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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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56-1546236
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Page
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PART I.
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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Item 1.
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Financial Statements
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January 31,
2019 |
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October 31,
2018* |
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ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
592,305
|
|
|
$
|
723,115
|
|
Accounts receivable, net
|
762,292
|
|
|
554,217
|
|
||
Inventories
|
137,559
|
|
|
122,407
|
|
||
Income taxes receivable and prepaid taxes
|
55,547
|
|
|
76,525
|
|
||
Prepaid and other current assets
|
249,927
|
|
|
67,533
|
|
||
Total current assets
|
1,797,630
|
|
|
1,543,797
|
|
||
Property and equipment, net
|
317,896
|
|
|
309,310
|
|
||
Goodwill
|
3,145,700
|
|
|
3,143,249
|
|
||
Intangible assets, net
|
332,187
|
|
|
360,404
|
|
||
Long-term prepaid taxes
|
54,722
|
|
|
138,312
|
|
||
Deferred income taxes
|
337,824
|
|
|
404,166
|
|
||
Other long-term assets
|
358,527
|
|
|
246,736
|
|
||
Total assets
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$
|
6,344,486
|
|
|
$
|
6,145,974
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
335,341
|
|
|
$
|
578,326
|
|
Accrued income taxes
|
13,366
|
|
|
27,458
|
|
||
Deferred revenue
|
1,262,201
|
|
|
1,152,862
|
|
||
Short-term debt
|
414,730
|
|
|
343,769
|
|
||
Total current liabilities
|
2,025,638
|
|
|
2,102,415
|
|
||
Long-term accrued income taxes
|
47,932
|
|
|
50,590
|
|
||
Long-term deferred revenue
|
63,013
|
|
|
116,859
|
|
||
Long-term debt
|
127,140
|
|
|
125,535
|
|
||
Other long-term liabilities
|
296,098
|
|
|
265,560
|
|
||
Total liabilities
|
2,559,821
|
|
|
2,660,959
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value: 400,000 shares authorized; 149,276 and 149,265 shares outstanding, respectively
|
1,493
|
|
|
1,493
|
|
||
Capital in excess of par value
|
1,654,363
|
|
|
1,644,830
|
|
||
Retained earnings
|
2,820,910
|
|
|
2,543,688
|
|
||
Treasury stock, at cost: 7,985 and 7,996 shares, respectively
|
(600,112
|
)
|
|
(597,682
|
)
|
||
Accumulated other comprehensive income (loss)
|
(97,852
|
)
|
|
(113,177
|
)
|
||
Total Synopsys stockholders’ equity
|
3,778,802
|
|
|
3,479,152
|
|
||
Non-controlling interest
|
5,863
|
|
|
5,863
|
|
||
Total stockholders’ equity
|
3,784,665
|
|
|
3,485,015
|
|
||
Total liabilities and stockholders’ equity
|
$
|
6,344,486
|
|
|
$
|
6,145,974
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
Revenue:
|
|
|
|
||||
Time-based products
|
$
|
553,716
|
|
|
$
|
570,933
|
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Upfront products
|
130,513
|
|
|
91,604
|
|
||
Maintenance and service
|
136,172
|
|
|
106,889
|
|
||
Total revenue
|
820,401
|
|
|
769,426
|
|
||
Cost of revenue:
|
|
|
|
||||
Products
|
116,620
|
|
|
111,394
|
|
||
Maintenance and service
|
58,829
|
|
|
50,754
|
|
||
Amortization of intangible assets
|
17,443
|
|
|
19,008
|
|
||
Total cost of revenue
|
192,892
|
|
|
181,156
|
|
||
Gross margin
|
627,509
|
|
|
588,270
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development
|
271,326
|
|
|
264,411
|
|
||
Sales and marketing
|
155,959
|
|
|
150,512
|
|
||
General and administrative
|
42,061
|
|
|
56,372
|
|
||
Amortization of intangible assets
|
10,784
|
|
|
9,539
|
|
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Restructuring
|
(35
|
)
|
|
(282
|
)
|
||
Total operating expenses
|
480,095
|
|
|
480,552
|
|
||
Operating income
|
147,414
|
|
|
107,718
|
|
||
Other income (expense), net
|
(359
|
)
|
|
12,385
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|
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Income before income taxes
|
147,055
|
|
|
120,103
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|
||
Provision (benefit) for income taxes
|
(6,459
|
)
|
|
123,794
|
|
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Net income (loss)
|
$
|
153,514
|
|
|
$
|
(3,691
|
)
|
Net income (loss) per share:
|
|
|
|
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Basic
|
$
|
1.03
|
|
|
$
|
(0.02
|
)
|
Diluted
|
$
|
1.01
|
|
|
$
|
(0.02
|
)
|
Shares used in computing per share amounts:
|
|
|
|
||||
Basic
|
149,288
|
|
|
149,441
|
|
||
Diluted
|
152,661
|
|
|
149,441
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
Net income (loss)
|
$
|
153,514
|
|
|
$
|
(3,691
|
)
|
Other comprehensive income (loss):
|
|
|
|
||||
Change in foreign currency translation adjustment
|
5,383
|
|
|
21,080
|
|
||
Cash flow hedges:
|
|
|
|
||||
Deferred gains (losses), net of tax of $(1,591) and $(3,419), respectively
|
5,467
|
|
|
13,013
|
|
||
Reclassification adjustment on deferred (gains) losses included in net income, net of tax of $(1,236) and $1,325, respectively
|
4,475
|
|
|
(5,306
|
)
|
||
Other comprehensive income (loss), net of tax effects
|
15,325
|
|
|
28,787
|
|
||
Comprehensive income
|
$
|
168,839
|
|
|
$
|
25,096
|
|
|
|
|
Capital in
Excess of
Par
Value
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Synopsys
Stockholders’
Equity
|
|
Non-controlling
Interest
|
|
Stockholders'
Equity
|
|||||||||||||||||||
|
Common Stock
|
|
||||||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||||||
Balance at October 31, 2018
|
149,265
|
|
|
$
|
1,493
|
|
|
$
|
1,644,830
|
|
|
$
|
2,543,688
|
|
|
$
|
(597,682
|
)
|
|
$
|
(113,177
|
)
|
|
$
|
3,479,152
|
|
|
$
|
5,863
|
|
|
$
|
3,485,015
|
|
Net income
|
|
|
|
|
|
|
153,514
|
|
|
|
|
|
|
153,514
|
|
|
|
|
153,514
|
|
||||||||||||||
Retained earnings adjustment due to adoption of accounting standards related to revenue(1)
