SYNOPSYS INC, DEF 14A, 2000-01-26

SYNOPSYS INC
DEF 14A, 2000-01-26
PREPACKAGED SOFTWARE

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<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

Synopsys, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

[SYNOPSYS LOGO]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 3, 2000
------------------------

To the Stockholders of Synopsys, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Synopsys,
Inc., a Delaware corporation (the "Company"), will be held on Friday, March 3,
2000, at 4:00 p.m., local time, at the Company's principal executive offices at
700 East Middlefield Road, Mountain View, California 94043, for the following
purposes:

1. To elect nine directors to serve for the ensuing year or until
their successors are elected.

2. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of shares of Common
Stock that the Company is authorized to issue from 200,000,000 to
400,000,000.

3. To approve an amendment to the Company's Employee Stock Purchase
Plan and International Employee Stock Purchase Plan to increase the number
of shares of Common Stock reserved for issuance thereunder by 1,200,000
shares.

4. To approve an amendment to the Company's 1992 Stock Option Plan
(the "1992 Plan") to change the limit on the number of options and/or stock
appreciation rights that may be granted to any one individual from
1,000,000 during the term of the 1992 Plan to 750,000 annually, except in
the case of an individual's initial employment with the Company, in which
case the individual may be granted an additional 250,000 options and/or
stock appreciation rights.

5. To approve an amendment to the 1992 Plan to (i) increase the number
of shares of Common Stock authorized for issuance thereunder by 1,000,000
shares per year on the dates of the 2000, 2001 and 2002 Annual Meetings of
Stockholders and (ii) extend the term of the 1992 Plan from January 2002
until January 2007.

6. To ratify the appointment of KPMG LLP as independent auditors of
the Company for fiscal 2000.

7. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.

Only stockholders of record at the close of business on January 5, 2000 are
entitled to notice of and to vote at the meeting. All stockholders are cordially
invited to attend the meeting in person. However, to assure your representation
at the meeting, you are urged to sign and return the enclosed proxy (the
"Proxy") as promptly as possible in the envelope enclosed. Any stockholder
attending the meeting may vote in person even if he or she has previously
returned a Proxy.

Sincerely,

/s/ Aart J. De Gaus
Aart J. de Geus
Chief Executive Officer &
Chairman of the Board
Mountain View, California
January 26, 2000

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, AND COMPLETE, SIGN AND DATE
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
<PAGE> 3

[SYNOPSYS LOGO]

700 EAST MIDDLEFIELD ROAD
MOUNTAIN VIEW, CALIFORNIA 94043
------------------------

PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 3, 2000
------------------------

GENERAL INFORMATION

The enclosed proxy (the "Proxy") is solicited on behalf of the Board of
Directors of Synopsys, Inc., a Delaware corporation ("Synopsys" or the
"Company"), for use at the Annual Meeting of Stockholders (the "Annual Meeting")
to be held on March 3, 2000 at the Company's principal executive offices, 700
East Middlefield Road, Mountain View, California 94043.

These proxy solicitation materials were mailed on or about January 26, 2000
to all stockholders entitled to vote at the Annual Meeting.

SOLICITATION

The cost of soliciting Proxies will be borne by the Company. The Company
has retained the services of Beacon Hill Partners, Inc. to assist in the
solicitation of Proxies, for which it will receive a fee from the Company of
approximately $3,000 plus out-of-pocket expenses. In addition, the Company may
reimburse brokerage houses and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such beneficial
owners. The Company will furnish copies of solicitation material to such
brokerage houses and other representatives. Proxies may also be solicited by
certain of the Company's directors, officers and employees, without additional
compensation, personally or by telephone, telecopy or telegram. Except as
described above, the Company does not presently intend to solicit Proxies other
than by mail.

REVOCABILITY OF PROXIES

Any person giving a Proxy has the power to revoke it at any time before its
use by delivering to the Company's principal executive offices a written notice
of revocation or a duly executed Proxy bearing a later date. The Proxy may also
be revoked by attending the Annual Meeting and voting in person.

RECORD DATE, VOTING AND SHARE OWNERSHIP

Stockholders of record on January 5, 2000 are entitled to notice of and to
vote at the Annual Meeting. As of the record date, 70,243,885 shares of the
Company's common stock, $.01 par value ("Common Stock"), were issued and
outstanding. No shares of the Company's preferred stock were outstanding.

Each stockholder is entitled to one vote for each share of Common Stock
held by such stockholder of record as of the close of business on January 5,
2000. The holders of a majority of the shares issued and outstanding,
represented in person or by Proxy, shall constitute a quorum. All valid Proxies
received before the meeting will be exercised. All shares represented by a Proxy
will be voted, and where a stockholder specifies by means of his or her Proxy a
choice with respect to any matter to be acted upon, the shares will be voted in
accordance with the specification so made. If no choice is indicated on the
Proxy, the shares will be voted in favor of the proposal. A stockholder who
abstains on any or all matters will be deemed present at the meeting for
purposes of determining whether a quorum is present and the total number of
votes cast with respect to a proposal (other than votes cast for the election of
directors), but will be deemed not to have voted in favor of the particular
matter (or matters) as to which the stockholder has abstained. In the event a
nominee (such as
<PAGE> 4

a brokerage firm) that is holding shares for a beneficial owner does not receive
instructions from such beneficial owner as to how to vote those shares on a
proposal and does not have discretionary authority to vote on such proposal,
then the shares held by the nominee will be deemed present at the meeting for
quorum purposes but will not be deemed to have voted on such proposal.

MATTERS TO BE CONSIDERED AT ANNUAL MEETING

PROPOSAL ONE -- ELECTION OF DIRECTORS

The Bylaws of the Company provide that the Board of Directors shall consist
of not fewer than five and not more than nine persons; within that range, the
Board has set the number of directors at nine persons. At the Annual Meeting,
nine directors are to be elected to serve until the Company's next Annual
Meeting or until their successors are elected and qualified. The Board of
Directors has selected nine nominees, all of whom are current directors of the
Company. Each person nominated for election has agreed to serve if elected, and
management has no reason to believe that any nominee will be unavailable to
serve. Unless otherwise instructed, the Proxy holders will vote the Proxies
received by them FOR the nominees named below. The nine candidates receiving the
highest number of affirmative votes of the shares represented and voting on this
proposal at the Annual Meeting will be elected directors of the Company.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE FOLLOWING NOMINEES TO SERVE AS DIRECTORS OF THE COMPANY
UNTIL THE NEXT ANNUAL MEETING OR UNTIL THEIR SUCCESSORS HAVE BEEN ELECTED AND
QUALIFIED.

NOMINEES

Set forth below is information regarding the nominees, including
information furnished by them as to principal occupations, certain other
directorships held by them, any arrangements pursuant to which they were
selected as directors or nominees and their ages as of December 31, 1999.

<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE ELECTED DIRECTOR
---- --- ----------------
<S> <C> <C>
Aart J. de Geus......................................... 45 1986
Andy D. Bryant.......................................... 49 1999
Chi-Foon Chan........................................... 50 1998
Deborah A. Coleman...................................... 47 1995
Harvey C. Jones, Jr..................................... 46 1987
William W. Lattin....................................... 59 1995
A. Richard Newton....................................... 48 1987; 1995
Sasson Somekh........................................... 53 1999
Steven C. Walske........................................ 47 1991
</TABLE>

BACKGROUND OF DIRECTORS

DR. AART J. DE GEUS co-founded Synopsys and currently serves as Chief
Executive Officer and Chairman of the Board of Directors. Since the inception of
Synopsys in December 1986 he has held a variety of positions including Senior
Vice President of Engineering and Senior Vice President of Marketing. From 1986
to 1992 Dr. de Geus served as Chairman of the Board. He served as President from
1992 to 1998. Dr. de Geus has served as Chief Executive Officer since January
1994 and has held the additional title of Chairman of the Board since February
1998. He has served as a Director since 1986. From 1982 to 1986 Dr. de Geus was
employed by General Electric Corporation, where he was the Manager of the
Advanced Computer-Aided Engineering Group. Dr. de Geus holds an M.S.E.E. from
the Swiss Federal Institute of Technology in Lausanne, Switzerland and a Ph.D.
in electrical engineering from Southern Methodist University.

ANDY D. BRYANT has been a Director of Synopsys since January 1999 and
currently serves as Senior Vice President and Chief Financial and Enterprise
Services Officer of Intel Corporation, with responsibility for

2
<PAGE> 5

financial operations, human resources, information technology and e-business
functions and activities worldwide. Mr. Bryant joined Intel in 1981 as
Controller for the Commercial Memory Systems Operation and in 1983 became
Systems Group Controller. In 1987 he was promoted to Director of Finance for the
corporation and was appointed Vice President and Director of Finance of the
Intel Products Group in 1990. Mr. Bryant became CFO in February of 1994 and was
promoted to Senior Vice President in January 1999. Mr. Bryant expanded his role
to Chief Financial and Enterprise Services Officer in December 1999. Prior to
joining Intel, he held positions in finance at Ford Motor Company and Chrysler
Corporation. Mr. Bryant holds a B.A. in economics from the University of
Missouri and an M.B.A. in finance from the University of Kansas.

DR. CHI-FOON CHAN joined Synopsys as Vice President of Application
Engineering & Services in May 1990. Since April 1997 he has served as Chief
Operating Officer and since February 1998 he has held the additional title of
President. Dr. Chan also became a Director of the Company in February 1998. From
September 1996 to February 1998 he served as Executive Vice President, Office of
the President. From February 1994 until April 1997 he served as Senior Vice
President, Design Tools Group and from October 1996 until April 1997 as Acting
Senior Vice President, Design Reuse Group. Additionally, he has held the titles
of Vice President, Engineering and General Manager, DesignWare Operations and
Senior Vice President, Worldwide Field Organization. From March 1987 to May
1990, Dr. Chan was employed by NEC Electronics, where his last position was
General Manager, Microprocessor Division. From 1977 to 1987, Dr. Chan held a
number of senior engineering positions at Intel Corporation. Dr. Chan holds an
M.S. and Ph.D. in computer engineering from Case Western Reserve University.

