Synopsys Posts Strong Financial Results for Fourth Quarter 2002

MOUNTAIN VIEW, California. December 4, 2002 – Synopsys Inc., (Nasdaq: SNPS) today reported its fourth quarter results for the period that ended on November 2, 2002.

For the fourth quarter of fiscal 2002, Synopsys reported revenue of $309.3 million and net earnings on a diluted basis excluding amortization of intangible assets, integration expenses, in-process research and development and insurance settlement expense (EBG) of $73.7 million, or $0.96 per share, consistent with our positive earnings preannouncement on November 4, 2002. This represents a 68% increase in revenue and a 146% increase in earnings per share on an EBG basis as compared to the fourth quarter of fiscal 2001 revenue of $183.6 million and earnings on an EBG basis of $24.5 million, or $0.39 per share.

"2002 was a year of tremendous achievement for Synopsys," said Aart de Geus, Chairman and CEO. "Despite the challenging market environment, we were able to maintain our focus to deliver best- in-class products to our customers. At the same time, we successfully completed the Avant! acquisition, which is the most important strategic acquisition in our company's history. Though we remain cautious about the overall economic environment, we enter 2003 excited about our prospects ahead."

For the fiscal year ended November 2, 2002, Synopsys reported revenue of $906.5 million and net income, on an EBG basis, of $155.7 million, or $2.22 per share. Revenue and net income, on an EBG basis, were $680.4 million and $71.0 million, or $1.10 per share, respectively, for the fiscal year ended November 3, 2001.

On a generally accepted accounting principles (GAAP) basis, for the fourth quarter of 2002, net loss after amortization of intangible assets, integration expenses, in-process research and development, and insurance settleme nt expense, was ($97.8) million, or ($1.31) per share, compared to net income of $20.4 million, or $0.33 per share, for the fourth quarter of fiscal 2001. For the twelve-month period ended November 2, 2002, net loss, on a GAAP basis, was ($200.0) million, or ($2.99) per share, compared to $56.8 million, or $0.88 per share, respectively, for the twelve-month period ended November 3, 2001. GAAP results for the fourth quarter and full year reflect the settlement of the litigation between Avant! and Cadence, which, though completed after the end of the fiscal year, is required under GAAP to be included in the 2002 financial results.

Outlook
Synopsys also announced its guidance targets for the first quarter of fiscal year 2003.

First quarter of fiscal year 2003 targets:

• Revenue: between $262 million and $273 million; 
• Total expenses: between $203 and $208 million;
• Other income, net: between $9 million and $12 million, including approximately $5- $7 million of investment sales gains;
• Average diluted shares outstanding: between 76 million and 79 million;
• Pro forma tax rate: 32.5%; and
• EBG: between $0.63 and $0.68 per share.
  

With respect to the fiscal year 2003, Synopsys expects to manage its business to generate $3.25 in EBG per share, and to hold total expenses flat at the first quarter fiscal 2003 level.

The foregoing statements are forward- looking statements. Factors that could cause actual results to differ materially from those expected include, but are not limited to, the factors noted in the "Forward Looking Statements" section below, and in Synopsys' filings with the Securities and Exchange Commission.

Effectiveness of Guidance
The targets set forth above represent the Company's expectations only as of the date of this release and should not be viewed as a statement about the Company's expectations after this date. Although this release will remain available on the Company's website, its continued availability does not indicate that the Company is reaffirming or confirming its continued validity. The Company will not report on its progress during the quarter or comment to analysts or investors on, or otherwise update, such targets until it releases its quarterly results.

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