|
|
|
|
|
|
|
257,594
|
|
|
|
|
|
|
257,594
|
|
|
|
|
257,594
|
|
||||||||||||||
Retained earnings adjustment due to adoption of an accounting standard related to income taxes(2)
|
|
|
|
|
|
|
(130,544
|
)
|
|
|
|
|
|
(130,544
|
)
|
|
|
|
(130,544
|
)
|
||||||||||||||
Other comprehensive income (loss), net of tax effects
|
|
|
|
|
|
|
|
|
|
|
15,325
|
|
|
15,325
|
|
|
|
|
15,325
|
|
||||||||||||||
Purchases of treasury stock
|
(346
|
)
|
|
(3
|
)
|
|
3
|
|
|
|
|
(29,185
|
)
|
|
|
|
(29,185
|
)
|
|
|
|
(29,185
|
)
|
|||||||||||
Common stock issued, net of shares withheld for employee taxes
|
357
|
|
|
3
|
|
|
(27,736
|
)
|
|
(3,342
|
)
|
|
26,755
|
|
|
|
|
(4,320
|
)
|
|
|
|
(4,320
|
)
|
||||||||||
Stock-based compensation
|
|
|
|
|
37,266
|
|
|
|
|
|
|
|
|
37,266
|
|
|
|
|
37,266
|
|
||||||||||||||
Balance at January 31, 2019
|
149,276
|
|
|
$
|
1,493
|
|
|
$
|
1,654,363
|
|
|
$
|
2,820,910
|
|
|
$
|
(600,112
|
)
|
|
$
|
(97,852
|
)
|
|
$
|
3,778,802
|
|
|
$
|
5,863
|
|
|
$
|
3,784,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
Capital in
Excess of
Par
Value
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Synopsys
Stockholders’
Equity
|
|
Non-controlling
Interest
|
|
Stockholders'
Equity
|
|||||||||||||||||||
|
Common Stock
|
|
||||||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||||||
Balance at October 31, 2017
|
150,445
|
|
|
$
|
1,505
|
|
|
$
|
1,622,429
|
|
|
$
|
2,143,873
|
|
|
$
|
(426,208
|
)
|
|
$
|
(65,979
|
)
|
|
$
|
3,275,620
|
|
|
$
|
4,104
|
|
|
3,279,724
|
|
|
Net income (loss)
|
|
|
|
|
|
|
(3,691
|
)
|
|
|
|
|
|
(3,691
|
)
|
|
|
|
(3,691
|
)
|
||||||||||||||
Other comprehensive income (loss), net of tax effects
|
|
|
|
|
|
|
|
|
|
|
28,787
|
|
|
28,787
|
|
|
|
|
28,787
|
|
||||||||||||||
Purchases of treasury stock
|
(1,987
|
)
|
|
(20
|
)
|
|
20
|
|
|
|
|
(180,000
|
)
|
|
|
|
(180,000
|
)
|
|
|
|
(180,000
|
)
|
|||||||||||
Equity forward contract
|
|
|
|
|
(20,000
|
)
|
|
|
|
|
|
|
|
(20,000
|
)
|
|
|
|
(20,000
|
)
|
||||||||||||||
Common stock issued, net of shares withheld for employee taxes
|
495
|
|
|
5
|
|
|
(22,103
|
)
|
|
(6,328
|
)
|
|
32,126
|
|
|
|
|
3,700
|
|
|
|
|
3,700
|
|
||||||||||
Stock-based compensation
|
|
|
|
|
32,113
|
|
|
|
|
|
|
|
|
32,113
|
|
|
|
|
32,113
|
|
||||||||||||||
Balance at January 31, 2018
|
148,953
|
|
|
$
|
1,490
|
|
|
$
|
1,612,459
|
|
|
$
|
2,133,854
|
|
|
$
|
(574,082
|
)
|
|
$
|
(37,192
|
)
|
|
$
|
3,136,529
|
|
|
$
|
4,104
|
|
|
$
|
3,140,633
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
153,514
|
|
|
$
|
(3,691
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Amortization and depreciation
|
51,830
|
|
|
43,920
|
|
||
Amortization of capitalized costs to obtain revenue contracts
|
12,793
|
|
|
—
|
|
||
Stock compensation
|
38,460
|
|
|
32,323
|
|
||
Allowance for doubtful accounts
|
1,500
|
|
|
368
|
|
||
(Gain) loss on sale of property and investments
|
—
|
|
|
4
|
|
||
Deferred income taxes
|
(6,215
|
)
|
|
46,172
|
|
||
Net changes in operating assets and liabilities, net of acquired assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(209,049
|
)
|
|
(34,811
|
)
|
||
Inventories
|
(15,827
|
)
|
|
(15,811
|
)
|
||
Prepaid and other current assets
|
(10,027
|
)
|
|
(14,504
|
)
|
||
Other long-term assets
|
(49,403
|
)
|
|
(25,601
|
)
|
||
Accounts payable and accrued liabilities
|
(219,099
|
)
|
|
(139,864
|
)
|
||
Income taxes
|
(41,985
|
)
|
|
(18,017
|
)
|
||
Deferred revenue
|
149,489
|
|
|
70,458
|
|
||
Net cash used in operating activities
|
(144,019
|
)
|
|
(59,054
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Proceeds from sales and maturities of short-term investments
|
—
|
|
|
12,449
|
|
||
Purchases of property and equipment
|
(29,007
|
)
|
|
(28,316
|
)
|
||
Cash paid for acquisitions and intangible assets, net of cash acquired
|
—
|
|
|
(608,344
|
)
|
||
Capitalization of software development costs
|
(737
|
)
|
|
(807
|
)
|
||
Net cash used in investing activities
|
(29,744
|
)
|
|
(625,018
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from credit facilities
|
185,080
|
|
|
450,000
|
|
||
Repayment of debt
|
(112,812
|
)
|
|
(21,875
|
)
|
||
Issuances of common stock
|
6,358
|
|
|
12,486
|
|
||
Payments for taxes related to net share settlement of equity awards
|
(10,593
|
)
|
|
(10,247
|
)
|
||
Purchase of equity forward contract
|
—
|
|
|
(20,000
|
)
|
||
Purchases of treasury stock
|
(29,185
|
)
|
|
(180,000
|
)
|
||
Other
|
(762
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
38,086
|
|
|
230,364
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
4,882
|
|
|
11,555
|
|
||
Net change in cash, cash equivalents and restricted cash
|
(130,795
|
)
|
|
(442,153
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
725,001
|
|
|
1,050,075
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
594,206
|
|
|
$
|
607,922
|
|
•
|
Revenue for certain ongoing contracts that was previously deferred would have been recognized in the periods prior to adoption under ASC 606. Therefore, upon adoption, the Company recorded the following adjustments to the beginning balances to reflect the amount of revenue that will no longer be recognized in future periods for such contracts: an increase to retained earnings of
$265.1 million
, a decrease to unbilled receivables of
$27.4 million
, an increase to contract assets of
$126.9 million
, and a decrease in deferred revenue of
$165.6 million
.
|
•
|
The Company capitalized
$73.8 million
of incremental costs for obtaining contracts with customers at the adoption date with a corresponding adjustment to retained earnings, and is amortizing these costs over the contract term.
|
•
|
The Company recorded an increase in its opening deferred tax liability of
$81.4 million
, with a corresponding adjustment to retained earnings, to record the tax effect of the above adjustments.
