Synopsys, Inc. provides electronic design automation software used to design complex integrated circuits and systems-on-chips in the global semiconductor and electronics industries. The Company also provides intellectual property and design services to simplify the design process and to accelerate time to market for its customers.

The Complaint was filed charging Synopsys and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to Defendants or recklessly disregarded by them: (1) that Defendants knew or recklessly disregarded the fact that renewals of up-front license bookings, which the Company had touted as being strong, were not materializing and were in fact becoming substantially more averse to its customer base due to the large up-front cash payments that the Company required; (2) that the Company was not able to achieve substantial growth and was not able to capture market share gains through the technological advancements in the Company's products, which Defendants touted as a means for achieving such an end; (3) that Defendants knew or recklessly disregarded the fact that demand for the Company's products would not continue to be strong despite a conservative spending environment; and (4) that as a result of the above, the Defendants' positive statements about the Company were lacking in any reasonable basis when made.

On August 2, 2004, Synopsys announced preliminary results for its third fiscal quarter ended July 31, 2004. The Company expected total revenues to be $279 million to $283 million, compared to its previous target range of $300 million to $320 million. Then on August 18, 2004, Synopsys reported fiscal third-quarter earnings that were slightly ahead of reduced estimates, and it also warned that results for the current period and fiscal year would fall far short of Wall Street's expectations. News of this shocked the market. Shares of Synopsys fell $6.63 per share, or 31.16 percent, to close at $14.65 per share.

By the Order signed by U.S. District Judge Martin J. Jenkin on August 10, 2005, the Court grants Defendants’ Motion to Dismiss without prejudice and denies Defendants’ motion for sanctions. Plaintiffs must file an amended Complaint within thirty days of the date of the Order.

According to a press release dated September 14, 2005, Synopsys announced the final dismissal of Kanekal v. Synopsys et al. The class action lawsuit, filed in August 2004 in United States District Court for the Northern District of California, had alleged securities laws violations by Synopsys and certain of its officers. Judgment has now been entered in favor of Synopsys with each party bearing its own fees and costs.