DEBORAH A. COLEMAN has been a Director of Synopsys since November 1995. Ms.
Coleman has been Chairman of the Board of Merix Corporation, a manufacturer of
printed circuit boards, since May 1994, when it was spun off from Tektronix,
Inc. She also served as Chief Executive Officer of Merix from May 1994 to
September 1999 and as President from March 1997 to September 1999. Ms. Coleman
joined Merix from Tektronix, a diversified electronics corporation, where she
served as Vice President of Materials Operations, responsible for worldwide
procurement, distribution, component engineering and component manufacturing
operation. Prior to joining Tektronix in November 1992, Ms. Coleman was with
Apple Computer, Inc. for eleven years, where she held several executive
positions, including Chief Financial Officer, Chief Information Officer and Vice
President of Operations. She is a Director of Applied Materials, Inc., a
manufacturer of semiconductor fabrication equipment.

HARVEY C. JONES, JR. has been a Director of Synopsys since December 1987.
Mr. Jones joined the Company in December 1987 and served as President and Chief
Executive Officer through December 1992. From December 1992 through January 1994
Mr. Jones served as Chairman of the Board and Chief Executive Officer. Mr. Jones
continued as Chairman until his retirement in February 1998. Prior to joining
Synopsys, Mr. Jones served as President and Chief Executive Officer of Daisy
Systems Corporation, a company he co-founded in 1981. Mr. Jones began his career
at Calma, a first-generation computer aided design company acquired by General
Electric, where his last position was Vice President, Business Development. Mr.
Jones is a director of Remedy Corporation, an enterprise software company, and
NVIDIA Corporation, a 3-D graphics processor company. As an active venture
investor, Jones also serves on numerous private boards of directors. Mr. Jones
holds a B.S. in mathematics and computer sciences from Georgetown University,
and an M.S. from MIT's Sloan School of Management.

DR. WILLIAM W. LATTIN has been a Director of Synopsys since July 1995. Dr.
Lattin joined Synopsys in February 1994 in connection with Synopsys' merger with
Logic Modeling Corporation ("LMC"). He served as Executive Vice President from
July 1995 to October 1999 and continues to work for the Company on a part-time
basis. From October 1994 to July 1995 he served as Senior Vice President,
Corporate Marketing, and from February 1994 until October 1994 as Senior Vice
President, Logic Modeling Group. From December 1992 to February 1994, Dr. Lattin
served as President, Chief Executive Officer and Director of LMC, and from May
1992 to December 1992 he served as Chairman of the Board and Chief Executive
Officer of LMC. From 1986 to 1992, Dr. Lattin served as Chairman of the Board of
Directors, President and Chief Executive Officer of Logic Automation Inc., a
predecessor of LMC. From 1975 to 1986, Dr. Lattin was employed by Intel
Corporation where his last position was Vice President and General Manager of
the Intel Systems Group. From 1969 to 1975, Dr. Lattin held a number of senior
level positions at Motorola, Inc.

3
<PAGE> 6

Dr. Lattin holds a B.S.E.E. and an M.S.E.E. from the University of California at
Berkeley, and a Ph.D. in electrical engineering from Arizona State University.
Dr. Lattin is a Director of RadiSys Corporation, a supplier of embedded
computers, FEI Company, a supplier of semiconductor equipment, Sitera, Inc., a
supplier of intelligent network processors, and Easy Street Online Services, an
internet service provider. He also serves as a Trustee of the Oregon Graduate
Institute.

DR. A. RICHARD NEWTON has been a Director of Synopsys since January 1995.
Previously, Dr. Newton was a Director of Synopsys from January 1987 to June
1991. Dr. Newton has been a Professor of Electrical Engineering and Computer
Sciences at the University of California at Berkeley since 1979 and is currently
Chair of the Electrical Engineering and Computer Sciences Department. Since 1988
Dr. Newton has acted as a Venture Partner with Mayfield Fund, a venture capital
partnership, and has contributed to the evaluation and development of over a
dozen new companies. From November 1994 to July 1995 he was acting President and
Chief Executive Officer of Silicon Light Machines, a private company which is
developing display systems based on the application of micromachined silicon
light-valves.

DR. SASSON SOMEKH has been a Director of Synopsys since January 1999. He
has served as Senior Vice President of Applied Materials, Inc., a manufacturer
of semiconductor fabrication equipment, since December 1993. Dr. Somekh served
as Group Vice President from 1990 to 1993. Prior to that, he was a divisional
Vice President. Dr. Somekh joined Applied Materials in 1980 as a Project
Manager. Dr. Somekh is a director of Scitex Corporation Ltd., which provides
digital imaging products and services for graphics communication.

STEVEN C. WALSKE has been a Director of Synopsys since December 1991. Mr.
Walske has been Chairman, Chief Executive Officer and a Director of Parametric
Technology Corporation, a supplier of software products for mechanical
computer-aided engineering, since August 1994 and served as President and Chief
Executive Officer of that company from December 1986 to August 1994.

There are no family relationships among any executive officers, directors
or persons chosen or nominated to become executive officers or directors of the
Company.

BOARD COMMITTEES AND MEETINGS

During fiscal 1999, the Board of Directors held five meetings and acted by
unanimous written consent on four occasions. During such year the Committees of
the Board of Directors included an Audit Committee, a Compensation Committee, a
Technology Committee and a Nominating and Board Affairs Committee.

During fiscal 1999, the Audit Committee consisted of three directors: Ms.
Coleman, Mr. Jones and Dr. Somekh. Ms. Coleman and Mr. Jones served on the Audit
Committee for the entire year; Dr. Somekh was appointed at the April 1999 Board
meeting. The Audit Committee is primarily responsible for reviewing the
Company's financial results prior to their release to the public, reviewing
reports provided by, and approving the services performed by, the Company's
independent auditors and reviewing the Company's accounting practices and
systems of internal accounting controls. The Audit Committee held four meetings
during fiscal 1999.

During fiscal 1999, the Compensation Committee consisted of three
directors: Mr. Walske, Ms. Coleman and Mr. Bryant. Mr. Walske and Ms. Coleman
served on the Committee for the entire fiscal year; Mr. Bryant was appointed at
the April 1999 Board meeting. The Compensation Committee is primarily
responsible for reviewing and approving the Company's general compensation
policies, setting compensation levels for the Company's executive officers and
administering the Company's stock option, employee stock purchase and 401(k)
savings plans. The Committee held four meetings during fiscal 1999 and acted by
unanimous written consent on six occasions.

During fiscal 1999, the Technology Committee consisted of two directors:
Dr. Newton and Dr. Somekh. Dr. Newton served on the Committee for the entire
fiscal year; Dr. Somekh was appointed at the January 1999 Board meeting. The
Technology Committee advises the Board on long-term technology strategy and
industry development issues. The Committee held six meetings during the year.

4
<PAGE> 7

During fiscal 1999, the Nominating and Board Affairs Committee consisted of
two directors: Dr. de Geus and Dr. Lattin. The Committee's charter is to
identify and recruit candidates for the Board and to make recommendations
regarding board of directors' best practices. The Committee also considers
stockholders nominations for the Board that are made in the manner provided in
the Company's Bylaws. See "ADDITIONAL INFORMATION -- Deadline for Receipt of
Stockholder Proposals" below. The Company did not receive any such nominations
for the Annual Meeting. The Committee held no meetings during the year; nominees
for the Annual Meeting were determined by the full Board.

During fiscal 1999, all directors attended at least 85% of the meetings of
the Board of Directors and Committees of the Board on which they served.

DIRECTORS' COMPENSATION

During fiscal 1999, each non-employee Board member was paid an annual
retainer of $8,000, and $1,000 for each Board or Board Committee meeting
attended, plus expenses.

In addition, non-employee Board members receive automatic option grants
under the 1994 Non-Employee Directors Stock Option Plan (the "Directors Plan").
As of the date of this Proxy, six non-employee Board members were eligible to
participate in the Directors Plan.

During fiscal 1999, Mr. Walske, Dr. Newton, Mr. Jones, Ms. Coleman, Mr.
Bryant and Dr. Somekh each received automatic grants of options to purchase
10,000 shares of Common Stock on February 26, 1999, at an exercise price of
$46.25 per share. Mr. Bryant and Dr. Somekh each received an option to purchase
20,833 shares of Common Stock at an exercise price of $55.125 per share in
connection with their appointment to the Board on January 27, 1999. In addition,
during fiscal 1999, Messrs. Walske, Newton and Jones each received options to
purchase 5,000 shares of Common Stock and Ms. Coleman and Dr. Somekh each
received options to purchase 10,000 shares of Common Stock, for service on Board
Committees, at an exercise price of $46.25. Mr. Bryant also received an option
to purchase 5,000 shares for service on a Board Committee during fiscal 1999 at
an exercise price of $46.875.

During fiscal 1999, Dr. Newton provided consulting services to the Company,
for which he was paid $120,000. Under the Company's agreement with Dr. Newton,
at the Company's request, Dr. Newton provides advice concerning long-term
technology strategy and industry development issues, as well as providing
assistance in identifying opportunities for partnerships with academia.

5
<PAGE> 8

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of December 1, 1999 by (i)
each person known by the Company to own beneficially more than five percent of
the outstanding shares of Common Stock on that date, (ii) each director, (iii)
each of the executive officers named in "-- Executive Compensation -- Summary
Compensation Table" on page 8 and (iv) all directors and current executive
officers as a group.

