SYNOPSYS INC - Annual Report: 2023 (Form 10-K)

Year Ended October 31, 20232022$ Change% Change (dollars in millions)Time-based products revenue$3,383.6 $2,993.8 $389.8 13 %Percentage of total revenue58 %59 %

The increase in time-based products revenue for fiscal 2023 compared to fiscal 2022 was primarily attributable to an increase in TSL license revenue from arrangements booked in prior periods.

Upfront Products Revenue


	Year Ended October 31,
	2023			2022			$ Change		% Change
	(dollars in millions)
Upfront products revenue	$	1,429.3		$	1,226.7		$	202.6	17	%
Percentage of total revenue	24		%	24		%

Changes in upfront products revenue are generally attributable to normal fluctuations in the extent and timing of customer requirements, which can drive the amount of upfront orders and revenue in any particular period.

The increase in upfront products revenue for fiscal 2023 compared to fiscal 2022 was primarily due to an increase in the sale of IP products and hardware products driven by higher demand from customers.

Upfront products revenue as a percentage of total revenue will likely fluctuate based on the timing of IP and hardware product sales. Such fluctuations will continue to be impacted by the timing of shipments and FSA drawdowns due to customer requirements.

Maintenance and Service Revenue


	Year Ended October 31,
	2023			2022			$ Change		% Change
	(dollars in millions)
Maintenance revenue	$	361.7		$	293.3		$	68.4	23	%
Professional service and other revenue	668.0			567.7			100.3		18	%
Total	$	1,029.7		$	861.0		$	168.7	20	%
Percentage of total revenue	18		%	17		%

The increase in maintenance revenue for fiscal 2023 compared to fiscal 2022 was primarily due to an increase in the volume of hardware arrangements that include maintenance.

The increase in professional services and other revenue for fiscal 2023 compared to fiscal 2022 was primarily due to the timing of IP customization projects.

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Cost of Revenue


	Year Ended October 31,
	2023			2022			$ Change		% Change
	(dollars in millions)
Cost of products revenue	$	763.5		$	653.8		$	109.7	17	%
Cost of maintenance and service revenue	383.8			343.0			40.8		12	%
Amortization of intangible assets	74.9			66.9			8.0		12	%
Total	$	1,222.2		$	1,063.7		$	158.5	15	%
Percentage of total revenue	21		%	21		%

We divide cost of revenue into three categories: cost of products revenue, cost of maintenance and service revenue, and amortization of intangible assets.

Cost of products revenue. Cost of products revenue includes costs related to products sold and software licensed, hardware-related costs including inventory provisions, allocated operating costs related to product support and distribution, royalties paid to third-party vendors, and the amortization of capitalized software development costs.

Cost of maintenance and service revenue. Cost of maintenance and service revenue includes costs to deliver our maintenance services, such as hotline and on-site support, production services and documentation of maintenance updates.

Amortization of intangible assets. Amortization of intangible assets, included in cost of revenue, consists of the amortization of core/developed technology and certain contract rights intangible assets related to acquisitions.

The increase in cost of revenue for fiscal 2023 compared to fiscal 2022 was primarily due to increases of $62.2 million in employee-related costs as a result of headcount increases from hiring, $53.5 million in hardware-related costs including inventory provisions, $13.1 million in facility costs, $8.0 million in amortization of technology-related intangible assets, $6.7 million in costs to fulfill IP consulting arrangements, and $6.1 million in the change in fair value of our executive deferred compensation plan assets.

Operating Expenses

Research and Development


	Year Ended October 31,
	2023			2022			$ Change		% Change
	(dollars in millions)
Research and development expenses	$	1,946.8		$	1,680.4		$	266.4	16	%
Percentage of total revenue	33		%	33		%

The increase in research and development expenses for fiscal 2023 compared to fiscal 2022 was primarily due to higher employee-related costs of $139.2 million as a result of headcount increases as we continue to expand and enhance our product portfolio, increases of $57.4 million in the change in fair value of our executive deferred compensation plan assets, $31.0 million in facility costs, and $20.9 million in consultant and contractor costs.

Sales and Marketing


	Year Ended October 31,
	2023			2022			$ Change		% Change
	(dollars in millions)
Sales and marketing expenses	$	889.0		$	779.8		$	109.2	14	%
Percentage of total revenue	15		%	15		%

The increase in sales and marketing expenses for fiscal 2023 compared to fiscal 2022 was primarily due to increases of $62.9 million in employee-related costs due to headcount increases and higher sales commissions, $13.4 million in the change in fair value of our executive deferred compensation plan assets, $12.0 million in travel and marketing costs due to an increased number of in-person meetings and events, and $8.5 million in facility costs.