|
|
As reported under ASC 606
|
|
Adjustments
|
|
Adjusted balance under ASC 605
|
||||||
|
(in thousands)
|
||||||||||
Receivables, net
|
$
|
762,292
|
|
|
$
|
73,234
|
|
|
$
|
835,526
|
|
Prepaid and other current assets
|
249,927
|
|
|
(167,729
|
)
|
|
82,198
|
|
|||
Deferred income taxes
|
337,824
|
|
|
70,362
|
|
|
408,186
|
|
|||
Other long-term assets
|
358,527
|
|
|
(95,715
|
)
|
|
262,812
|
|
|||
Accounts payable and other accrued liabilities
|
335,341
|
|
|
(10,713
|
)
|
|
324,628
|
|
|||
Deferred revenue
|
1,262,201
|
|
|
112,374
|
|
|
1,374,575
|
|
|||
Long-term deferred revenue
|
63,013
|
|
|
80,614
|
|
|
143,627
|
|
|||
Other long-term liabilities (1)
|
296,098
|
|
|
(16,671
|
)
|
|
279,427
|
|
|||
Retained earnings
|
2,820,910
|
|
|
(285,452
|
)
|
|
2,535,458
|
|
|
As reported under ASC 606
|
|
Adjustments
|
|
Adjusted under ASC 605
|
||||||
|
(in thousands, except per share amounts)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Time-based products
|
$
|
553,716
|
|
|
$
|
15,856
|
|
|
$
|
569,572
|
|
Upfront products
|
130,513
|
|
|
(16,786
|
)
|
|
113,727
|
|
|||
Maintenance and service
|
136,172
|
|
|
(21,414
|
)
|
|
114,758
|
|
|||
Total revenue
|
820,401
|
|
|
(22,344
|
)
|
|
798,057
|
|
|||
Cost of Revenue:
|
|
|
|
|
|
|
|||||
Products
|
116,620
|
|
|
—
|
|
|
116,620
|
|
|||
Maintenance and service
|
58,829
|
|
|
—
|
|
|
58,829
|
|
|||
Amortization of intangible assets
|
17,443
|
|
|
—
|
|
|
17,443
|
|
|||
Total cost of revenue
|
192,892
|
|
|
—
|
|
|
192,892
|
|
|||
Gross margin
|
627,509
|
|
|
(22,344
|
)
|
|
605,165
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|||||
Research and development
|
271,326
|
|
|
—
|
|
|
271,326
|
|
|||
Sales and marketing
|
155,959
|
|
|
11,184
|
|
|
167,143
|
|
|||
General and administrative
|
42,061
|
|
|
—
|
|
|
42,061
|
|
|||
Amortization of intangible assets
|
10,784
|
|
|
—
|
|
|
10,784
|
|
|||
Restructuring
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
|||
Total operating expenses
|
480,095
|
|
|
11,184
|
|
|
491,279
|
|
|||
Operating income
|
147,414
|
|
|
(33,528
|
)
|
|
113,886
|
|
|||
Other income (expense), net
|
(359
|
)
|
|
—
|
|
|
(359
|
)
|
|||
Income (loss) before provision for income taxes
|
147,055
|
|
|
(33,528
|
)
|
|
113,527
|
|
|||
Provision (benefit) for income taxes
|
(6,459
|
)
|
|
(5,670
|
)
|
|
(12,129
|
)
|
|||
Net income (loss)
|
$
|
153,514
|
|
|
$
|
(27,858
|
)
|
|
$
|
125,656
|
|
Net income (loss) per share:
|
|
|
|
|
—
|
|
|||||
Basic
|
$
|
1.03
|
|
|
$
|
(0.19
|
)
|
|
$
|
0.84
|
|
Diluted
|
$
|
1.01
|
|
|
$
|
(0.19
|
)
|
|
$
|
0.82
|
|
Shares used in computing per share amounts:
|
|
|
|
|
—
|
|
|||||
Basic
|
149,288
|
|
|
|
|
149,288
|
|
||||
Diluted
|
152,661
|
|
|
|
|
152,661
|
|
•
|
Identification of the contract, or contracts, with the customer
|
•
|
Identification of the performance obligation in the contract
|
•
|
Determination of the transaction price
|
•
|
Allocation of the transaction price to the performance obligations in the contract
|
•
|
Recognition of revenue when, or as, the Company satisfies a performance obligation
|
|
Three Months Ended
January 31, |
||||
|
2019
|
|
2018
|
||
EDA
|
61
|
%
|
|
63
|
%
|
IP & System Integration
|
29
|
%
|
|
28
|
%
|
Software Integrity Products & Services
|
10
|
%
|
|
8
|
%
|
Other
|
—
|
%
|
|
1
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
As of January 31, 2019
|
|
As of October 31, 2018
|
||||
|
|
|
as adjusted
|
||||
|
(in thousands)
|
||||||
Contract assets
|
$
|
167,729
|
|
|
$
|
126,897
|
|
Unbilled receivables
|
36,922
|
|
|
36,699
|
|
||
Deferred revenue
|
1,325,214
|
|
|
1,104,110
|
|
|
Gross
Assets
|
|
Accumulated
Amortization
|
|
Net Assets
|
||||||
|
(in thousands)
|
||||||||||
Core/developed technology
|
$
|
773,147
|
|
|
$
|
615,315
|
|
|
$
|
157,832
|
|
Customer relationships
|
358,644
|
|
|
214,037
|
|
|
144,607
|
|
|||
Contract rights intangible
|
184,260
|
|
|
178,614
|
|
|
5,646
|
|
|||
Trademarks and trade names
|
42,928
|
|
|
23,116
|
|
|
19,812
|
|
|||
In-process research and development (IPR&D)(1)
|
1,200
|
|
|
—
|
|
|
1,200
|
|
|||
Capitalized software development costs
|
36,556
|
|
|
33,466
|
|
|
3,090
|
|
|||
Total
|
$
|
1,396,735
|
|
|
$
|
1,064,548
|
|
|
$
|
332,187
|
|
(1)
|
IPR&D is reclassified to core/developed technology upon completion or is written off upon abandonment.
|
|
Gross
Assets
|
|
Accumulated
Amortization
|
|
Net Assets
|
||||||
|
(in thousands)
|
||||||||||
Core/developed technology
|
$
|
773,147
|
|
|
$
|
598,956
|
|
|
$
|
174,191
|
|
Customer relationships
|
358,524
|
|
|
204,382
|
|
|
154,142
|
|
|||
Contract rights intangible
|
183,953
|
|
|
177,191
|
|
|
6,762
|
|
|||
Trademarks and trade names
|
42,929
|
|
|
21,944
|
|
|
20,985
|
|
|||
In-process research and development (IPR&D)(1)
|
1,200
|
|
|
—
|
|
|
1,200
|
|
|||
Capitalized software development costs
|
35,818
|
|
|
32,694
|
|
|
3,124
|
|
|||
Total
|
$
|
1,395,571
|
|
|
$
|
1,035,167
|
|
|
$
|
360,404
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Core/developed technology
|
$
|
16,359
|
|
|
$
|
18,068
|
|
Customer relationships
|
9,580
|
|
|
8,563
|
|
||
Contract rights intangible
|
1,116
|
|
|
890
|
|
||
Trademarks and trade names
|
1,172
|
|
|
1,026
|
|
||
Capitalized software development costs(2)
|
772
|
|
|
920
|
|
||
Total
|
$
|
28,999
|
|
|
$
|
29,467
|
|
(2)
|
Amortization of capitalized software development costs is included in cost of products revenue in the unaudited condensed consolidated statements of operations.
|
Fiscal Year
|
(in thousands)
|
||
Remainder of fiscal 2019
|
$
|
73,894
|
|
2020
|
78,456
|
|
|
2021
|
55,954
|
|
|
2022
|
44,017
|
|
|
2023
|
29,219
|
|
|
2024 and thereafter
|
49,447
|
|
|
IPR&D(3)
|
1,200
|
|
|
Total
|
$
|
332,187
|
|
(3)
|
IPR&D assets are amortized over their useful lives upon completion or are written off upon abandonment.
|
|
Cost
|
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses Less Than 12 Continuous Months |
|
Gross
Unrealized Losses 12 Continuous Months or Longer |
|
Estimated
Fair Value(1) |
||||||||||
|
(in thousands)
|
||||||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
||||||||||
Money market funds
|
$
|
122,397
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
122,397
|
|
Total:
|
$
|
122,397
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
122,397
|
|
(1)
|
See
Note 5. Fair Value Measures
for further discussion on fair values of cash equivalents.