<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
------------------------
PERCENTAGE
NAME OF BENEFICIAL OWNER(1) NUMBER OWNERSHIP
--------------------------- ---------- ----------
<S> <C> <C>
T. Rowe Price............................................... 9,379,864(2) 13.14%
100 East Pratt Street
Baltimore, Maryland 21202
Putnam Investments.......................................... 6,298,637(2) 8.82%
One Post Office Square
Boston, Massachusetts 02109
Massachusetts Financial Services Company.................... 5,729,476(2) 8.03%
500 Boylston Street, 15th Floor
Boston, Massachusetts 02116
J & W Seligman & Co., Inc................................... 4,156,520(2) 5.82%
100 Park Avenue
New York, NY 10017
Andy D. Bryant.............................................. 35,833(3) *
Raul Camposano.............................................. 30,017(4) *
Chi-Foon Chan............................................... 147,507(5) *
Deborah A. Coleman.......................................... 73,000(6) *
Aart J. de Geus............................................. 737,547(7) *
Harvey C. Jones, Jr......................................... 220,997(8) *
William W. Lattin........................................... 128,937(9) *
A. Richard Newton........................................... 53,078(10) *
Robert Russo................................................ 0(11) 0
Sasson Somekh............................................... 40,833(12) *
Steven C. Walske............................................ 58,200(13) *
All directors and executive officers as a group (18
persons).................................................. 1,773,960(14) 2.49%
</TABLE>

- ---------------
* Less than 1%

(1) The persons named in the table above have sole voting and investment power
with respect to all shares of the Company's Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes of this table.

(2) Based on information that the Company believes to be correct as of
September 1999, but that is not reflected in filings with the Commission.
The Company does not know the extent to which voting or dispositive power
with respect to such shares is shared.

(3) Comprised of options to purchase 35,833 shares of Synopsys Common Stock
exercisable by Mr. Bryant within 60 days of December 1, 1999.

(4) Includes options to purchase 19,973 shares of Synopsys Common Stock
exercisable by Dr. Camposano within 60 days of December 1, 1999.

(5) Includes options to purchase 116,635 shares of Synopsys Common Stock
exercisable by Dr. Chan within 60 days of December 1, 1999.

(6) Comprised of options to purchase 73,000 shares of Synopsys Common Stock
exercisable by Ms. Coleman within 60 days of December 1, 1999.

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<PAGE> 9

(7) Includes options to purchase 450,375 shares of Synopsys Common Stock
exercisable by Dr. de Geus within 60 days of December 1, 1999. Excludes
11,000 shares held by Dr. de Geus' spouse, as to which he disclaims
beneficial ownership.

(8) Includes options to purchase 168,400 shares of Synopsys Common Stock
exercisable by Mr. Jones within 60 days of December 1, 1999.

(9) Includes options to purchase 9,457 shares of Synopsys Common Stock
exercisable by Dr. Lattin within 60 days of December 1, 1999.

(10) Includes options to purchase 53,000 shares of Synopsys Common Stock
exercisable by Dr. Newton within 60 days of December 1, 1999.

(11) Mr. Russo resigned from his position as Senior Vice President, Worldwide
Sales and Services of the Company on November 1, 1999. Shareholdings based
on information that the Company believes to be correct as of December 1,
1999.

(12) Comprised of options to purchase 40,833 shares of Synopsys Common Stock
exercisable by Dr. Somekh within 60 days of December 1, 1999.

(13) Includes options to purchase 58,000 shares of Synopsys Common Stock
exercisable by Mr. Walske within 60 days of December 1, 1999.

(14) Includes options to purchase 1,249,663 shares of Synopsys Common Stock
exercisable by directors and executive officers within 60 days of December
1, 1999. Excludes 11,000 shares held by Dr. de Geus' spouse, as to which he
disclaims beneficial ownership.

7
<PAGE> 10

EXECUTIVE COMPENSATION

Executive Compensation and Other Matters

The following table sets forth the compensation earned by the Company's
Chief Executive Officer and each of the other four most highly compensated
executive officers whose compensation for fiscal 1999 exceeded $100,000 (the
"Named Executive Officers"), for services rendered in all capacities to the
Company during the last three fiscal years.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION($) COMPENSATION:
--------------------------------- SECURITIES
OTHER ANNUAL AWARDS ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND POSITION YEAR SALARY BONUS(1) (1)(2) OPTIONS(#) ($)(3)
----------------- ---- ------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Aart J. de Geus.................. 1999 375,000 681,690 -- 254,700 1,953
Chief Executive Officer and 1998 362,118 391,000 -- 150,000 1,863
Chairman of the Board 1997 299,231 200,363 -- 200,000 1,870
Chi-Foon Chan.................... 1999 375,000 681,690 -- 199,200 1,653
President and 1998 329,615 363,000 -- 125,000 1,758
Chief Operating Officer 1997 281,914 144,441 -- 165,000(4) 2,494
Raul Camposano................... 1999 300,000 300,000 -- 53,000 1,950
Senior Vice President, 1998 271,692 136,600 -- 75,000 1,608
Design Tools Group and Chief 1997 199,808 91,086 -- 106,500(5) 2,071
Technical Officer
William W. Lattin(6)............. 1999 250,000 350,000 -- 37,900 2,700
1998 258,993 250,000 -- 40,000 1,976
1997 201,717 91,818 -- 60,000 2,361
Robert Russo(7).................. 1999 300,000 508,140 251,760 37,200 10,398
1998 289,662 78,820 366,216 30,000 1,805
1997 191,327 160,188 231,600 82,000(8) 3,144
</TABLE>

- ---------------
(1) Includes amounts paid in the subsequent fiscal year in respect of services
rendered (or, in the case of commissions, orders booked) during the fiscal
year for which information is provided.

(2) Represents commissions earned by Mr. Russo for fiscal 1999, 1998 and 1997.

(3) Amounts in this column reflect premiums paid for group term life insurance,
Synopsys 401(k) contributions and, in the case of Mr. Russo only, car
allowances.

(4) Includes options to purchase 75,000 shares which were granted in fiscal 1996
and 1997 and canceled and regranted in fiscal 1997 in connection with an
option repricing.

(5) Includes options to purchase 36,500 shares which were granted in fiscal 1996
and 1997 and canceled and regranted in fiscal 1997 in connection with an
option repricing.

(6) Dr. Lattin resigned from his position as Executive Vice President of the
Company on October 4, 1999.

(7) Mr. Russo resigned from his position as Senior Vice President, Worldwide
Sales and Services of the Company on November 1, 1999.

(8) Includes options to purchase 12,000 shares which were granted in fiscal 1997
in connection with an option repricing.

8
<PAGE> 11

Stock Option Grants

The following table sets forth further information regarding individual
grants of options for Synopsys' Common Stock during fiscal 1999 for each of the
Named Executive Officers. All grants for each of the Named Executive Officers
were made pursuant to Synopsys' 1992 Stock Option Plan (the "1992 Plan"). In
accordance with the rules of the Securities and Exchange Commission, the table
sets forth the hypothetical gains or "option spreads" that would exist for the
options at the end of their respective ten-year terms based on assumed
annualized rates of compound stock price appreciation of 5% and 10% from the
dates the options were granted to the end of the respective option terms. Actual
gains, if any, on option exercises are dependent on the future performance of
Synopsys Common Stock and overall market conditions. There can be no assurance
that the potential realizable values shown in this table will be achieved. No
stock appreciation rights were granted to such officers during fiscal 1999.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE APPRECIATION FOR
SECURITIES OPTIONS GRANTED EXERCISE OR OPTION TERM($)
UNDERLYING TO EMPLOYEES BASE PRICE EXPIRATION -----------------------------
NAME OPTIONS GRANTED(1) FISCAL 1999(2) ($/SHARE) DATE 5% 10%
---- ------------------ --------------- ----------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Aart J. de Geus............ 254,700 5.19 42.50-56.75 10/29/08- 8,090,761 20,503,576
7/28/09
Chi-Foon Chan.............. 199,200 4.06 42.50-56.75 10/29/08- 6,325,076 16,028,985
7/28/09
Raul Camposano............. 53,000 1.08 42.50-56.75 10/29/08- 1,682,953 4,264,935
7/28/09
William W. Lattin(3)....... 37,900 .77 42.50-56.75 10/29/08- 1,203,453 3,049,786
7/28/09
Robert Russo(4)............ 37,200 .76 42.50-56.75 10/29/08- 1,180,459 2,991,514
7/28/09
</TABLE>

- ---------------
(1) Sum of all option grants made during fiscal year to such person. Options
become exercisable ratably in a series of monthly installments over a
four-year period from the grant date, assuming continued service to
Synopsys, subject to acceleration under certain circumstances involving a
change in control of Synopsys. Each option has a maximum term of 10 years,
subject to earlier termination upon the optionee's cessation of service.

(2) Based on aggregate options to acquire 4,905,852 shares of Synopsys Common
Stock granted in fiscal 1999.

(3) Dr. Lattin resigned from his position as Executive Vice President of the
Company on October 4, 1999.

(4) Mr. Russo resigned from his position as Senior Vice President, Worldwide
Sales and Services of the Company on November 1, 1999. At the time of Mr.
Russo's resignation, options to purchase 5,919 shares granted during fiscal
1999 were vested and exercisable; options to purchase the remaining 31,281
shares were unvested and were terminated following his resignation.

9
<PAGE> 12

Option Exercises and Year-End Values

The following table sets forth, for each of the Named Executive Officers,
each exercise of stock options during fiscal 1999 and the year-end value of
unexercised options.