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General and Administrative


	Year Ended October 31,
	2023			2022			$ Change		% Change
	(dollars in millions)
General and administrative expenses	$	410.3		$	353.8		$	56.5	16	%
Percentage of total revenue	7		%	7		%

The increase in general and administrative expenses for fiscal 2023 compared to fiscal 2022 was primarily due to increases of $23.4 million in personnel-related costs due to headcount increases from hiring, $16.4 million in maintenance and depreciation expenses, $12.9 million in the change in fair value of our executive deferred compensation plan assets, and $7.4 million in legal, consulting and other professional fees. These increases were partially offset by bad debt recoveries of $15.9 million in the second quarter of fiscal 2022.

Change in Fair Value of Deferred Compensation

The income or loss arising from the change in fair value of our non-qualified deferred compensation plan obligation is recorded in cost of sales and each functional operating expense, with the offsetting change in the fair value of the related assets recorded in other income (expense), net. There is no impact on our net income from the fair value changes in our deferred compensation plan obligation and related assets.

Amortization of Intangible Assets

Amortization of intangible assets included in operating expenses consists of the amortization of trademarks, trade names, and customer relationships intangible assets related to acquisitions.


	Year Ended October 31,
	2023			2022			$ Change		% Change
	(dollars in millions)
Amortization of intangible assets	$	28.0		$	29.8		$	(1.8)	(6)	%
Percentage of total revenue	—		%	1		%

The decrease in amortization of intangible assets for fiscal 2023 compared to fiscal 2022 was primarily due to certain intangible assets becoming fully amortized in fiscal 2023, partially offset by amortization expense related to intangible assets acquired during fiscal 2023.

Restructuring Charges

In the first quarter of fiscal 2023, we initiated a restructuring plan for involuntary employee terminations as part of a business reorganization (the 2023 Plan). The 2023 Plan was substantially completed in the third quarter of fiscal 2023, and total charges under the 2023 Plan were $77.0 million, consisting primarily of severance costs and facility exit costs.

The following is a summary of our restructuring liabilities:


Fiscal Year	Balance at Beginning of Period		Costs Incurred		Cash Payments		Balance at End of Period
	(dollars in millions)
2023	$	—	$	77.0	$	(68.3)	$	8.7
2022	$	14.2	$	12.1	$	(26.3)	$	—
2021	$	1.3	$	33.4	$	(20.5)	$	14.2

See Note 18. Restructuring Charges of the Notes to Consolidated Financial Statements for additional information.

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Other Income (Expense), Net


	Year Ended October 31,
	2023		2022		$ Change		% Change
	(dollars in millions)
Interest income	$	36.7	$	8.5	$	28.2	332	%
Interest expense	(1.2)		(1.7)		0.5		(29)	%
Gains (losses) on assets related to executive deferred compensation plan	20.5		(68.8)		89.3		(130)	%
Foreign currency exchange gains (losses)	(1.5)		4.7		(6.2)		(132)	%
Other, net	(22.0)		10.8		(32.8)		(304)	%
Total	$	32.5	$	(46.5)	$	79.0	(170)	%

The increase in other income (expense) for fiscal 2023 as compared to fiscal 2022 was primarily due to the increase in the fair value of our executive deferred compensation plan assets.

Segment Operating Results

We do not allocate certain operating expenses managed at a consolidated level to our reportable segments. These unallocated expenses consist primarily of stock-based compensation expense, amortization of intangible assets, changes in the fair value of deferred compensation plan, restructuring charges, and certain other operating expenses. See Note 17. Segment Disclosure of the Notes to Consolidated Financial Statements for more information.

Design Automation Segment


	Year Ended October 31,									$ Change			% Change		$ Change			% Change
	2023			2022			2021			2023 vs. 2022					2022 vs. 2021
	(dollars in millions)
Adjusted operating income	$	1,439.7		$	1,206.6		$	924.6		$	233.1		19	%	$	282.0		30	%
Adjusted operating margin	38		%	37		%	34		%	1		%	3	%	3		%	9	%

The increase in adjusted operating income for both fiscal 2023 compared to fiscal 2022 and fiscal 2022 compared to fiscal 2021 was primarily due to an increase in revenue from arrangements booked in prior periods.

