 2014 could differ from the targets given in this press release as a result of higher than expected employee stock plan issuances, 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.

###

May 21, 2014 9

SYNOPSYS, INC.

Unaudited Consolidated Statements of Operations (1)

(in thousands, except per share amounts)

	Three Months Ended April 30,				Six Months Ended April 30,
	2014		2013		2014		2013
Revenue:
Time-based license	$	424,185	$	413,491	$	824,331	$	799,450
Upfront license		36,297		24,779		70,269		55,568
Maintenance and service		57,215		60,987		102,048		119,376
Total revenue		517,697		499,257		996,648		974,394
Cost of revenue:
License		67,302		61,569		130,127		126,061
Maintenance and service		21,109		19,766		41,380		39,821
Amortization of intangible assets		25,674		26,398		48,427		52,914
Total cost of revenue		114,085		107,733		219,934		218,796
Gross margin		403,612		391,524		776,714		755,598
Operating expenses:
Research and development		178,043		169,962		345,586		327,472
Sales and marketing		114,784		103,930		220,576		205,688
General and administrative		40,575		32,254		74,808		70,192
Amortization of intangible assets		6,376		5,875		11,754		11,762
Total operating expenses		339,778		312,021		652,724		615,114
Operating income		63,834		79,503		123,990		140,484
Other income (expense), net		4,225		7,204		15,253		17,953
Income before income taxes		68,059		86,707		139,243		158,437
Provision (benefit) for income taxes		4,742		18,016		8,230		19,824
Net income	$	63,317	$	68,691	$	131,013	$	138,613
Net income per share:
Basic	$	0.41	$	0.45	$	0.85	$	0.91
Diluted	$	0.40	$	0.44	$	0.83	$	0.89
Shares used in computing per share amounts:
Basic		154,572		153,515		154,319		152,496
Diluted		157,082		156,606		156,986		155,662

(1) Synopsys’ second quarter of fiscal 2014 and 2013 ended on May 3, 2014 and May 4, 2013, respectively. For presentation purposes, we refer to periods ended April 30.

May 21, 2014 10

SYNOPSYS, INC.

Unaudited Consolidated Balance Sheets (1)

(in thousands, except par value amounts)

	April 30, 2014			October 31, 2013
ASSETS:
Current assets:
Cash and cash equivalents	$	821,633		$	1,022,441
Accounts receivable, net		322,606			256,026
Deferred income taxes		99,385			92,058
Income taxes receivable and prepaid taxes		18,241			18,277
Prepaid and other current assets		66,406			59,175
Total current assets		1,328,271			1,447,977
Property and equipment, net		202,860			197,600
Goodwill		2,254,454			1,975,971
Intangible assets, net		398,560			335,425
Long-term prepaid taxes		9,605			7,935
Long-term deferred income taxes		203,554			243,066
Other long-term assets		163,232			150,961
Total assets	$	4,560,536		$	4,358,935
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable and accrued liabilities	$	275,611		$	358,197
Accrued income taxes		17,847			7,168
Deferred revenue		781,274			827,554
Short-term debt		230,000			30,000
Total current liabilities		1,304,732			1,222,919
Long-term accrued income taxes		42,943			53,064
Long-term deferred revenue		72,212			54,736
Long-term debt		60,000			75,000
Other long-term liabilities		161,530			164,939
Total liabilities		1,641,417			1,570,658
Stockholders’ equity:
Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding		—			—
Common stock, $0.01 par value: 400,000 shares authorized; 154,707 and 154,169 shares outstanding, respectively		1,547			1,542
Capital in excess of par value		1,614,838			1,597,244
Retained earnings		1,437,246			1,324,854
Treasury stock, at cost: 2,558 and 3,095 shares, respectively		(94,659	)		(106,668	)
Accumulated other comprehensive loss		(39,853	)		(28,695	)
Total stockholders’ equity		2,919,119			2,788,277
Total liabilities and stockholders’ equity	$	4,560,536		$	4,358,935

(1) Synopsys’ second quarter of fiscal 2014 ended on May 3, 2014, and its fourth quarter of fiscal 2013 ended on November 2, 2013. For presentation purposes, the periods refer to the closest calendar month end.

May 21, 2014 11

SYNOPSYS, INC.

Unaudited Consolidated Statements of Cash Flows (1)

(in thousands)

	Six Months Ended April 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	131,013		$	138,613
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation		91,585			94,154
Stock compensation		36,941			33,229
Allowance for doubtful accounts		(250	)		901
Gain on sale of investments		(6,529	)		(101	)
Deferred income taxes		9,266			8,225
Net changes in operating assets and liabilities, net of acquired assets and liabilities:
Accounts receivable		(59,577	)		39,287
Prepaid and other current assets		(4,557	)		(27,502	)
Other long-term assets		(13,756	)		(16,524	)
Accounts payable and other liabilities		(83,135	)		(97,569	)
Income taxes		(15,021	)		(2,574	)
Deferred revenue		(48,069	)		(127,847	)
Net cash provided by operating activities		37,911			42,292
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of long-term investments		7,304			222
Purchases of property and equipment		(29,901	)		(29,426	)
Proceeds from sales of property and equipment		—			2,000
Cash paid for acquisitions, net of cash acquired		(367,965	)		—
Capitalization of software development costs		(1,875	)		(1,787	)
Net cash used in investing activities		(392,437	)		(28,991	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases		(206	)		(784	)
Proceeds from credit facility		200,000			—
Repayment of debt		(15,497	)		(15,237	)
Acquisition of non-controlling interest		—			(44,004	)
Issuances of common stock		53,326			75,193
Purchases of treasury stock		(79,747	)		(34,998	)
Other		(500	)		(1,130	)
Net cash provided by (used in) financing activities		157,376			(20,960	)
Effect of exchange rate changes on cash and cash equivalents		(3,658	)		(11,705	)
Net change in cash and cash equivalents		(200,808	)		(19,364	)
Cash and cash equivalents, beginning of the year		1,022,441			700,382
Cash and cash equivalents, end of the period	$	821,633		$	681,018

(1) Synopsys’ second quarter of fiscal 2014 and 2013 ended on May 3, 2014 and May 4, 2013, respectively. For presentation purposes, we refer to periods ended April 30.

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