|
|
Cost
|
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses Less Than 12 Continuous Months |
|
Gross
Unrealized Losses 12 Continuous Months or Longer |
|
Estimated
Fair Value(1) |
||||||||||
|
(in thousands)
|
||||||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
||||||||||
Money market funds
|
$
|
165,296
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
165,296
|
|
Total:
|
$
|
165,296
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
165,296
|
|
(1)
|
See
Note 5. Fair Value Measures
for further discussion on fair values of cash equivalents.
|
|
As of January 31, 2019
|
|
As of October 31, 2018
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
592,305
|
|
|
$
|
723,115
|
|
Restricted cash included in Prepaid expenses and other current assets
|
1,169
|
|
|
1,164
|
|
||
Restricted cash included in Other long-term assets
|
732
|
|
|
722
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
594,206
|
|
|
$
|
725,001
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Gain (loss) recorded in other income (expense), net
|
$
|
(1,900
|
)
|
|
$
|
(1,571
|
)
|
|
As of January 31, 2019
|
|
As of October 31, 2018
|
||||
|
(in thousands)
|
||||||
Total gross notional amount
|
$
|
1,010,001
|
|
|
$
|
1,135,549
|
|
Net fair value
|
$
|
(8,244
|
)
|
|
$
|
(18,120
|
)
|
|
Fair values of
derivative instruments
designated as hedging
instruments
|
|
Fair values of
derivative instruments
not designated as
hedging instruments
|
||||
|
(in thousands)
|
||||||
As of January 31, 2019
|
|
|
|
||||
Other current assets
|
$
|
5,117
|
|
|
$
|
46
|
|
Accrued liabilities
|
$
|
13,059
|
|
|
$
|
348
|
|
As of October 31, 2018
|
|
|
|
||||
Other current assets
|
$
|
4,771
|
|
|
$
|
131
|
|
Accrued liabilities
|
$
|
22,890
|
|
|
$
|
132
|
|
|
Location of gain (loss)
recognized in OCI on
derivatives
|
|
Amount of gain (loss)
recognized in OCI on
derivatives
(effective portion)
|
|
Location of
gain (loss)
reclassified from OCI
|
|
Amount of
gain (loss)
reclassified from
OCI
(effective portion)
|
||||
|
(in thousands)
|
||||||||||
Three months ended
January 31, 2019 |
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Revenue
|
|
$
|
(1,208
|
)
|
|
Revenue
|
|
$
|
164
|
|
Foreign exchange contracts
|
Operating expenses
|
|
6,675
|
|
|
Operating expenses
|
|
(4,639
|
)
|
||
Total
|
|
|
$
|
5,467
|
|
|
|
|
$
|
(4,475
|
)
|
Three months ended
January 31, 2018 |
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Revenue
|
|
$
|
(2,626
|
)
|
|
Revenue
|
|
$
|
1,667
|
|
Foreign exchange contracts
|
Operating expenses
|
|
15,639
|
|
|
Operating expenses
|
|
3,639
|
|
||
Total
|
|
|
$
|
13,013
|
|
|
|
|
$
|
5,306
|
|
Foreign exchange contracts
|
Amount of
gain (loss) recognized
in statement of operations
on derivatives
(ineffective
portion)(1)
|
|
Amount of gain (loss)
recognized in
statement of operations on
derivatives
(excluded from
effectiveness testing)(2)
|
||||
|
(in thousands)
|
||||||
For the three months ended January 31, 2019
|
$
|
(104
|
)
|
|
$
|
(13
|
)
|
For the three months ended January 31, 2018
|
$
|
214
|
|
|
$
|
1,100
|
|
(1)
|
The ineffective portion includes forecast inaccuracies.
|
(2)
|
The portion excluded from effectiveness testing includes the discount earned or premium paid for the contracts.
|
|
|
|
Fair Value Measurement Using
|
||||||||||||
Description
|
Total
|
|
Quoted Prices in
Active
Markets for Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
122,397
|
|
|
$
|
122,397
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Prepaid and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative contracts
|
5,163
|
|
|
|
|
|
5,163
|
|
|
—
|
|
||||
Other long-term assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan assets
|
229,274
|
|
|
229,274
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
356,834
|
|
|
$
|
351,671
|
|
|
$
|
5,163
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative contracts
|
$
|
13,407
|
|
|
$
|
—
|
|
|
$
|
13,407
|
|
|
$
|
—
|
|
Other long-term liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan liabilities
|
229,274
|
|
|
229,274
|
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
$
|
242,681
|
|
|
$
|
229,274
|
|
|
$
|
13,407
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurement Using
|
||||||||||||
Description
|
Total
|
|
Quoted Prices in
Active
Markets for Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
165,296
|
|
|
$
|
165,296
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Prepaid and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative contracts
|
4,902
|
|
|
—
|
|
|
4,902
|
|
|
—
|
|
||||
Other long-term assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan assets
|
212,165
|
|
|
212,165
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
382,363
|
|
|
$
|
377,461
|
|
|
$
|
4,902
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative contracts
|
$
|
23,022
|
|
|
$
|
—
|
|
|
$
|
23,022
|
|
|
$
|
—
|
|
Other long-term liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan liabilities
|
212,165
|
|
|
212,165
|
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
$
|
235,187
|
|
|
$
|
212,165
|
|
|
$
|
23,022
|
|
|
$
|
—
|
|
|
As of January 31, 2019
|
|
As of October 31, 2018
|
||||
|
(in thousands)
|
||||||
Payroll and related benefits
|
$
|
241,897
|
|
|
$
|
413,307
|
|
Other accrued liabilities
|
67,425
|
|
|
79,973
|
|
||
Accounts payable
|
26,019
|
|
|
85,046
|
|
||
Total
|
$
|
335,341
|
|
|
$
|
578,326
|
|
|
As of January 31, 2019
|
|
As of October 31, 2018
|
||||
|
(in thousands)
|
||||||
Deferred compensation liability
|
$
|
229,274
|
|
|
$
|
212,165
|
|
Other long-term liabilities
|
66,824
|
|
|
53,395
|
|
||
Total
|
$
|
296,098
|
|
|
$
|
265,560
|
|
Fiscal year
|
(in thousands)
|
||
Remainder of fiscal 2019
|
$
|
11,250
|
|
2020
|
17,813
|
|
|
2021
|
27,187
|
|
|
2022
|
75,000
|
|
|
Total
|
$
|
131,250
|
|
|
As of January 31, 2019
|
|
As of October 31, 2018
|
||||
|
(in thousands)
|
||||||
Cumulative currency translation adjustments
|
$
|
(83,906
|
)
|
|
$
|
(89,289
|
)
|
Unrealized gain (loss) on derivative instruments, net of taxes
|
(13,946
|
)
|
|
(23,888
|
)
|
||
Total accumulated other comprehensive income (loss)
|
$
|
(97,852
|
)
|
|
$
|
(113,177
|
)
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Reclassifications from accumulated other comprehensive income (loss) into unaudited condensed consolidated statement of operations:
|
|
|
|
||||
Gain (loss) on cash flow hedges, net of taxes
|
|
|
|
||||
Revenues
|
$
|
164
|
|
|
$
|
1,667
|
|
Operating expenses
|
(4,639
|
)
|
|
3,639
|
|
||
Gain (loss) on available-for-sale securities
|
|
|
|
||||
Other income (expense)
|
—
|
|
|
(4
|
)
|
||
Total reclassifications into net income
|
$
|
(4,475
|
)
|
|
$
|
5,302
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Total shares repurchased(1)
|
346
|
|
|
1,987
|
|
||
Total cost of the repurchased shares
|
$
|
29,185
|
|
|
$
|
180,000
|
|
Reissuance of treasury stock
|
357
|
|
|
495
|
|
(1)
|
The first quarter of fiscal 2018 includes the settlement of the
$20.0 million
equity forward contract related to the Company's accelerated share repurchase agreement entered into in September 2017.