Design IP Segment


	Year Ended October 31,									$ Change			% Change		$ Change			% Change
	2023			2022			2021			2023 vs. 2022					2022 vs. 2021
	(dollars in millions)
Adjusted operating income	$	532.1		$	421.5		$	318.5		$	110.6		26	%	$	103.0		32	%
Adjusted operating margin	34		%	32		%	30		%	2		%	6	%	2		%	7	%

The increase in adjusted operating income for both fiscal 2023 compared to fiscal 2022 and fiscal 2022 compared to fiscal 2021 was primarily due to an increase in the revenue of IP products driven by timing of customer demands.

Software Integrity Segment


	Year Ended October 31,									$ Change			% Change		$ Change			% Change
	2023			2022			2021			2023 vs. 2022					2022 vs. 2021
	(dollars in millions)
Adjusted operating income	$	76.3		$	47.0		$	38.3		$	29.3		62	%	$	8.7		23	%
Adjusted operating margin	15		%	10		%	10		%	5		%	50	%	—		%	—	%

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Income Taxes

Our effective tax rate for fiscal 2023 is 6.4%, which included a tax benefit of $65.9 million of U.S. federal research tax credit, a foreign derived intangible income (FDII) deduction of $82.4 million, and excess tax benefits from stock-based compensation of $84.5 million.

Our effective tax rate for fiscal 2022 was 12.3%, which included a tax benefit of $61.5 million of U.S. federal research tax credit, a FDII deduction of $38.9 million, and excess tax benefits from stock-based compensation of $88.8 million.

The Tax Act provides an exemption from federal income taxes for distributions from foreign subsidiaries made after December 31, 2017 that were not subject to the one-time transition tax. We have provided for foreign withholding taxes on undistributed earnings of certain of our foreign subsidiaries to the extent such earnings are no longer considered to be indefinitely reinvested in the operations of those subsidiaries.

In 2017, the Hungarian Tax Authority (the HTA) assessed withholding taxes of approximately $25.0 million and interest and penalties of $11.0 million, against our Hungary subsidiary (Synopsys Hungary). Synopsys Hungary contested the assessment with the Hungarian Administrative Court (Administrative Court). In 2019, as required under Hungarian law, Synopsys Hungary paid the assessment and recorded a tax expense due to an unrecognized tax benefit of $17.4 million, which is net of estimated U.S. foreign tax credits. During 2021 and 2022 a series of appeals, hearings and re-hearings occurred at the Administrative Court and Hungarian Supreme Court. Hearings with the Administrative Court were held on June 30, 2022, September 22, 2022 and April 25, 2023. The Administrative Court issued its written decision in favor of Synopsys Hungary on May 17, 2023, and subsequently refunded Synopsys Hungary the tax, penalty and interest paid in fiscal 2018, as well as additional interest all totaling $39.1 million (including the effect of currency movement). The refunded tax, penalty and interest was recognized as an income tax benefit. The HTA had until July 14, 2023, to file an appeal with the Hungarian Supreme Court and the HTA did not appeal. This concludes the litigation. During the third quarter of fiscal 2023, Synopsys released its unrecognized tax benefit and offsetting U.S. foreign tax credits, resulting in a net benefit of $23.8 million.

See Note 15. Income Taxes of the Notes to Consolidated Financial Statements for further discussion of the provision for income taxes, the impacts related to the Tax Act, and the Hungarian audit.

Liquidity and Capital Resources

Our principal sources of liquidity are funds generated from our business operations and funds that may be drawn down under our revolving credit and term loan facilities.

As of October 31, 2023, we held $1.6 billion in cash, cash equivalents and short-term investments. We also held $2.3 million in restricted cash primarily associated with deposits for office leases and employee loan programs. Our cash equivalents consisted primarily of taxable money market mutual funds, time deposits and highly liquid investments with maturities of three months or less. Our short-term investments include U.S. government and municipal obligations, investment-grade available-for-sale debt and asset backed securities with an overall weighted-average credit rating of approximately AA.

As of October 31, 2023, approximately $753.7 million of our cash and cash equivalents were domiciled in various foreign jurisdictions. We have provided for foreign withholding taxes on the undistributed earnings of certain of our foreign subsidiaries to the extent such earnings are no longer considered to be indefinitely reinvested in the operations of those subsidiaries.