No stock appreciation rights were exercised during such fiscal year by the
Named Executive Officers, and no stock appreciation rights were outstanding at
the end of the fiscal year.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF IN-THE-MONEY
SHARES VALUE OPTIONS AT FY-END OPTIONS AT FY-END($)(2)
ACQUIRED REALIZED ---------------------------- ----------------------------
NAME ON EXERCISE ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Aart J. de Geus........ 5,000 208,281 386,653 419,047 8,629,741 4,949,149
Chi-Foon Chan.......... 114,500 4,078,681 127,347 334,853 2,378,837 4,318,889
Raul Camposano......... 77,531 1,683,618 20,279 143,315 337,879 2,292,253
William W. Lattin(3)... 94,026 2,976,853 52,743 87,579 910,483 1,209,443
Robert Russo(4)........ 55,000 1,460,646 24,058 92,407 437,574 1,413,532
</TABLE>

- ---------------
(1) Market value at exercise less exercise price.

(2) Market value of underlying securities at October 1, 1999 ($56.4063) minus
the exercise price.

(3) Dr. Lattin resigned from his position as Executive Vice President of the
Company on October 4, 1999.

(4) Mr. Russo resigned from his position as Senior Vice President, Worldwide
Sales and Services of the Company on November 1, 1999.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT ARRANGEMENTS AND CHANGE OF
CONTROL AGREEMENTS

Under the 1992 Plan, in the event of certain changes in the ownership or
control of the Company involving a "Corporate Transaction," which includes an
acquisition of the Company by merger or asset sale, all outstanding options
under the 1992 Plan will automatically become exercisable, unless the option is
assumed by the successor corporation (or parent thereof) or replaced by a
comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof).

In addition, in the event of a successful hostile tender offer for more
than 50% of the Company's outstanding Common Stock or a change in the majority
of the Board as a result of one or more contested elections for Board
membership, the Compensation Committee has the authority to provide for the
acceleration of vesting of the shares of Common Stock subject to outstanding
options under the 1992 Plan.

Synopsys has entered into Employment Agreements, effective October 1, 1997,
with its Chief Executive Officer, President and Chief Financial Officer. Each
Employment Agreement provides that if the executive is terminated involuntarily
other than for cause within 24 months of a change of control, (a) the executive
will be paid an amount equal to two times the sum of the executive's annual base
pay plus target cash incentive, plus the cash value of the executive's health
benefits for the next 18 months and (b) all stock options held by the executive
will immediately vest in full. If the executive is terminated involuntarily
other than for cause in any other situation, the executive will receive a cash
payment equal to the sum of the executive's annual base pay for one year plus
target cash incentive for such year, plus the cash value of the executive's
health benefits for twelve months. The terms "involuntary termination," "cause"
and "change of control" are defined in each Employment Agreement.

10
<PAGE> 13

REPORT OF THE COMPENSATION COMMITTEE

The following is the report of the Compensation Committee of the Board of
Directors describing the compensation policies, and the rationale therefor, with
respect to the compensation paid to the Company's executive officers for fiscal
1999.

Executive Compensation

Purpose of the Compensation Committee

The Compensation Committee of the Board of Directors (the "Committee") is
responsible for determining compensation levels for the executive officers for
each fiscal year based upon a consistent set of policies and procedures. The
Committee reviews and approves all executive target compensation (base and
bonus) and the plan by which bonus in excess of target may be paid to executive
officers. In the case of the Company's principal sales executive, the Chief
Executive Officer, President and certain other members of senior management
formulate an individual bonus plan based primarily upon accepted orders for the
Company's products and services and revenues.

Committee Structure

During fiscal 1999 the Committee was made up of three independent,
non-employee members of the Board of Directors: Andy Bryant, Deborah Coleman and
Steven C. Walske. Ms. Coleman and Mr. Walske served as members of the Committee
for the full year, while Mr. Bryant was appointed to the Committee in April
1999. The Committee met during the fourth quarter of fiscal year 1998 to set
executive officer compensation plans for the ensuing fiscal year.

Objectives of the Compensation Plan

The objectives of the compensation program as established by the Committee
are: (1) to provide a means for the Company to attract and retain high-quality
executives; (2) to tie executive compensation directly to the Company's business
and performance objectives; and (3) to reward outstanding individual performance
that contributes to the long-term success of the Company.

Elements of Compensation

Each executive officer's compensation package is comprised of three
elements: (1) base compensation, which reflects individual performance and is
designed primarily to be competitive with salary levels in a comparative group;
(2) variable or bonus compensation payable based on the achievement of financial
performance goals and individual performance; and (3) long-term stock-based
incentive compensation, which rewards Company growth and increased stockholder
value.

Base Compensation. The base compensation for each executive officer is
determined based on consideration of the following factors: (1) salary levels
for comparable positions in software and related companies similar in size and
business that compete with Synopsys in the recruitment and retention of senior
personnel; (2) each executive's past performance relative to corporate, business
group (if applicable) and individual objectives; (3) each executive's
responsibility level and objectives for the subsequent year; and (4)
compensation relative to other executives in the Company.

Information regarding competitive salary ranges for fiscal 1999 was
obtained from an independent compensation survey firm. Some of the companies the
Committee surveyed as part of the peer group for comparative compensation
purposes are included in the S&P Technology Sector Index, which the Company has
selected as the industry index for purposes of the stock price performance graph
that appears later in this Proxy Statement. However, the S&P Technology Sector
Index also includes a significant number of companies that are of greater size
than the Company, participate in different industries than the Company or are
located in different regions from the Company, and use of index companies alone
would have incorrectly affected compensation comparisons. In selecting companies
for compensation comparison purposes, the Committee selected companies that
actually compete with the Company in seeking executive talent.

11
<PAGE> 14

Consequently, some companies included in the compensation comparison survey are
not necessarily included in the S&P Technology Sector Index.

The Company believes that the total cash compensation for the executive
officers of the Company for fiscal 1999 was competitive with the total cash
compensation for executive officers at companies with which the Company competes
for executives.

Variable Compensation. The Company's fiscal 1999 bonus plan approved by the
Committee set forth (1) the size of the aggregate bonus pool for all
non-commissionable employees and executive officers and (2) the amount of
incentive bonus compensation payable to individual executive officers (other
than the Company's principal sales executive) based on the achievement of
specific performance targets relating to accepted orders, revenue and operating
margin for the Company as a whole (and, for officers in business units,
contribution margin). An executive officer's bonus compensation may be increased
based upon a qualitative assessment of his or her performance by the Chairman of
the Board/Chief Executive Officer and President/ Chief Operating Officer, in
consultation with the Board of Directors. The bonuses payable to all such
executive officers, together with bonuses payable to all other
non-commissionable employees as a group, may not exceed the total bonus pool
approved by the Committee. For fiscal 1999, a bonus formula was established such
that achievement of planned levels of accepted orders, revenue, operating margin
and, where applicable, contribution margin would result in a specified bonus
level. For performance levels over or under plan, the bonus compensation amount
would increase or decrease proportionately. In addition, bonuses were subject to
upward or downward adjustment based upon the earnings and revenue growth of the
Company during fiscal 1999 compared to other electronic design automation
companies. For fiscal 1999, accepted orders, revenue and operating margin all
were above the established targets, and contribution margin varied by business
unit. Bonus compensation (except for the qualitative component) was determined
according to the compensation formula and, except for the business unit
component for certain business units, was above the target amount. In addition,
bonuses were adjusted upward as a result of the Company's earnings and revenue
growth during fiscal 1999 as compared to other electronic design automation
companies. Bonus compensation paid to the Company's principal sales executive in
fiscal 1999 was determined under his individual bonus plan and was adjusted
upward as a result of increased orders for the Company's products and services
and revenue during fiscal 1999. Total bonus compensation for the Named Executive
Officers is shown in the Summary Compensation Table on page 8. The Committee
believes that these levels of compensation are a fair reflection of the
performance of the named individuals.

The Company's incentive bonus compensation structure for executive officers
was reviewed for fiscal 2000 and includes specific corporate performance targets
relating to accepted orders, revenue, operating margin and individual
performance, as well as providing for upward or downward adjustments based upon
earnings and revenue growth of the Company during fiscal 2000 compared to other
electronic design automation companies. Bonus compensation for the Company's
principal sales executive will be determined under the individual bonus plan
adopted for such officer.

Long-Term Incentive Compensation. Long-term compensation provided to the
Company's executives has been in the form of stock options. The Committee
believes that equity-based compensation closely aligns the interests of
executive officers with those of stockholders by providing an incentive to
manage the Company with a focus on long-term strategic objectives set by the
Board of Directors relating to growth and stockholder value. Stock options are
granted under the 1992 Plan according to guidelines that take into account the
executive's responsibility level, comparison with comparable awards to
individuals in similar positions in the industry, the Company's long-term
objectives for maintaining and expanding technological leadership through
product development and growth, expected Company performance, the executive's
performance and contribution during the last fiscal year and the executive's
existing holdings of unvested stock options. However, the Committee does not
strictly adhere to these factors in all cases and will vary the size of the
grant made to each executive officer as the particular circumstances warrant.
Each grant allows the officer to acquire shares of the Company's Common Stock at
the fair market value in effect on the date of grant.

The options vest in a series of installments over a four-year period,
contingent upon the executive's continued employment with the Company.
Accordingly, the option will provide a return to the executive only

12
<PAGE> 15

if he or she remains in the Company's employ, and then only if the market price
of the Common Stock appreciates over the option term. Subsequent grants may be
made to officers when the Committee believes that the officer has demonstrated
greater potential, achieved more than originally expected, or assumed expanded
responsibilities. Additionally, subsequent grants may be made to remain
competitive with similar companies.

The Committee evaluated the performance of the executive officers against
the strategic objectives for fiscal 1999 set by the Board and concluded that
such performance warrants the level of long-term compensation awarded them as
set forth in the Summary Compensation Table on page 8. The Committee typically
reexamines long-term compensation levels each year.