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Cost of products
|
$
|
4,126
|
|
|
$
|
3,383
|
|
Cost of maintenance and service
|
1,459
|
|
|
1,247
|
|
||
Research and development expense
|
18,304
|
|
|
15,396
|
|
||
Sales and marketing expense
|
7,272
|
|
|
6,621
|
|
||
General and administrative expense
|
7,299
|
|
|
5,676
|
|
||
Stock compensation expense before taxes
|
38,460
|
|
|
32,323
|
|
||
Income tax benefit
|
(6,449
|
)
|
|
(6,038
|
)
|
||
Stock compensation expense after taxes
|
$
|
32,011
|
|
|
$
|
26,285
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Intrinsic value of awards exercised
|
$
|
8,152
|
|
|
$
|
18,775
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands, except per share amounts)
|
||||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
153,514
|
|
|
$
|
(3,691
|
)
|
Denominator:
|
|
|
|
||||
Weighted-average common shares for basic net income (loss) per share
|
149,288
|
|
|
149,441
|
|
||
Dilutive effect of potential common shares from equity-based compensation
|
3,373
|
|
|
—
|
|
||
Weighted-average common shares for diluted net income (loss) per share
|
152,661
|
|
|
149,441
|
|
||
Net income (loss) per share:
|
|
|
|
||||
Basic
|
$
|
1.03
|
|
|
$
|
(0.02
|
)
|
Diluted
|
$
|
1.01
|
|
|
$
|
(0.02
|
)
|
Anti-dilutive employee stock-based awards excluded(1)
|
1,601
|
|
|
4,627
|
|
(1)
|
These employee stock-based awards were anti-dilutive for the respective periods and are excluded in calculating diluted net income (loss) per share. While such awards were anti-dilutive for the respective periods, they could be dilutive in the future.
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Total segment adjusted operating income
|
$
|
200,952
|
|
|
$
|
195,946
|
|
Reconciling items:
|
|
|
|
||||
Amortization of intangible expense
|
(28,227
|
)
|
|
(28,547
|
)
|
||
Stock-based compensation expense
|
(38,460
|
)
|
|
(32,323
|
)
|
||
Other
|
13,149
|
|
|
(27,358
|
)
|
||
Total operating income
|
$
|
147,414
|
|
|
$
|
107,718
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Revenue:
|
|
|
|
||||
United States
|
$
|
407,799
|
|
|
$
|
384,574
|
|
Europe
|
83,886
|
|
|
85,465
|
|
||
Japan
|
65,073
|
|
|
68,389
|
|
||
Asia-Pacific and Other
|
263,643
|
|
|
230,998
|
|
||
Consolidated
|
$
|
820,401
|
|
|
$
|
769,426
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Interest income
|
$
|
1,565
|
|
|
$
|
1,636
|
|
Interest expense
|
(4,554
|
)
|
|
(2,843
|
)
|
||
Gain (loss) on assets related to executive deferred compensation plan assets
|
4,289
|
|
|
13,440
|
|
||
Foreign currency exchange gain (loss)
|
(416
|
)
|
|
(1,019
|
)
|
||
Other, net
|
(1,243
|
)
|
|
1,171
|
|
||
Total
|
$
|
(359
|
)
|
|
$
|
12,385
|
|
|
Three Months Ended
January 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Income before income taxes
|
$
|
147,055
|
|
|
$
|
120,103
|
|
Provision (benefit) for income taxes
|
$
|
(6,459
|
)
|
|
$
|
123,794
|
|
Effective tax rate
|
(4.4
|
)%
|
|
103.1
|
%
|
•
|
A tax on global intangible low-tax income (GILTI), which is determined annually based on the Company’s aggregate foreign subsidiaries’ income in excess of certain qualified business asset investment return. In the first quarter of fiscal 2019, the Company adopted an accounting policy to account for the tax effects of GILTI in the period that it is subject to such tax.
|
•
|
A base erosion and anti-abuse tax (BEAT), which functions as a minimum tax that partially disallows deductions for certain related party transactions and certain tax credits.
|
•
|
A special tax deduction for foreign-derived intangible income (FDII), which, in general, allows a deduction of certain intangible income earned in the U.S. and derived from foreign sources.
|
Item 2.
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Revenues were $820.4 million, an increase of $51.0 million, or 7%, primarily due to our continued growth both organically and through prior year acquisitions. Fiscal 2018 included an extra week that added approximately $46 million of revenue to the first fiscal quarter of 2018.
|
•
|
Total cost of revenue and operating expenses were $673.0 million, an increase of $11.3 million, or 2%, primarily due to increases in employee-related costs, resulting from increases in headcount to support business growth and headcount from prior year acquisitions. The increase in total cost of revenue and operating expenses was partially offset by a legal settlement of $18.3 million.
|
•
|
Operating income was $147.4 million, an increase of $39.7 million or 37%.
|
•
|
Benefit for income taxes was $6.5 million compared to provision for income taxes of $123.8 million, primarily driven by charges related to the enactment of the Tax Act in the first quarter of fiscal 2018.
|
•
|
ASC 606 impact increased our net income by $27.9 million.
|
•
|
Revenue recognition;
|
•
|
Business combinations; and
|
•
|
Income taxes
|
•
|
future expected cash flows from software license sales, subscriptions, support agreements, consulting contracts and acquired developed technologies and patents;
|
•
|
historical and expected customer attrition rates and anticipated growth in revenue from acquired customers;
|
•
|
the expected use of the acquired assets; and
|
•
|
discount rates.
|
•
|
EDA software includes digital, custom and Field Programmable Gate Array (FPGA) IC design software, verification products and obligations to provide unspecified updates and support services. EDA products and services are typically sold through TSL arrangements that grant customers the right to access and use all of the licensed products at the outset of an arrangement and software updates are generally made available throughout the entire term of the arrangement, which is typically three years. Under ASC 606, we have concluded that the software licenses in TSL contracts are not distinct from the obligation to provide unspecified software updates to the licensed software throughout the license term, because the multiple software licenses represent inputs to a single, combined offering, and timely, relevant software updates are integral to maintaining the utility of the software licenses. We recognize revenue for the combined performance obligation under TSL contracts ratably over the term of the license. Under ASC 605, these arrangements were recognized ratably over the contract term.
|
•
|
IP & System Integration includes our DesignWare® IP portfolio and system-level products and services. Under ASC 606, these arrangements generally have two performance obligations which consist of transferring of the licensed IP and providing related support, which includes rights to technical support and software updates that are provided over the support term and are transferred to the customer over a time. Revenue allocated to the IP licenses is recognized at a point in time upon the later of the delivery date or the beginning of the license period, and revenue allocated to support is recognized over the support term. Royalties are recognized as revenue in the quarter in which the applicable customer sells its products that incorporate our IP. Payments for IP contracts are generally received upon delivery of the IP. Revenue related to the customization of certain IP is recognized as “Professional Services.” Under ASC 605, we recognized revenues ratably for certain IP licensing and support arrangements.