We believe that our existing cash, cash equivalents and short-term investments and sources of liquidity will be sufficient to satisfy our cash requirements and capital return program over the next 12 months and beyond. We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months. Our future cash requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, and the timing and extent of our spending to support our research and development efforts. We also may invest in or acquire businesses, applications or technologies, or may further expand our board-authorized stock repurchase program, which may require the use of significant cash resources and/or additional financing.

Effective fiscal 2023, our research and development expenditures are required to be capitalized and amortized under the Tax Act instead of being deducted when incurred for US tax purposes. As a result of the IRS tax relief for the California winter storms, the due date for our fiscal 2023 federal tax payment was November 16, 2023 and as such, we have deferred our fiscal 2023 federal cash tax payments until the first quarter of fiscal 2024. This results in

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a significant increase to our cash outflows beginning in fiscal 2024. See Note 15. Income Taxes of the Notes to Consolidated Financial Statements for further discussion.

Cash Flows


	Year Ended October 31,
	2023		2022		$ Change
	(dollars in millions)
Cash provided by operating activities	$	1,703.3	$	1,738.9	$	(35.6)
Cash used in investing activities	$	(482.1)	$	(572.6)	$	90.5
Cash used in financing activities	$	(1,196.9)	$	(1,116.3)	$	(80.6)

Cash Provided by Operating Activities

We expect cash from our operating activities to fluctuate as a result of a number of factors, including the timing of our billings and collections, our operating results, and the timing and amount of tax and other liability payments. Cash provided by our operations is dependent primarily upon the payment terms of our license agreements. We generally receive cash from upfront arrangements much sooner than from time-based products revenue, in which the license fee is typically paid either quarterly or annually over the term of the license.

The decrease in cash provided by operating activities was primarily attributable to the timing of customer billings and higher disbursements for operations, partially offset by higher net income and higher accounts receivable collection.

Cash Used in Investing Activities

The decrease in cash used in investing activities was primarily due to lower cash paid for acquisitions of $124.7 million and higher proceeds from the sales and maturities of investments of $44.6 million, partially offset by higher purchases of property and equipment of $53.0 million and higher purchases of investments of $27.3 million.

Cash Used in Financing Activities

The increase in cash used in financing activities was primarily due to higher stock repurchases of $105.7 million, higher taxes paid for net share settlements of $67.4 million partially offset by lower debt repayments of $74.2 million and higher proceeds from issuance of common stock of $15.0 million.

Credit and Term Loan Facilities

On December 14, 2022, we entered into a Fifth Extension and Amendment Agreement (the Fifth Amendment), which amended and restated our previous credit agreement, dated as of January 22, 2021 (as amended and restated, the Credit Agreement).

The Fifth Amendment increased the existing senior unsecured revolving credit facility (the Revolver) from $650.0 million to $850.0 million and extended the maturity date from January 22, 2024 to December 14, 2027, which could be further extended at our option. The Credit Agreement also provides an uncommitted incremental revolving loan facility of up to $150.0 million in the aggregate principal amount. The Credit Agreement contains a financial covenant requiring us to maintain a maximum consolidated leverage ratio, as well as other non-financial covenants. There was no outstanding balance under the Revolver as of October 31, 2023.

In July 2018, we entered into a 12-year 220.0 million Renminbi (approximately $33.0 million) credit agreement with a lender in China to support our facilities expansion. Borrowings bear interest at a floating rate based on the 5-year Loan Prime Rate plus 0.74%. As of October 31, 2023, we had a $18.1 million outstanding balance under the agreement. See Note 7. Financial Assets and Liabilities of the Notes to Consolidated Financial Statements for further discussion.

Stock Repurchase Program

In fiscal 2022, our Board of Directors approved a stock repurchase program with authorization to purchase up to $1.5 billion of our common stock. During the fiscal year 2023, we repurchased 3.0 million shares of common stock at an average price of $387.92 per share for an aggregate purchase price of $1.2 billion. As of October 31, 2023, $194.3 million remained available for future stock repurchases. The pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions, our debt repayment obligations, our stock price, and economic and market conditions.

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The IR Act was enacted in the United States on August 16, 2022. The IR Act imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. The total taxable value of shares repurchased is reduced by the fair market value of any newly issued shares during the taxable year. As of October 31, 2023, this does not have any impact on our consolidated financial statements. Risks related to the IR Act are described in Part I, Item 1A, Risk Factors.

Material Cash Requirements

Our material cash requirements include the following contractual and other obligations.

Leases

We have operating lease arrangements for office space, data center, equipment and other corporate assets. As of October 31, 2023, we had lease payment obligations, net of immaterial sublease income, of $614.8 million, with $84.6 million payable within 12 months.