Chairman of the Board/Chief Executive Officer's Compensation

Compensation for the Chairman/CEO is determined by a process similar to
that discussed above for executive officers. Dr. de Geus' base compensation for
fiscal 1999 was established by the Committee in July 1998. Dr. de Geus' base
compensation is competitive with base compensation levels for chief executive
officers of the companies with which the Company competes for executives.

As was the case with the other executive officers, Dr. de Geus' bonus was
calculated under a formula based on accepted orders, revenue and operating
margin, and adjusted based on the Company's earnings and revenue growth compared
to other electronic design automation companies. For performance levels over or
under plan, the bonus compensation amount would increase or decrease
proportionately. Dr. de Geus was also eligible for an increased bonus based on a
qualitative assessment of his performance by the Board of Directors. For fiscal
1999, accepted orders, revenue and operating margin all were above the
established target. In addition, Dr. de Geus' bonus was adjusted upward as a
result of the Company's earnings and revenue growth during fiscal 1999 compared
to other electronic design automation companies. Dr. de Geus' bonus compensation
(except for the qualitative component) was determined according to the
compensation formula established at the beginning of the year and is shown in
the Summary Compensation Table on page 8. In determining the amount of long-term
compensation to grant to Dr. de Geus the Committee considered the same factors
used to determine grants for other executive officers set forth above.

The Committee believes that the overall level of compensation is a fair
reflection of Dr. de Geus' performance for the year.

Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code (the "Code") places a $1
million limit on the tax deductibility of cash compensation paid to the five
most highly compensated executive officers of the Company. The Company expects
that a portion of the cash compensation paid to three executive officers in
fiscal 1999 will not qualify for a tax deduction as a result of Section 162(m);
the aggregate amount of such nondeductible compensation is not material to the
Company. Under the 1992 Plan, compensation deemed paid to an executive officer
when he or she exercises an outstanding option under the Plan will qualify as
performance-based compensation which will not be subject to the $1 million
limitation.

COMPENSATION COMMITTEE
Andy D. Bryant
Deborah A. Coleman
Steven C. Walske

COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the members of the Compensation Committee was at any time during
fiscal 1999, or at any other time, an officer or employee of the Company.

13
<PAGE> 16

No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as members of the Company's Board of Directors or the
Compensation Committee.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Andy D. Bryant, a director of the Company, also serves as Senior Vice
President and Chief Financial and Enterprise Services Officer of Intel
Corporation, a customer of the Company. The Company's sales of products and
services to Intel during fiscal 1999 accounted for more than 5% of the Company's
consolidated gross revenues during such fiscal year.

PERFORMANCE GRAPH

The following graph compares the cumulative total return to stockholders of
the Company's Common Stock from September 30, 1994 through September 30, 1999 to
the cumulative total return of (1) the S&P 500 Index and (2) the S&P Technology
Sector Index over the same period (assuming the investment of $100 in the
Company's Common Stock and in each of the other indices, and reinvestment of all
dividends). This section shall not constitute "soliciting material" nor shall it
be deemed "filed" with the SEC, and is not to be incorporated by reference in
any filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG SYNOPSYS, INC., THE S&P 500 INDEX
AND THE S&P TECHNOLOGY SECTOR INDEX

<TABLE>
<CAPTION>
S&P TECHNOLOGY
SYNOPSYS, INC. S&P 500 SECTOR
-------------- ------- --------------
<S> <C> <C> <C>
9/94 100 100 100
9/95 136 126 156
9/96 204 149 191
9/97 188 205 309
9/98 147 220 348
9/99 248 277 607
</TABLE>

- ---------------
* $100 INVESTED ON 9/30/94 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30, 1999.

14
<PAGE> 17

PROPOSAL TWO -- AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

The Board of Directors is requesting stockholder approval of an amendment
to the Company's Amended and Restated Certificate of Incorporation to increase
the number of shares of Common Stock authorized for issuance from 200,000,000 to
400,000,000 (and a concomitant increase in the total number of shares authorized
for issuance from 202,000,000 to 402,000,000).

As a result of the share issuances resulting from corporate acquisitions,
exercises of options by employees and purchases from the Company's employee
stock purchase plans, 70,243,885 of the Company's 200,000,000 authorized shares
of Common Stock were issued and outstanding as of the record date, January 5,
2000. An additional 12,181,329 shares of Common Stock were reserved for issuance
upon exercise of outstanding vested and unvested stock options as of January 5,
2000. The Board of Directors considers it advisable to have additional shares
available for issuance under the Company's employee benefit plans, for possible
future stock dividends or stock splits and for other corporate purposes.

If this amendment is adopted, the additional shares of Common Stock may be
issued by direction of the Board of Directors at such times, in such amounts and
upon such terms as the Board of Directors may determine, without further
approval of the stockholders unless, in any specific instances, such approval is
expressly required by regulatory agencies or otherwise. Approval of the
amendment could have an anti-takeover effect, in that additional shares could be
issued (within the limits imposed by applicable law) in one or more transactions
that could make a change in control or takeover of the Company more difficult.
For example, additional shares could be issued by the Company to persons who
might side with the Board of Directors in opposing a takeover bid that the Board
determines is not in the best interests of the Company and its stockholders.
Such an issuance could diminish the voting power of existing stockholders who
favor a change in control, and the ability to issue the shares could discourage
an attempt to acquire control of the Company. While it may be deemed to have
potential anti-takeover effects, the proposed amendment is not prompted by any
specific effort or takeover threat currently perceived by management. In
addition, the issuance of additional shares of Common Stock would dilute the
existing stockholders' equity interest in the Company. The Company has no
present plans which would result in the issuance of a material number of new
shares of Common Stock, except through the Company's employee benefit plans.

Stockholders of the Company have no preemptive rights to purchase
additional shares. The adoption of the amendment will not of itself cause any
change in the capital accounts of the Company.

The affirmative vote of a majority of the shares of Common Stock entitled
to vote on this proposal at the Annual Meeting is required for approval of the
amendment.

RECOMMENDATION

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION.

PROPOSAL THREE -- AMENDMENT TO THE
EMPLOYEE STOCK PURCHASE PLANS

PROPOSED AMENDMENT

At the Annual Meeting, the Company's stockholders will be asked to approve
an increase in the total number of shares authorized under the Employee Stock
Purchase Plan and International Employee Stock Purchase Plan (the "Plans") by
1,200,000 shares.

EXPLANATION

The Plans permit employees of the Company and its subsidiaries to purchase
the Company's Common Stock at a discounted price. The Plans are designed to
encourage and assist a broad spectrum of employees of

15
<PAGE> 18

the Company and its subsidiaries to acquire an equity interest in the Company
through the purchase of Common Stock. The Plans also are intended to provide to
United States employees participating in the Plans the tax benefits available
under Section 421 of the Code. As of October 29, 1999, the last purchase date
under the Plans, approximately 2,146 of approximately 2,987 eligible employees
were participants in the Plans.

Management believes that maintaining a competitive employee stock purchase
program is an important element in recruiting and retaining employees. The Plans
are designed to more closely align the interests of employees and shareholders
by encouraging employees to invest in the Company's securities, and to help
employees share in the Company's success. Employee stock purchase plan gains
have become an important part of overall compensation of employees.

The Company is requesting authorization of additional shares under the
Plans in order to preserve the current benefits of the Plans for employees and
favorable accounting treatment for the Company. The Plans currently provide for
enrollment periods of 24 months as described under "Description of Plans." Under
current accounting rules, if (i) at the start of an enrollment period, the
shares reserved for issuance under an employee stock purchase plan are
insufficient to cover all shares issuable throughout that period, (ii) any
shares sold during an enrollment period are authorized after the commencement of
the enrollment period and (iii) on the authorization date the fair market value
("FMV") of the Common Stock is higher than the FMV at the beginning of the
enrollment period, then the Company would be required to record a charge to
earnings, which could be significant, for each subsequent quarter when the FMV
on each semi-annual purchase date during the 24 month enrollment period was
above the FMV on the enrollment date, to reflect the perceived compensatory
element of the difference in FMV.

The Company estimates, based on certain assumptions it considers
reasonable, that enough shares are available under the Plans to cover purchases
under the Plans by all current participants in all current 24-month enrollment
periods. However, the Company believes that, under certain circumstances, it
will need additional shares to cover purchases under the Plans by participants
who may enroll in enrollment periods commencing between the Annual Meeting and
the expected date of the 2001 Annual Meeting. Consequently, the Board of
Directors has adopted, subject to stockholder approval, an amendment to the
Plans to increase the aggregate number of shares issuable under the Plans by
1,200,000 shares in order to avoid any potential charge to earnings caused by a
share shortfall discussed above. The Company believes that the assumptions it
has used in estimating the need for additional shares are reasonable. Some of
these assumptions, however, are based on factors that cannot be precisely
predicted, including the future number of the Company's employees, the future
price of the Company's Common Stock, the Company's overall salary levels and the
participation rate in the Plans.

Approval of the amendment to the Plans requires the affirmative vote of a
majority of the votes cast at a duly held stockholders' meeting at which there
is a quorum.

RECOMMENDATION

As stated above, the Board of Directors believes that the proposed
amendment to the Plans is important for employee retention and in the best
interests of the Company and of its stockholders. ACCORDINGLY, THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE IN SHARES ISSUABLE
UNDER THE PLANS.

DESCRIPTION OF PLANS

The following is a summary of the principal features of the Plans. The
summary, however, does not purport to be a complete description of all of the
provisions of the Plans. Any stockholder who wishes to obtain a copy of the
actual plan documents may do so by written request to the Company's Secretary at
the Company's executive offices.