|
•
|
In the case of Hardware products, we generally have two performance obligations in arrangements involving the sale of hardware products. The first performance obligation is to transfer the hardware product, which includes software integral to the functionality of the hardware product. The second performance obligation is to provide maintenance on the hardware and its embedded software, which includes rights to technical support, hardware repairs and software updates that are all provided over the same term and have the same time-based pattern of transfer to the customer. The portion of the transaction price allocated to the hardware product is generally recognized as revenue at the time of delivery because the customer obtains control of the product at that point in time. We have concluded that control generally transfers at that point in time because the customer has title to the hardware, physical possession, and a present obligation to pay for the hardware. The portion of the transaction price allocated to the maintenance obligation is recognized as revenue ratably over the maintenance term. The adoption of ASC 606 did not change the timing of revenue recognition for hardware products.
|
•
|
Revenue from Professional Service contracts is recognized over time, generally using costs incurred or hours expended to measure progress. We have a history of reasonably estimating project status and the costs necessary to complete projects. A number of internal and external factors can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing
|
•
|
We sell Software Integrity products in arrangements that provide customers the right to software licenses, maintenance updates and technical support. Over the term of these arrangements, the customer expects us to provide integral maintenance updates to the software licenses, which help customer’s protect their own software from new critical quality defects and potential security vulnerabilities. The licenses and maintenance updates serve together to fulfill our commitment to the customer as both work together to provide the functionality to the customer and represent a combined performance obligation. We will recognize revenue for the combined performance obligation over the term of the arrangement.
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
|
|
|
|
|
|
|
|||||||
Semiconductor & System Design Segment
|
$
|
737.9
|
|
|
$
|
705.3
|
|
|
$
|
32.6
|
|
|
5
|
%
|
Software Integrity Segment
|
82.5
|
|
|
64.1
|
|
|
18.4
|
|
|
29
|
%
|
|||
Total
|
$
|
820.4
|
|
|
$
|
769.4
|
|
|
$
|
51.0
|
|
|
7
|
%
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
$
|
553.7
|
|
|
$
|
570.9
|
|
|
$
|
(17.2
|
)
|
|
(3
|
)%
|
Percentage of total revenue
|
67
|
%
|
|
74
|
%
|
|
|
|
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
$
|
130.5
|
|
|
$
|
91.6
|
|
|
$
|
38.9
|
|
|
42
|
%
|
Percentage of total revenue
|
16
|
%
|
|
12
|
%
|
|
|
|
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
|
|
|
|
|
|
|
|||||||
Maintenance revenue
|
$
|
55.5
|
|
|
$
|
25.3
|
|
|
$
|
30.2
|
|
|
119
|
%
|
Professional services and other revenue
|
80.7
|
|
|
81.6
|
|
|
(0.9
|
)
|
|
(1
|
)%
|
|||
Total maintenance and service revenue
|
$
|
136.2
|
|
|
$
|
106.9
|
|
|
$
|
29.3
|
|
|
27
|
%
|
Percentage of total revenue
|
17
|
%
|
|
14
|
%
|
|
|
|
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
|
|
|
|
|
|
|
|||||||
Cost of products revenue
|
$
|
116.6
|
|
|
$
|
111.4
|
|
|
$
|
5.2
|
|
|
5
|
%
|
Cost of maintenance and service revenue
|
58.8
|
|
|
50.8
|
|
|
8.0
|
|
|
16
|
%
|
|||
Amortization of intangible assets
|
17.5
|
|
|
19.0
|
|
|
(1.5
|
)
|
|
(8
|
)%
|
|||
Total
|
$
|
192.9
|
|
|
$
|
181.2
|
|
|
$
|
11.7
|
|
|
6
|
%
|
Percentage of total revenue
|
24
|
%
|
|
24
|
%
|
|
|
|
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
$
|
271.3
|
|
|
$
|
264.4
|
|
|
$
|
6.9
|
|
|
3
|
%
|
Percentage of total revenue
|
33
|
%
|
|
34
|
%
|
|
|
|
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
$
|
156.0
|
|
|
$
|
150.5
|
|
|
$
|
5.5
|
|
|
4
|
%
|
Percentage of total revenue
|
19
|
%
|
|
20
|
%
|
|
|
|
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
$
|
42.1
|
|
|
$
|
56.4
|
|
|
$
|
(14.3
|
)
|
|
(25
|
)%
|
Percentage of total revenue
|
5
|
%
|
|
7
|
%
|
|
|
|
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
|
|
|
|
|
|
|
|||||||
Included in cost of revenue
|
$
|
17.4
|
|
|
$
|
19.0
|
|
|
$
|
(1.6
|
)
|
|
(8
|
)%
|
Included in operating expenses
|
10.8
|
|
|
9.5
|
|
|
1.3
|
|
|
14
|
%
|
|||
Total
|
$
|
28.2
|
|
|
$
|
28.5
|
|
|
$
|
(0.3
|
)
|
|
(1
|
)%
|
Percentage of total revenue
|
3
|
%
|
|
4
|
%
|
|
|
|
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
|
|
|
|
|
|
|
|||||||
Interest income
|
$
|
1.6
|
|
|
$
|
1.6
|
|
|
$
|
—
|
|
|
—
|
%
|
Interest (expense)
|
(4.6
|
)
|
|
(2.8
|
)
|
|
(1.8
|
)
|
|
64
|
%
|
|||
Gain (loss) on assets related to executive deferred compensation plan
|
4.3
|
|
|
13.4
|
|
|
(9.1
|
)
|
|
(68
|
)%
|
|||
Foreign currency exchange gain (loss)
|
(0.4
|
)
|
|
(1.0
|
)
|
|
0.6
|
|
|
(60
|
)%
|
|||
Other, net
|
(1.3
|
)
|
|
1.2
|
|
|
(2.5
|
)
|
|
(208
|
)%
|
|||
Total
|
$
|
(0.4
|
)
|
|
$
|
12.4
|
|
|
$
|
(12.8
|
)
|
|
(103
|
)%
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
|
|
|
|
|
|
|
|||||||
Adjusted operating income
|
$
|
195.3
|
|
|
$
|
199.1
|
|
|
$
|
(3.8
|
)
|
|
(2
|
)%
|
Adjusted operating margin
|
26
|
%
|
|
28
|
%
|
|
(2
|
)%
|
|
(7
|
)%
|
|
January 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Three months ended
|
|
|
|
|
|
|
|
|||||||
Adjusted operating income (loss)
|
$
|
5.6
|
|
|
$
|
(3.2
|
)
|
|
$
|
8.8
|
|
|
(275
|
)%
|
Adjusted operating margin
|
7
|
%
|
|
(5
|
)%
|
|
12
|
%
|
|
(240
|
)%
|
|
January 31,
2019 |
|
October 31,
2018 |
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Cash and cash equivalents
|
$
|
592.3
|
|
|
$
|
723.1
|
|
|
$
|
(130.8
|
)
|
|
(18
|
)%
|
|
January 31,
|
|
|
||||||||
|
2019
|
|
2018
|
|
$ Change
|
||||||
|
(dollars in millions)
|
||||||||||
Three months ended
|
|
|
|
|
|
||||||
Cash used in operating activities
|
$
|
(144.0
|
)
|
|
$
|
(59.1
|
)
|
|
$
|
(84.9
|
)
|
Cash used in investing activities
|
(29.7
|
)
|
|
(625.0
|
)
|
|
595.3
|
|
|||
Cash provided by financing activities
|
38.1
|
|
|
230.4
|
|
|
(192.3
|
)
|
|
January 31,
2019 |
|
October 31,
2018 |
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Accounts Receivable, net
|
$
|
762.3
|
|
|
$
|
554.2
|
|
|
$
|
208.1
|
|
|
38
|
%
|
|
January 31,
2019 |
|
October 31,
2018 |
|
$ Change
|
|
% Change
|
|||||||
|
(dollars in millions)
|
|||||||||||||
Current assets
|
$
|
1,797.6
|
|
|
$
|
1,543.8
|
|
|
$
|
253.8
|
|
|
16
|
%
|
Current liabilities
|
2,025.6
|
|
|
2,102.4
|
|
|
(76.8
|
)
|
|
(4
|
)%
|
|||
Working deficit
|
$
|
(228.0
|
)
|
|
$
|
(558.6
|
)
|
|
$
|
330.6
|
|
|
(59
|
)%
|
Fiscal year
|
(in thousands)
|
||
Remainder of fiscal 2019
|
$
|
11,250
|
|
2020
|
17,813
|
|
|
2021
|
27,187
|
|
|
2022
|
75,000
|
|
|
Total
|
$
|
131,250
|
|
|
Total
|
Remainder of Fiscal 2019
|
Fiscal 2020/ Fiscal 2021
|
Fiscal 2022/ Fiscal 2023
|
Thereafter
|
Other
|
||||||||||||||||||||||
|
(in thousands)
|
|
||||||||||||||||||||||||||
Operating Leases
|
$
|
513,980
|
|
$
|