Purchase Obligations

Purchase obligations represent an estimate of all open purchase orders and contractual obligations in the ordinary course of business for which we have not received the goods or services. As of October 31, 2023, we had $604.3 million of purchase obligations, with $464.2 million payable within 12 months. Although open purchase orders are considered enforceable and legally binding, the terms may allow us the option to cancel, reschedule and adjust our requirements based on our business needs prior to the delivery of goods or performance of services.

Term Loan

Refer to "Credit and Term Loan Facilities” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report on Form 10-K for more information.

Long Term Accrued Income Taxes

As of October 31, 2023, we had $22.0 million of long-term accrued income taxes which represent uncertain tax benefits. Currently, a reasonably reliable estimate of timing of payments related to uncertain tax benefits in individual years beyond fiscal 2023 cannot be made due to uncertainties in timing of the commencement and settlement of potential tax audits.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to financial market risks, primarily due to changes in interest rates, foreign currency exchange rates, and non-marketable equity security price. None of market risk sensitive instruments are held for speculative trading purposes.

Interest Rate Risk. The primary objective of our investment activities is to preserve the invested principal while maximizing yields without significantly increasing risk exposure. To achieve this objective, we maintain our portfolio of investments in a mix of tax-exempt and taxable instruments that meet high credit quality standards, as specified in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer and type of instrument.

Our exposure to market risk for changes in interest rates relates to our cash, cash equivalents, short-term investments, and outstanding debt. As of October 31, 2023, all of our cash, cash equivalents, and debt were at short-term variable or fixed interest rates. As of October 31, 2023, we had short term fixed income investment portfolio of $151.6 million. These securities, as with all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase. While par value generally approximates fair value on variable instruments, rising interest rates over time would increase both our interest income and our interest expense.

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Our cash equivalents and debt by fiscal year of expected maturity and average interest rates as of October 31, 2023 are as follows:


	Maturing in Year Ending
	2024			2025			2026			2027			2028 and thereafter			Total		Fair Value
	(in thousands)
Cash & Cash equivalents	$	1,343,860														$	1,343,860	$	1,343,860
Approx. average interest rate	2.44		%
Short-term investments	$	73,879		$	38,851		$	24,558		$	9,501		$	4,850		$	151,639	$	151,639
Approx. average coupon rate	2.07		%	3.19		%	3.71		%	5.11		%	4.48		%
Short-term debt (variable rate):
Credit Facility in China													$	18,078		$	18,078	$	18,078
Average interest rate													LPR + 0.74% of such rate

Foreign Currency Risk. We operate internationally and are exposed to potentially adverse movements in currency exchange rates. The functional currency of the majority of our active foreign subsidiaries is the foreign subsidiary’s local currency. A weakening U.S. dollar relative to other currencies increases expenses of our foreign subsidiaries when they are translated into U.S. dollars in our consolidated statements of income. Likewise, a strengthening of the U.S. dollar relative to other currencies, including the renminbi or Yen, reduces revenue of our foreign subsidiaries upon translation and consolidation. If the U.S. dollar continues to strengthen, this could adversely affect our financial condition and operating results. In addition, increased international sales in the future may result in greater foreign currency denominated sales, increasing our foreign currency risk. Our operating expenses incurred outside the United States and denominated in foreign currencies are increasing and are subject to fluctuations due to changes in foreign currency exchange rates. If we are not able to successfully hedge against the risks associated with foreign currency fluctuations, our financial condition and operating results could be adversely affected. We enter into hedges in the form of foreign currency forward contracts to reduce our exposure to foreign currency rate changes on non-functional currency denominated forecasted transactions and balance sheet positions including: (1) certain assets and liabilities, (2) shipments forecasted to occur within approximately one month, (3) future billings and revenue on previously shipped orders, and (4) certain future intercompany invoices denominated in foreign currencies. The foreign currency contracts are carried at fair value and denominated in various currencies as listed in the tables below. The duration of forward contracts usually ranges from one month to 27 months. See Note 2. Summary of Significant Accounting Policies and Basis of Presentation and Note 7. Financial Assets and Liabilities of the Notes to Consolidated Financial Statements for a description of our accounting for foreign currency contracts.