All regular employees, including executive officers and directors who are
employees, customarily employed more than 20 hours per week and more than five
months per year by the Company or a participating subsidiary, are eligible to
participate in the Plans as of the first enrollment date following employment.
Participants may elect to make contributions up to a maximum of 10% of base
earnings. On the last trading

16
<PAGE> 19

date of each semi-annual purchase period, the Company applies the funds then in
each participant's account to the purchase of shares. The purchase dates are the
last trading day of February and August. The cost of each share purchased is 85%
of the lower of the closing prices for the Company's Common Stock on (i) the
first trading day in the enrollment period in which the purchase is made and
(ii) the purchase date. The closing price of the Company's Common Stock as
reported on the Nasdaq National Market on December 31, 1999 was $66.75 per
share. The length of each enrollment period may not exceed 24 months. A new six
month offering period within each 24-month enrollment period commences each
March 1 and September 1. Enrollment dates are the first business day of March
and September, except that the enrollment dates for enrollment periods
commencing before March 1, 2000 were the first business days of May and
November. Under the Plans, the maximum amount of payroll deductions by a
participant during any semi-annual purchase period is $7,500, and no
participant's right to acquire shares may accrue at a rate exceeding $25,000 of
fair market value of Common Stock (determined as of the first business day in an
enrollment period) in any calendar year. No single participant may acquire more
than 2,000 shares, and all participants may not acquire more than 500,000 shares
in the aggregate, on any semi-annual purchase date.

The Plans are administered by the Compensation Committee, but routine
matters are delegated to management. The Board of Directors may amend or
terminate the Plans at any time and may provide for an adjustment in the
purchase price and the number and kind of securities available under the Plans
in the event of a reorganization, recapitalization, stock split, or other
similar event. Amendments that would increase the number of shares reserved for
purchase or that may be purchased by participants during any semi-annual
purchase period, alter the purchase price formula to reduce the purchase price
for shares under the Plans, materially increase the benefits to participants or
materially modify the requirements for participation under the Plans also
require stockholder approval. Shares available under the Plans may be either
outstanding shares repurchased by the Company or newly issued shares.

FEDERAL INCOME TAX CONSEQUENCES

In general, participants who are citizens or residents of the United States
("U.S. Participants") will not have taxable income or loss under the Plans until
they sell or otherwise dispose of shares acquired under the Plans (or die
holding such shares). If the shares are held, as of the date of sale or
disposition, for longer than both (i) two years after the beginning of the
enrollment period during which the shares were purchased, and (ii) one year
following purchase, a U.S. Participant will have taxable ordinary income equal
to 15% of the fair market value of the shares on the first day of the enrollment
period (but not in excess of the gain on the sale). Any additional gain from the
sale will be long-term capital gain. The Company is not entitled to an income
tax deduction if the holding periods are satisfied.

If the shares are disposed of within either of the foregoing holding
periods (a "disqualifying disposition"), a U.S. Participant will have taxable
ordinary income equal to the excess of the fair market value of the shares on
the purchase date over the purchase price. In addition, the U.S. Participant
will have taxable capital gain (or loss) measured by the difference between the
sale price and the U.S. Participant's purchase price plus the amount of ordinary
income recognized, which gain (or loss) will be long-term if the shares have
been held, as of the date of sale, for more than one year. The Company is
entitled to an income tax deduction equal to the amount of ordinary income
taxable to a U.S. Participant in a disqualifying disposition.

Special rules may apply to U.S. Participants who are directors or officers.
The consequences to non-U.S. Participants are governed by foreign laws, which
typically do not offer the same tax advantages as United States law.

17
<PAGE> 20

PLAN BENEFITS TABLE

The following table shows the "Dollar Value" and number of shares purchased
under the Plans by each of the Named Executive Officers and the groups listed
below during fiscal 1999. The "Dollar Value" is the difference between the fair
market value of the stock at the date of purchase and the participant's purchase
price for the stock.

PLAN BENEFITS
EMPLOYEE STOCK PURCHASE PLAN
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN(1)

<TABLE>
<CAPTION>
NUMBER OF DOLLAR
NAME SHARES PURCHASED VALUE($)
---- ---------------- ---------
<S> <C> <C>
Aart J. de Geus............................................. 504 8,311
Chief Executive Officer and Chairman of the Board
Chi-Foon Chan............................................... 504 8,311
President and Chief Operating Officer
Raul Camposano.............................................. 479 7,922
Senior Vice President, Design Tools Group and Chief
Technical Officer
William W. Lattin(2)........................................ 504 8,311
Robert Russo(3)............................................. 504 8,311
Executive Officers as a group (11 persons).................. 4,965 73,076
Non-employee directors as a group........................... --(4) --
Non-executive officer employees as a group.................. 455,473(5) 6,623,498
</TABLE>

- ---------------
(1) Future benefits or amounts received cannot be calculated as they are
dependent on each individual's decision as to the amount of salary to be
deducted for stock purchases and the stock price in effect at the time of
purchase.

(2) Dr. Lattin resigned from his position as Executive Vice President of the
Company on October 4, 1999.

(3) Mr. Russo resigned from his position as Senior Vice President, Worldwide
Sales and Services of the Company on November 1, 1999.

(4) Non-employee directors are not eligible to participate in the Plans.

(5) Represents all employees other than the executive officers of the Company.

PROPOSAL FOUR -- AMENDMENT
TO THE 1992 STOCK OPTION PLAN
TO INCREASE INDIVIDUAL OPTION LIMIT

PROPOSED AMENDMENT

At the Annual Meeting, the Company's stockholders will be asked to approve
an amendment to the Company's 1992 Stock Option Plan (the "1992 Plan") to change
the limit on the number of options and/or stock appreciation rights that may be
granted to any one individual from 1,000,000 during the term of the 1992 Plan to
750,000 annually, except in the case of an individual's initial employment with
the Company, in which case such individual may be granted an additional 250,000
options and/or appreciation rights (the "Share Limit Amendment").

EXPLANATION

The Company's success depends in large part on its ability to attract,
retain, and motivate its executive officers and other key personnel. Stock
options are a significant element of compensation for such persons, as they are
for executives in the software industry generally. Options benefit the Company
in a number of ways, including by tying compensation to the Company's
performance, conserving cash and reducing fixed costs. In

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<PAGE> 21

addition, the exercise of options increases the Company's capital and the
Company is entitled to a tax deduction upon the exercise of nonstatutory options
or the disqualifying disposition of incentive stock options.

The 1992 Plan currently limits to 1,000,000 the number of options and/or
stock appreciation rights that may be granted to any person during the life of
the 1992 Plan. This limit, adopted in October 1994 in response to a change in
federal tax laws, was implemented in order to preserve the Company's ability to
obtain a federal income tax deduction for compensation granted to its top five
most highly compensated executive officers. However, because the limit is based
on the total number of options granted to one person during the life of the 1992
Plan, the limitation may prevent the Company from granting additional options
under the 1992 Plan to officers who have been with the Company for long periods
of time, including the Chairman/Chief Executive Officer and President/Chief
Operating Officer. This could harm the Company's ability to retain such
personnel and attract new key officers.

Based on a review of the option plans in effect at the companies with whom
the Company competes for executive talent and a sample of other technology
companies similar in size to the Company, the Board of Directors has concluded
an annual share limit, rather than one for the life of the 1992 Plan, would
allow the Company to comply with the rules for tax deductibility of executive
compensation while giving it more flexibility to grant stock options as needed
in order to attract and retain key executives. The Board of Directors believes
the proposed option and stock appreciation right limit is within the range of
limits competitors and other technology companies have implemented in their
option plans, and that the Company's proposed option limit should prevent the
Company from being disadvantaged in its efforts to attract and retain
executives. Consequently, the Board of Directors has adopted, subject to
stockholder approval, the Share Limit Amendment.

Approval of the Share Limit Amendment requires the affirmative vote of a
majority of the votes cast at a duly held stockholders' meeting at which there
is a quorum.

RECOMMENDATION

As stated above, the Board of Directors believes that the proposed
amendment is important to attract and retain key executives of the Company.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SHARE
LIMIT AMENDMENT.

DESCRIPTION OF 1992 PLAN

GENERAL

The purpose of the 1992 Plan is to attract and retain the best available
personnel for positions of substantial responsibility with the Company, to
provide additional incentive to the officers, key employees and consultants of
the Company and to promote the success of the Company's business. Options
granted under the 1992 Plan may be either "incentive stock options," as defined
in Section 422 of the Code, or nonstatutory stock options. The 1992 Plan also
permits the grant of stock appreciation rights.

NUMBER OF SHARES ISSUABLE UNDER PLAN

The total number of shares of the Company's Common Stock issuable over the
term of the 1992 Plan may not exceed 17,767,142 shares, of which as of December
31, 1999, options in respect of 3,700,271 shares were available for issuance.
The Board has approved, subject to stockholder approval at the Annual Meeting,
an increase in the number of shares reserved for issuance under the 1992 Plan by
1,000,000 shares per year on the dates of the 2000, 2001 and 2002 Annual
Meetings of Stockholders. See "PROPOSAL FIVE-AMENDMENT TO THE 1992 STOCK OPTION
PLAN TO INCREASE NUMBER OF AUTHORIZED SHARES AND EXTEND TERM." In no event may
the maximum number of shares which may be

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<PAGE> 22

issued pursuant to incentive options granted under the 1992 Plan on or after
October 2, 1994 exceed 16,000,000 shares, subject to adjustment for changes in
capitalization, as set forth below. If an option expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an option repricing, the unpurchased shares which were subject thereto shall
become available for future grant or sale under the 1992 Plan. Shares that have
actually been issued under the 1992 Plan shall not be returned to the 1992 Plan
and shall not become available for future distribution under the 1992 Plan.