44,623
|
|
$
|
111,044
|
|
$
|
81,988
|
|
$
|
276,325
|
|
$
|
—
|
|
||||||||||
Purchase Obligations(1)
|
398,130
|
|
258,675
|
|
139,455
|
|
—
|
|
—
|
|
—
|
|
||||||||||||||||
Other Obligations(2)
|
533,352
|
|
411,627
|
|
46,725
|
|
75,000
|
|
—
|
|
—
|
|
||||||||||||||||
Long term accrued income taxes(3)
|
47,932
|
|
—
|
|
1,429
|
|
1,429
|
|
5,357
|
|
39,717
|
|
||||||||||||||||
Total
|
$
|
1,493,394
|
|
$
|
714,925
|
|
$
|
298,653
|
|
$
|
158,417
|
|
$
|
281,682
|
|
$
|
39,717
|
|
(1)
|
Purchase obligations represent an estimate of all open purchase orders and contractual obligations in the ordinary course of business as of
January 31, 2019
. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule or adjust our requirements based on our business needs prior to the delivery of goods or performance of services.
|
(2)
|
These other obligations include our Term Loan, Revolver, a credit facility, and associated fees.
|
(3)
|
Long-term accrued income taxes represent uncertain tax benefits and transition tax liability as of
January 31, 2019
. Currently, a reasonably reliable estimate of timing of payments related to uncertain tax benefits in individual years beyond fiscal
2019
cannot be made due to uncertainties in timing of the commencement and settlement of potential tax audits.
|
Item 3.
|
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
|
Controls and Procedures
|
(a)
|
Evaluation of Disclosure Controls and Procedures.
As of
January 31, 2019
, Synopsys carried out an evaluation under the supervision and with the participation of Synopsys’ management, including the co-Chief Executive Officers and Chief Financial Officer, of the effectiveness of the design and operation of Synopsys’ disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives. Our co-Chief Executive Officers and Chief Financial Officer have concluded that, as of
January 31, 2019
, Synopsys’ disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports Synopsys files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required, and that such information is accumulated and communicated to Synopsys’ management, including the co-Chief Executive Officers and Chief Financial Officer, to allow timely decisions regarding its required disclosure.
|
(b)
|
Changes in Internal Control over Financial Reporting.
On November 4, 2018, Synopsys implemented new and modified existing internal controls for the adoption of the new revenue recognition accounting standard, ASC 606. There were no additional changes in Synopsys’ internal control over financial reporting during the three months ended
January 31, 2019
that have materially affected, or are reasonably likely to materially affect, Synopsys’ internal control over financial reporting.
|
Item 1.
|
|
Legal Proceedings
|
Item 1A.
|
|
Risk Factors
|
•
|
Changes in demand for our products-especially products, such as hardware, generating upfront revenue-due to fluctuations in demand for our customers’ products and due to constraints in our customers’ budgets for research and development, EDA products and services, and Software Integrity solutions;
|
•
|
Product competition in the semiconductor and electronics industries, which can change rapidly due to industry or customer consolidation and technological innovation;
|
•
|
Our ability to innovate and introduce new products and services or effectively integrate products and technologies that we acquire;
|
•
|
Failures or delays in completing sales due to our lengthy sales cycle, which often includes a substantial customer evaluation and approval process because of the complexity of our products and services;
|
•
|
Our ability to implement effective cost control measures;
|
•
|
Our dependence on a relatively small number of large customers, and on such customers continuing to renew licenses and purchase additional products from us, for a large portion of our revenue;
|
•
|
Changes to the amount, composition and valuation of, and any impairments to or write-offs of, our inventory;
|
•
|
Changes in the mix of our products sold, as increased sales of our products with lower gross margins, such as our hardware products, may reduce our overall margins;
|
•
|
Expenses related to our acquisition and integration of businesses and technology;
|
•
|
Changes in tax rules, as well as changes to our effective tax rate, including the tax effects of infrequent or unusual transactions and tax audit settlements;
|
•
|
Delays, increased costs or quality issues resulting from our reliance on third parties to manufacture our hardware products, which includes a sole supplier for certain hardware components;
|
•
|
General economic and political conditions that affect the industries in which we operate, such as disruptions to international trade relationships, including tariffs, export licenses, or other trade barriers affecting our or our suppliers' products; and
|
•
|
Changes in accounting standards, such as ASC 606, as discussed in Note 2 of the
Notes to Unaudited Condensed Consolidated Financial Statements
, which, for example, could impact the expected realization of our backlog.
|
•
|
Cancellations or changes in levels of orders or the mix between upfront products revenue and time-based products revenue;
|
•
|
Delay of one or more orders for a particular period, particularly orders generating upfront products revenue, such as hardware;
|
•
|
Delay in the completion of professional services projects that require significant modification or customization and are accounted for using the percentage of completion method;
|
•
|
Delay in the completion and delivery of IP products in development as to which customers have paid for early access;
|
•
|
Customer contract amendments or renewals that provide discounts or defer revenue to later periods;
|
•
|
The levels of our hardware revenues, which are recognized upfront and are primarily dependent upon our ability to provide the latest technology and meet customer requirements, and which may also impact our levels of excess and obsolete inventory expenses;
|
•
|
Changes in accounting standards, such as ASC 606, as discussed in Note 2 of the
Notes to Unaudited Condensed Consolidated Financial Statements
; and
|
•
|
Changes in our revenue recognition model.
|
•
|
Our ability to anticipate and lead critical development cycles and technological shifts, innovate rapidly and efficiently, improve our existing products, and successfully develop or acquire new products;
|
•
|
Our ability to offer products that provide both a high level of integration into a comprehensive platform and a high level of individual product performance;
|
•
|
Our ability to enhance the value of our offerings through more favorable terms such as expanded license usage, future purchase rights, price discounts and other differentiating rights, such as multiple tool copies, post-contract customer support, “re-mix” rights that allow customers to exchange the software they initially licensed for other Synopsys products, and the ability to purchase pools of technology;
|
•
|
Our ability to compete on the basis of payment terms; and
|
•
|
Our ability to provide engineering and design consulting for our products.