The success of our hedging activities depends upon the accuracy of our estimates of various balances and transactions denominated in non-functional currencies. Exchange rates are subject to significant and rapid fluctuations due to a number of factors, including interest rate changes and political and economic uncertainty. Therefore, we cannot predict the prospective impact of exchange rate fluctuations. To the extent our estimates are correct, gains and losses on our foreign currency contracts will be offset by corresponding losses and gains on the underlying transactions. For example, if the Euro were to depreciate by 10% compared to the U.S. dollar prior to the settlement of the Euro forward contracts listed in the table below as of October 31, 2023, the fair value of the contracts would decrease by approximately $26.1 million, and we would be required to pay approximately $26.1 million to the counterparty upon contract maturity. At the same time, the U.S. dollar value of our Euro-based expenses would decline, resulting in positive cash flow of approximately $26.1 million that would offset the loss and negative cash flow on the maturing forward contracts.

If estimates of our balances and transactions prove inaccurate, we will not be completely hedged, and we will record gains or losses, depending upon the nature and extent of such inaccuracy. Although we engage in foreign currency hedging activity, we may be unable to hedge all of our foreign currency risk, which could have a negative impact on our results of operations.

We enter into foreign exchange forward contracts with financial institutions and have not experienced nonperformance by counterparties. Further, we anticipate performance by all counterparties to such agreements.

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Information about the gross notional values of our foreign currency contracts as of October 31, 2023 is as follows:


	Gross Notional Amount in U.S. Dollars		Average Contract Rate
	(in thousands)
Forward Contract Values:
Indian rupee	$	523,162	84.792
Japanese yen	286,654		144.426
Euro	260,562		1.086
Chinese renminbi	146,652		0.141
Canadian dollar	141,956		1.359
Taiwanese dollar	103,717		30.778
Korean won	80,903		1,326.344
Israel shekel	47,809		3.768
British pound sterling	32,556		0.819
Armenian dram	19,716		399.587
Singapore dollar	12,166		1.340
Swiss franc	8,324		0.865
Hungarian forint	2,581		359.851
	$	1,666,758

Equity Price Risk. Our non-marketable equity securities investments totaled $19.1 million and $31.9 million as of October 31, 2023 and 2022, respectively. Our strategic investments include privately-held companies that are considered to be in the start-up or development stages and have a higher inherent risk. Specifically, the technologies or products these companies have under development are typically in the early stages and may never materialize, which could result in a loss of a substantial part of our initial investment in these companies. These investments could be impaired if the carrying value exceeds the fair value and is not expected to recover. The evaluation of these investments is based on information provided by these companies, which is not subject to the same disclosure regulations as U.S. publicly traded companies and as such, the basis for these evaluations is subject to the timing and accuracy of the data provided.

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Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Synopsys, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Synopsys, Inc. and subsidiaries (the Company) as of October 28, 2023 and October 29, 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended October 28, 2023, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of October 28, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 28, 2023 and October 29, 2022, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended October 28, 2023, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 28, 2023 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

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A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the Company’s analysis of terms and conditions in software and intellectual property license contracts with customers

As discussed in Notes 2 and 3 to the consolidated financial statements, the Company generates revenue from the sale of products that include software and intellectual property (IP) licenses, hardware products, maintenance and services. The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. Arrangements with customers can involve hundreds of products and various license rights, and customers negotiate with the Company over many aspects of these arrangements. The Company’s customers often request a broader portfolio of solutions, support and services and seek more favorable terms such as expanded license usage, future purchase rights and other unique rights at an overall lower total cost. The Company recognized total revenue of $5,842.6 million for the year ended October 28, 2023, which included revenue related to software and IP licenses.

We identified the evaluation of the Company’s analysis of terms and conditions in significant software and IP license contracts with customers and their effect on revenue recognition as a critical audit matter. Complex auditor judgment was required to assess the Company’s judgments made in applying revenue recognition requirements to certain terms and conditions.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s revenue recognition process, including the Company’s analysis of terms and conditions in software and IP license contracts with customers and their effect on revenue recognition. We tested certain software and IP license customer contracts by inspecting the underlying customer agreements and evaluating the Company’s assessment of the contractual terms and conditions in accordance with revenue recognition requirements. For a selection of software and IP license contracts with customers entered during the year, we inquired of personnel outside of the accounting function to corroborate our understanding of certain terms and conditions.

/s/ KPMG LLP

We have served as the Company’s auditor since 1992.