ADMINISTRATION

The 1992 Plan may generally be administered by the Board or a Committee
appointed by the Board (as applicable, the "Administrator"). The Plan is
currently administered by the Compensation Committee of the Board. The
Administrator may make any determinations deemed necessary or advisable for the
1992 Plan.

ELIGIBILITY

Nonstatutory stock options may be granted under the 1992 Plan to officers,
key employees, consultants and other independent advisors of the Company or any
parent or subsidiary of the Company. Incentive stock options may be granted only
to employees. Non-employee directors are not eligible to receive options under
the 1992 Plan. The Administrator, in its discretion, selects the persons to whom
options may be granted, the time or times at which such options and stock
purchase rights shall be granted, and the number of shares subject to each such
grant.

LIMITATIONS

Section 162(m) of the Code places limits on the deductibility for federal
income tax purposes of compensation paid to certain executive officers of the
Company. In order to preserve the Company's ability to deduct the compensation
income associated with options granted to such persons, the 1992 Plan, as
proposed to be amended, provides that no individual may be granted, in any
fiscal year of the Company, options and/or stock appreciation rights to purchase
more than 750,000 shares of Common Stock, except in the case of an individual's
initial employment with the Company, in which case the individual may be granted
options and/or stock appreciation rights to purchase an additional 250,000
shares.

TERMS AND CONDITIONS

Each option is evidenced by a stock option agreement between the Company
and the optionee, and is subject to the following additional terms and
conditions:

(a) Exercise Price. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an
incentive stock option may not be less than 100% of the fair market value
of the Common Stock on the date such option is granted. The fair market
value of the Common Stock is generally the closing sale price for the
Common Stock on the date of grant.

(b) Exercise of Option; Form of Consideration. The Administrator
determines when options become exercisable. The 1992 Plan permits payment
of the exercise price of options to be made by cash, check, other shares of
Common Stock of the Company (with some restrictions), cashless exercise, or
any combination thereof.

(c) Term of Option. The term of an option may be no more than ten (10)
years from the date of grant. No option may be exercised after the
expiration of its term.

(d) Termination of Employment. If an optionee's employment or
consulting relationship terminates for any reason (including death or
disability), then all options held by the optionee under the 1992 Plan
expire on the earlier of (i) the date set forth in his or her notice of
grant or (ii) the expiration date of such option. The 1992 Plan and the
option agreement may provide for a longer period of time for the option to
be exercised after the optionee's death or disability than for other
terminations. The optionee (or the optionee's estate or the person who
acquires the right to exercise the option by bequest or inheritance) may
exercise his or her option, but only to the extent the option is
exercisable at the time of

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<PAGE> 23

such termination. However, should an optionee be terminated for misconduct
including, but not limited to, any act of dishonesty, willful misconduct,
fraud or embezzlement or an optionee makes an unauthorized use or
disclosure of confidential information or trade secrets of the Company,
then in any such event all outstanding options held by such optionee shall
terminate immediately and cease to be exercisable.

The Company has discretion to permit options to be exercised, during
the limited period of exercisability following termination, for shares that
were not vested at the time of termination.

(e) Non-transferability of Options. Unless otherwise determined by the
Administrator, options granted under the 1992 Plan are not transferable
other than by will or the laws of descent and distribution, and may be
exercised during the optionee's lifetime only by the optionee.

(f) Other Provisions. The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the 1992 Plan as may
be determined by the Administrator.

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

In the event that the stock of the Company changes by reason of any stock
split, reverse stock split, stock dividend, combination, reclassification or
other similar change in the capital structure of the Company effected without
the receipt of consideration, appropriate adjustments shall be made in the
number and class of shares of stock subject to the 1992 Plan, the number and
class of shares of stock subject to any option outstanding under the 1992 Plan,
and the exercise price of any such outstanding option.

STOCK APPRECIATION RIGHTS

The Administrator may in its discretion implement a stock appreciation
rights program by which one or more optionees may be granted the right to
surrender their options to the Company in exchange for a payment in cash, stock
or both, for the difference between the fair market value of the vested shares
under such option at the time of surrender less the aggregate exercise price for
such shares. The Company currently has no outstanding stock appreciation rights.

AMENDMENT AND TERMINATION OF THE PLAN

The Board may amend the 1992 Plan or any part thereof in its discretion.
However, the Company shall obtain stockholder approval for any amendment to the
Plan that would materially increase the maximum number of shares under the 1992
Plan or materially modify the eligibility requirements for participation in the
1992 Plan. No such action by the Board may alter or impair the rights of any
optionee without the consent of the optionee. Unless terminated earlier, the
1992 Plan shall terminate in January 2002 with respect to future grants. The
Board has approved an amendment extending the term of the 1992 Plan from January
2002 until January 2007, subject to stockholder approval at the Annual Meeting.
See "PROPOSAL FIVE-AMENDMENT TO THE 1992 STOCK OPTION PLAN TO INCREASE NUMBER OF
AUTHORIZED SHARES AND EXTEND TERM."

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<PAGE> 24

FEDERAL INCOME TAX CONSEQUENCES

Incentive Stock Options

An optionee who is granted an incentive stock option does not recognize
taxable income at the time the option is granted or upon its exercise, although
the exercise is an adjustment item for alternative minimum tax purposes and may
subject the optionee to the alternative minimum tax. Upon a disposition of the
shares more than two years after grant of the option and one year after exercise
of the option, any gain or loss is treated as long-term capital gain or loss.
Net capital gains on shares held more than 12 months may be taxed at a maximum
federal rate of 20%. Capital losses are allowed in full against capital gains
and up to $3,000 against other income. If these holding periods are not
satisfied, the optionee recognizes ordinary income at the time of disposition
equal to the difference between the exercise price and the lower of (i) the fair
market value of the shares at the date of the option exercise or (ii) the sale
price of the shares. Any gain or loss recognized on such a premature disposition
of the shares in excess of the amount treated as ordinary income is treated as
long-term or short-term capital gain or loss, depending on the holding period. A
different rule for measuring ordinary income upon such a premature disposition
may apply if the optionee is also an officer, director, or 10% stockholder of
the Company. Unless limited by Section 162(m) of the Code, the Company is
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee.

Nonstatutory Stock Options

An optionee does not recognize any taxable income at the time he or she is
granted a nonstatutory stock option. Upon exercise, the optionee recognizes
taxable income generally measured by the excess of the then fair market value of
the shares over the exercise price. Any taxable income recognized in connection
with an option exercise by an employee of the Company is subject to tax
withholding by the Company. Unless limited by Section 162(m) of the Code, the
Company is entitled to a deduction in the same amount as the ordinary income
recognized by the optionee. Upon a disposition of such shares by the optionee,
any difference between the sale price and the optionee's exercise price, to the
extent not recognized as taxable income as provided above, is treated as capital
gain or loss. Net capital gains on shares held more than 12 months may be taxed
at a maximum federal rate of 20%. Capital losses are allowed in full against
capital gains and up to $3,000 against other income.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF OPTIONS
UNDER THE 1992 PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS
THE TAX CONSEQUENCES OF DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY
MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE EMPLOYEE OR CONSULTANT MAY
RESIDE.

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<PAGE> 25

PLAN BENEFITS TABLE

The table below shows, as to each of the Named Executive Officers and the
various indicated groups, the number of options to purchase Common Stock of the
Company granted under the 1992 Plan during fiscal 1999, together with the
weighted average exercise price payable per share.

PLAN BENEFITS
1992 STOCK OPTION PLAN

<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
NAME OPTIONS GRANTED EXERCISE PRICE($)
---- --------------- ------------------
<S> <C> <C>
Aart J. de Geus............................................. 254,700 50.5106
Chief Executive Officer and Chairman of the Board
Chi-Foon Chan............................................... 199,200 50.4892
President and Chief Operating Officer
Raul Camposano.............................................. 53,000 50.4915
Senior Vice President, Design Tools Group and Chief
Technical Officer
William W. Lattin(1)........................................ 37,900 50.4908
Robert Russo(2)............................................. 37,200 50.4580
Executive Officers as a group (11 persons).................. 642,300 50.4942
Non-employee directors as a group........................... --(3) --
Non-executive officer employees as a group.................. 348,900(4) 49.7203
</TABLE>

- ---------------
(1) Dr. Lattin resigned from his position as Executive Vice President of the
Company on October 4, 1999.

(2) Mr. Russo resigned from his position as Senior Vice President, Worldwide
Sales and Services of the Company on November 1, 1999.

(3) Non-employee directors are not eligible to participate in the 1992 Stock
Option Plan.

(4) Represents all employees other than the executive officers of the Company.

PROPOSAL FIVE -- AMENDMENT TO THE 1992 STOCK OPTION PLAN
TO INCREASE NUMBER OF AUTHORIZED SHARES AND EXTEND TERM

At the Annual Meeting, the Company's stockholders will be asked to approve
an amendment to the 1992 Plan to (i) increase the number of shares authorized
for issuance under the 1992 Plan by 1,000,000 shares per year on the dates of
the 2000, 2001 and 2002 Annual Meetings of Stockholders and (ii) extend the term
of the 1992 Plan from January 2002 until January 2007 (the "Share Increase and
Term Amendment").

EXPLANATION

As noted above, the Company's success depends in large part on its ability
to attract, retain, and motivate its executive officers and other key personnel.
Stock options are a significant element of compensation for such persons, as
they are for executives in the software industry generally. Options benefit the
Company in a number of ways, including by tying compensation to the Company's
performance, conserving cash and reducing fixed costs. In addition, the exercise
of options increases the Company's capital and the Company is entitled to a tax
deduction upon the exercise of nonstatutory options or the disqualifying
disposition of incentive stock options.