|
•
|
Ineffective or weaker legal protection of intellectual property rights;
|
•
|
Uncertain economic and political conditions in countries where we do business;
|
•
|
Difficulties in adapting to cultural differences in the conduct of business, which may include business practices in which we are prohibited from engaging by the Foreign Corrupt Practices Act or other anti-corruption laws;
|
•
|
Financial risks such as longer payment cycles and difficulty in collecting accounts receivable;
|
•
|
Inadequate local infrastructure that could result in business disruptions;
|
•
|
Government trade restrictions, including tariffs, export licenses, or other trade barriers, and changes to existing trade arrangements between various countries;
|
•
|
Additional taxes, interest, and potential penalties, and uncertainty around changes in tax laws of various countries; and
|
•
|
Other factors beyond our control such as natural disasters, terrorism, civil unrest, war and infectious diseases.
|
•
|
Assert claims of infringement of our intellectual property;
|
•
|
Defend our products from piracy;
|
•
|
Protect our trade secrets or know-how; or
|
•
|
Determine the enforceability, scope and validity of the propriety rights of others.
|
•
|
Potential negative impact on our earnings per share;
|
•
|
Failure of acquired products to achieve projected sales;
|
•
|
Problems in integrating the acquired products with our products;
|
•
|
Difficulties entering into new markets in which we are not experienced or where competitors may have stronger positions;
|
•
|
Potential downward pressure on operating margins due to lower operating margins of acquired businesses, increased headcount costs and other expenses associated with adding and supporting new products;
|
•
|
Difficulties in retaining and integrating key employees;
|
•
|
Substantial reductions of our cash resources and/or the incurrence of debt;
|
•
|
Failure to realize expected synergies or cost savings;
|
•
|
Difficulties in integrating or expanding sales, marketing and distribution functions and administrative systems, including information technology and human resources systems;
|
•
|
Dilution of our current stockholders through the issuance of common stock as part of the merger consideration;
|
•
|
Assumption of unknown liabilities, including tax and litigation, and the related expenses and diversion of resources;
|
•
|
Disruption of ongoing business operations, including diversion of management’s attention and uncertainty for employees and customers, particularly during the post-acquisition integration process;
|
•
|
Potential negative impacts on our relationships with customers, distributors and business partners;
|
•
|
Exposure to new operational risks, regulations, and business customs to the extent acquired businesses are located in regions where we are not currently conducting business;
|
•
|
The need to implement controls, processes and policies appropriate for a public company at acquired companies that may have lacked such controls, processes and policies;
|
•
|
Negative impact on our net income resulting from acquisition-related costs; and
|
•
|
Requirements imposed by government regulators in connection with their review of an acquisition, including required divestitures, required out-licenses of our intellectual property, or restrictions on the conduct of our business or the acquired business.
|
•
|
Our ability to attract a new customer base, including in industries in which we have less experience;
|
•
|
Our successful development of new sales and marketing strategies to meet customer requirements;
|
•
|
Our ability to accurately predict, prepare for, and promptly respond to technological developments in new fields;
|
•
|
Our ability to compete with new and existing competitors in these new industries, many of which may have more financial resources, industry experience, brand recognition, relevant intellectual property rights, or established customer relationships than we currently do, and could include free and open source solutions that provide similar software quality, testing, and security tools without fees;
|
•
|
Our ability to skillfully balance our investment in adjacent markets with investment in our existing products and services;
|
•
|
Our ability to attract and retain employees with expertise in new fields;
|
•
|
Our ability to sell and support consulting services at profitable margins; and
|
•
|
Our ability to manage our revenue model in connection with hybrid sales of licensed products and consulting services or other sales methods.
|
•
|
Increased dependence on a sole supplier for certain hardware components, which may reduce our control over product quality and pricing and may lead to delays in production and delivery of our hardware products, should our supplier fail to deliver sufficient quantities of acceptable components in a timely fashion;
|
•
|
Increasingly variable revenue and decreasingly accurate revenue forecasts, due to fluctuations in hardware revenue, which is recognized upfront upon shipment, as opposed to most sales of software products for which revenue is recognized over time;
|
•
|
Overall reductions in margins, as the gross margin for our hardware products is typically lower than those of our software products;
|
•
|
Longer sales cycles, which create risks of insufficient, excess or obsolete inventory and variations in inventory valuation, which can adversely affect our operating results;
|
•
|
Decreases or delays in customer purchases in favor of next-generation releases, which may lead to excess or obsolete inventory or require us to discount our older hardware products; and
|
•
|
Longer warranty periods than those of our software products, which may require us to replace hardware components under warranty, thus increasing our costs.
|
Item 2.
|
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period (1)
|
|
Total number
of shares
purchased
|
|
Average
price paid
per share
|
|
Total number of
shares purchased
as part of
publicly
announced
programs
|
|
Maximum dollar
value of shares
that may yet be
purchased
under the
programs (1)
|
||||||
Month #1
|
|
|
|
|
|
|
|
|
||||||
November 4, 2018 through December 8, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
325,000,050
|
|
Month #2
|
|
|
|
|
|
|
|
|
||||||
December 9, 2018 through January 5, 2019
|
|
346,300
|
|
|
$
|
84.28
|
|
|
346,300
|
|
|
$
|
295,815,184
|
|
Month #3
|
|
|
|
|
|
|
|
|
||||||
January 6, 2019 through February 2, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
295,815,184
|
|
Total
|
|
346,300
|
|
|
$
|
84.28
|
|
|
346,300
|
|
|
$
|
295,815,184
|
|
(1)
|
As of
January 31, 2019
,
$295.8
million remained available for future repurchases under the program.
|
Item 6.
|
|
Exhibits
|
Exhibit
Number
|
|
|
|
Incorporated By Reference
|
|
Filed
Herewith
|
||||||
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|||
3.1
|
|
|
10-Q
|
|
000-19807
|
|
3.1
|
|
9/15/2003
|
|
|
|
3.2
|
|
|
10-K
|
|
000-19807
|
|
3.2
|
|
12/17/2018
|
|
|
|
4.1
|
|
Specimen Common Stock Certificate(P)
|
|
S-1
|
|
33-45138
|
|
4.3
|
|
2/24/92 (effective date)
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.3
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
SYNOPSYS, INC.
|
|
|
|
|
Date: February 25, 2019
|
By:
|
/s/ T
RAC
P
HAM
|
|
|
Trac Pham
Chief Financial Officer
(Principal Financial Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Synopsys, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 25, 2019
|
|
/s/ Aart J. de Geus
|
|
|
Aart J. de Geus
Co-Chief Executive Officer and Chairman
(Co-Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Synopsys, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: February 25, 2019
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/s/ Chi-Foon Chan
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Chi-Foon Chan
Co-Chief Executive Officer and President
(Co-Principal Executive Officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Synopsys, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: February 25, 2019
|
|
/s/ Trac Pham
|
|
|
Trac Pham
Chief Financial Officer
(Principal Financial Officer)
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/s/ Aart J. de Geus
|
|
Aart J. de Geus
Co-Chief Executive Officer and Chairman
|
|
|
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/s/ Chi-Foon Chan
|
|
Chi-Foon Chan
Co-Chief Executive Officer and President
|
|
|
|
/s/ Trac Pham
|
|
Trac Pham
Chief Financial Officer
|
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