Santa Clara, California

December 12, 2023

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SYNOPSYS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)


	October 31,
	2023	2022
ASSETS
Current assets:
Cash and cash equivalents	$	$
Short-term investments
Total cash, cash equivalents and short-term investments
Accounts receivable, net
Inventories
Prepaid and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets, net
Goodwill
Intangible assets, net
Deferred income taxes
Other long-term assets
Total assets	$	$
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	$
Operating lease liabilities
Deferred revenue
Total current liabilities
Long-term operating lease liabilities
Long-term deferred revenue
Long-term debt
Other long-term liabilities
Total liabilities
Redeemable non-controlling interest
Stockholders’ equity:
Preferred stock, $ par value: shares authorized; outstanding
Common stock, $ par value: shares authorized; and shares outstanding, respectively
Capital in excess of par value
Retained earnings
Treasury stock, at cost: and shares, respectively	()	()
Accumulated other comprehensive income (loss)	()	()
Total Synopsys stockholders’ equity
Non-controlling interest
Total stockholders’ equity
Total liabilities, redeemable non-controlling interest and stockholders’ equity	$	$

See the accompanying Notes to Consolidated Financial Statements.

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SYNOPSYS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

Year Ended October 31,

2023

2022

2021

Revenue:

Time-based products

Upfront products

Total products revenue

Maintenance and service

Total revenue

Cost of revenue:

Products

Maintenance and service

Amortization of intangible assets

Total cost of revenue

Gross margin

Operating expenses:

Research and development

Sales and marketing

General and administrative

Amortization of intangible assets

Restructuring charges

Total operating expenses

Operating income

Other income (expense), net

()

Income before income taxes

Provision (benefit) for income taxes

Net income

Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest

()

Net income attributed to Synopsys

Net income per share attributed to Synopsys:

Basic

Diluted

Shares used in computing per share amounts:

Basic

Diluted

See the accompanying Notes to Consolidated Financial Statements.

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SYNOPSYS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)


	Year Ended October 31,
	2023	2022	2021
Net income	$	$	$
Other comprehensive income (loss):
Change in foreign currency translation adjustment	()	()
Change in unrealized gains (losses) on available-for-sale securities, net of tax of $ for periods presented		()	()
Cash flow hedges:
Deferred gains (losses), net of tax of $(), $, and $() for fiscal years 2023, 2022 and 2021, respectively		()
Reclassification adjustment on deferred (gains) losses included in net income, net of tax of $(), $(), and $ for fiscal years 2023, 2022 and 2021, respectively			()
Other comprehensive income (loss), net of tax effects		()
Comprehensive income
Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest	()	()	()
Comprehensive income attributed to Synopsys	$	$	$

See the accompanying Notes to Consolidated Financial Statements.

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SYNOPSYS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

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

Amount

Balance at October 31, 2020

()

Net income

()

Retained earnings adjustment due to adoption of ASC 326

()

Other comprehensive income (loss), net of tax effects

Purchases of treasury stock

()

Equity forward contract, net

()

Common stock issued, net of shares withheld for employee taxes

()

Stock-based compensation

Balance at October 31, 2021

()

Net income

()

Other comprehensive income (loss), net of tax effects

()

Purchases of treasury stock

()

Equity forward contract, net

Common stock issued, net of shares withheld for employee taxes

()

Stock-based compensation

Balance at October 31, 2022

()

Net income

()

Other comprehensive income (loss), net of tax effects

Purchases of treasury stock

()

Equity forward contract, net

()

Common stock issued, net of shares withheld for employee taxes

()

Stock-based compensation

Adjustments to redeemable non-controlling interest

()

Recognition of non-controlling interest upon issuance of subsidiary stock

()

Balance at October 31, 2023

()

See the accompanying Notes to Consolidated Financial Statements.

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SYNOPSYS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Year Ended October 31,
	2023	2022	2021
Cash flows from operating activities:
Net income	$	$	$
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation
Reduction of operating lease right-of-use assets
Amortization of capitalized costs to obtain revenue contracts
Stock-based compensation
Allowance for credit losses		()
Deferred income taxes	()	()	()
Other non-cash
Net changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Accounts receivable	()	()
Inventories	()		()
Prepaid and other current assets	()	()	()
Other long-term assets	()	()	()
Accounts payable and accrued liabilities		()
Operating lease liabilities	()	()	()
Income taxes
Deferred revenue	()
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from sales and maturities of short-term investments
Purchases of short-term investments	()	()	()
Proceeds from sales of long-term investments
Purchases of long-term investments	()	()	()
Purchases of property and equipment	()	()	()
Acquisitions, net of cash acquired	()	()	()
Capitalization of software development costs	()	()	()
Other		()	()
Net cash used in investing activities	()	()	()
Cash flows from financing activities:
Repayment of debt	()	()	()
Issuances of common stock
Payments for taxes related to net share settlement of equity awards	()	()	()
Purchase of equity forward contract	()		()
Purchases of treasury stock	()	()	()
Other	()	()	()
Net cash used in financing activities	()	()	()
Effect of exchange rate changes on cash, cash equivalents and restricted cash	()	()
Net change in cash, cash equivalents and restricted cash		()
Cash, cash equivalents and restricted cash, beginning of year
Cash, cash equivalents and restricted cash, end of year	$	$	$
Supplemental disclosure of cash flow information:
Cash paid for income taxes during the year:	$	$	$
Interest payments during the year:	$	$	$
Non-cash activities:
Purchase of property and equipment included in accounts payable	$	$	$
Conversion of notes receivable to non-marketable equity securities	$	$	$