The purpose of the 1992 Plan is to attract and retain the best available
executive officers and other key personnel. Competition for such persons is
intense and the Company believes an attractive option package is a material
inducement to attract and retain such persons. Since adoption of the 1998
Nonstatutory Stock Option Plan in January 1998, the Company's practice has been
to use the 1992 Plan to grant options primarily to executive officers; the
Company expects to continue this practice in the future. The Company typically
grants options to the rest of its employees under the 1998 Nonstatutory Stock
Option Plan.

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<PAGE> 26

In March 1996, the Company's stockholders approved increases in the number
of shares authorized for issuance under the 1992 Plan on the first day of each
of fiscal 1997, 1998 and 1999, in each case in an amount equal to 5% of the
number of shares of Common Stock and Common Stock equivalents outstanding on the
first day of such fiscal years. The last of these increases took place on
October 1, 1998. As of December 31, 1999, options to purchase an aggregate of
6,674,949 shares were outstanding under the 1992 Plan and options to purchase
7,391,922 shares had been exercised under the 1992 Plan. There were 3,700,271
shares available for future grants under the 1992 Plan, including the last 5%
automatic increase effective October 1, 1998.

In December 1999, the Board approved the Share Increase and Term Amendment,
with the goals of continuing to enable the Company to continue to attract and
retain high quality employees in a highly competitive market and of more closely
aligning the interests of employees and other service providers with those of
the Company's stockholders.

In addition, the 1992 Plan will terminate as to future grants in January
2002. In order to permit the proposed increases under the 1992 Plan through 2002
as proposed, and to permit such additional shares to be granted, the Share
Increase and Term Amendment also extends the term of the 1992 Plan until January
2007.

Approval of the Share Increase and Term Amendment requires the affirmative
vote of a majority of the votes cast at a duly held stockholders' meeting at
which there is a quorum.

RECOMMENDATION

The Board of Directors believes that the Share Increase and Term Amendment
is in the best interests of the Company, its stockholders and its employees.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SHARE
INCREASE AND TERM AMENDMENT.

DESCRIPTION OF THE 1992 PLAN

The 1992 Plan is summarized above in "PROPOSAL FOUR -- AMENDMENT TO THE
1992 STOCK OPTION PLAN TO INCREASE INDIVIDUAL OPTION LIMIT -- DESCRIPTION OF
1992 PLAN."

PROPOSAL SIX -- RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS

The Board of Directors has appointed the firm of KPMG LLP, independent
auditors, to audit the financial statements of the Company for fiscal 2000. KPMG
LLP has audited the Company's consolidated financial statements since fiscal
1992.

A representative of KPMG LLP is expected to be present at the Annual
Meeting, will have the opportunity to make a statement if he or she desires to
do so, and will be available to respond to appropriate questions.

In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Ratification of the appointment of KPMG
LLP requires the affirmative vote of a majority of the votes cast at a duly held
stockholders meeting at which there is a quorum.

RECOMMENDATION

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF KPMG LLP TO SERVE AS THE COMPANY'S INDEPENDENT
AUDITORS FOR FISCAL 2000.

ADDITIONAL INFORMATION

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors, officers and greater than ten percent
beneficial owners of its stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission").
Directors, officers and greater than ten percent stockholders are required by
Commission regulations to furnish the Company with copies of all Section 16(a)
forms they file.

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<PAGE> 27

Based solely on its review of the copies of the Forms 3, 4 and 5 received
by the Company and/or written representations from certain reporting persons
that no Form 5 reports were required for such persons, the Company believes that
each of its directors, officers and greater than ten percent beneficial owners
of its stock during the fiscal year ended September 30, 1999 have complied with
all filing requirements applicable to such persons, except: (a) due to a
clerical error on the part of the Company, a Form 5 relating to the grant of an
option to Andy D. Bryant, a director, was filed late and (b) Robert Russo,
former Senior Vice President, Worldwide Sales and Services of the Company, filed
a Form 5, reporting a purchase of shares late.

CORPORATE ANNUAL SUMMARY AND ANNUAL REPORT ON FORM 10-K

A copy of the Company's Corporate Annual Summary and Annual Report on Form
10-K for fiscal 1999 has been mailed concurrently with this Proxy Statement to
all stockholders entitled to notice of and to vote at the Annual Meeting. The
Corporate Annual Summary is not incorporated into this Proxy Statement and shall
not be considered proxy solicitation material.

DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS

The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
Proxy to vote the shares they represent as the Board of Directors may recommend.
Discretionary authority with respect to such other matters is granted by the
execution of the enclosed Proxy.

Stockholders of the Company that intend to present one or more proposals at
the Company's 2001 Annual Meeting of Stockholders, including nominations to the
Board of Directors of persons other than those nominated by the Board, must
notify the Company no later than September 28, 2000 in order that they may be
timely under the Company's Bylaws and may be included in the proxy statement and
proxy relating to that meeting; provided that in the event the date of the
Company's 2001 Annual Meeting of Stockholders is changed by more than 30 days,
such notice must be delivered to the Company a reasonable time before the
solicitation is made. A stockholder's notice to the Company must include, with
respect to each matter the stockholder proposes to bring before the annual
meeting: (i) a brief description of the matter and the reasons for conducting
such business at the annual meeting, (ii) the name and address of the
stockholder, as they appear on the Company's books, (iii) the number of shares
beneficially owned by the stockholder, (iv) any material interest of the
stockholder in the proposal and (v) any other information that is required to be
provided by the stockholder pursuant to Regulation 14A under the 1934 Act.
Nominations of persons to the Board of Directors must include, with respect to
each nomination and the nominating stockholder, (A) the name, age, business
address and residence address of such person, (B) the principal occupation or
employment of such person, (C) the class and number of shares of the Company
which are beneficially owned by such person, (D) a description of all
arrangements or understandings between the stockholder and each nominee and
other person or persons (naming such person or persons) pursuant to which the
nominations are to be made by the stockholder and (E) any other information
relating to such person that is required to be disclosed in solicitations of
proxies for elections of directors, or is otherwise required under the 1934 Act.

Notwithstanding the foregoing, the stockholder must also provide notice as
required by the 1934 Act and the applicable regulations thereunder. The chairman
of the Annual Meeting may determine, if the facts warrant, that a matter has not
been properly brought before the meeting and, therefore, may not be considered
at the meeting.

THE BOARD OF DIRECTORS
Dated: January 26, 2000

25
<PAGE> 28
Proxy

Synopsys, Inc.

Annual Meeting of Stockholders, March 3, 2000

This proxy is solicited on behalf of the board of directors of Synopsys, Inc.

The undersigned revokes all previous proxies, acknowledges receipt of the Notice
of Annual Meeting of Stockholders to be held March 3, 2000 and the Proxy
Statement and appoints Aart J. De Geus and Chi-Foon Chan, and each of them
individually, the proxy of the undersigned, with full power of substitution, to
vote all shares of Common Stock of Synopsys, Inc. (the "Company") that the
undersigned is entitled to vote, either on his or her own behalf or on behalf of
any entity or entities, at the Annual Meeting of Stockholders of the Company to
be held at the Company's offices at 700 East Middlefield Road, Mountain View,
California on Friday, March 3, 2000 at 4:00 p.m., and at any adjournment or
adjournments thereof, with the same force and effect as the undersigned might or
could do if personally present. The shares represented by the proxy shall be
voted in the manner as set forth on the reverse side.

- -------------- ------------
see reverse continued and to be signed on reverse side see reverse
side side
- -------------- ------------

[x] Please mark votes as in this example.

The Board of Directors recommends a vote for each of the directors
listed below and a vote for the other proposals. This proxy, when
properly executed, will be voted as specified below. This proxy will be
voted for the election of the directors listed below and for the other
proposals if no specification is made.

1. To elect nine directors to serve for the ensuing year or until their
successors are elected.

Nominees: Aart J. De Geus, Andy D. Bryant, Chi-Foon Chan, Deborah A.
Coleman, Harvey C. Jones, Jr., William W. Lattin, A. Richard Newton,
Sasson Somekh, Steven C. Walske

For Withheld
All [ ] [ ] From All
Nominees Nominees

[ ] Mark here
for address [ ]
-------------------------------------- change and
for all nominees except as noted above note below

2. To approve an amendment to the Company's For Against Abstain
Amended and Restated Certificate of [ ] [ ] [ ]
Incorporation to increase the number of
shares of Common Stock that the Company is
authorized to issue from 200,000,000 to
400,000,000.

3. To approve an amendment to the Company's For Against Abstain
Employee Stock Purchase Plan and [ ] [ ] [ ]
International Employee Stock Purchase Plan
to increase the number of shares of Common
Stock reserved for issuance thereunder by
1,200,000 shares.
<PAGE> 29

4. To approve an amendment to the Company's For Against Abstain
1992 Stock Option Plan (the "1992 Plan") [ ] [ ] [ ]
to change the limit on the number of
options and/or stock appreciation rights
that may be granted to any one individual
from 1,000,000 during the term of the 1992
plan to 750,000 annually, except in the
case of an individual's initial employment
with the Company, in which case the
individual may be granted an additional
250,000 options and/or stock appreciation
rights.

5. To approve an amendment to the 1992 Plan For Against Abstain
to (i) increase the number of shares of [ ] [ ] [ ]
Common Stock authorized for issuance
thereunder by 1,000,000 shares per year on
the dates of the 2000, 2001 and 2002
annual meetings of stockholders and (ii)
extend the term of the 1992 plan from
January 2002 until January 2007.

6. To ratify the appointment of KPMG LLP as For Against Abstain
independent auditors of the Company for [ ] [ ] [ ]
fiscal 2000.

7. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.

Please sign exactly as name appears at left. when shares are held by
joint tenants both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or
other authorized officer. If a partnership, please sign in partnership
name by an authorized person.

Signature: Date: Signature: Date:
------------ ----------- ------------ -----------