See the accompanying Notes to Consolidated Financial Statements.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

Note 2.

reportable segments to reportable segments, as described in Segment Reporting policy below.

Certain reclassifications have been made to the prior year's consolidated financial statements to conform to the current year presentation. The reclassifications, including the segment change, did not have a material impact on the prior year's consolidated balance sheets, statements of income, statements of comprehensive income and statements of cash flows.

or less at the date of purchase to be cash equivalents. Our investments in debt securities with remaining maturities greater than at the date of purchase are designated as available-for-sale securities as we may convert these investments into cash at any time to fund general operations, and included in

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

and are carried at fair value, with unrealized gains and losses included in the consolidated balance sheets as a component of accumulated other comprehensive income (loss). For available-for-sale debt securities in an unrealized loss position, we evaluate whether a current expected credit loss exists based on available information relevant to the credit rating of the security, current economic conditions and reasonable and supportable forecasts. The allowance for credit loss is recorded in other income (expense), net, on the consolidated statements of income, not to exceed the amount of the unrealized loss. Any excess unrealized loss other than the credit loss is recognized in accumulated other comprehensive income or loss in the stockholders' equity section of the consolidated balance sheets. The cost of securities sold is based on the specific identification method and realized gains and losses are included in other income (expense), net. See Note 7. Financial Assets and Liabilities of the Notes to Consolidated Financial Statements.

These investments are subject to a periodic impairment review, and are included in other long-term assets on the consolidated balance sheets.

$ $()$ 2022$ $ $()$ 2021$ $ $()$

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Depreciation expenses were $ million, $ million and $ million in fiscal 2023, 2022 and 2021, respectively. Repair and maintenance costs are expensed as incurred and such costs were $ million, $ million and $ million in fiscal 2023, 2022 and 2021, respectively.

- BuildingsFurniture and fixturesLeasehold improvements Shorter of the lease term or the estimated useful life

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

There was goodwill impairment in fiscal 2023, 2022 and 2021.

There were impairment charges for long-lived assets in fiscal 2023, 2022 and 2021.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

days for our software products and for up to for our hardware products.

For example, in connection with a litigation campaign launched by Bell Semiconductor LLC (Bell Semic), a patent monetization entity, some customers have requested defense and indemnification against claims of patent infringement asserted by Bell Semic in various district court litigations and at the U.S. International Trade Commission. Bell Semic alleges that the customers’ use of one or more features of certain of our products infringes one or more of six patents held by Bell Semic. We have offered to defend some of our customers consistent with the terms of our End User License Agreement. We are unable to estimate the potential impact of these commitments on the future results of operations.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

reportable segments to the following reportable segments: (1) Design Automation, which includes our advanced silicon design, verification products and services, system integration products and services, digital, custom and FPGA IC design software, verification software and hardware products, manufacturing software products and other; (2) Design IP, which includes our Design IP products; and (3) Software Integrity, which includes solutions that test software code for security vulnerabilities and quality defects, as well as professional and managed services. As such, prior period reportable segment results and related disclosures have been reclassified to reflect our current reportable segments. million to retained earnings as of beginning of fiscal 2021. Please see the “Allowance for Credit Losses” accounting policy above.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts. We early adopted the standard in the second quarter of fiscal 2022 on a prospective basis, and the adoption did not have a material impact on our consolidated financial statements.

There have been no recently adopted accounting pronouncements during fiscal 2023 that are of significance to us.

Recent Accounting Pronouncements Not Yet Adopted

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (ASU 2022-03), which applies to all equity securities measured at fair value that are subject to contractual sale restrictions. This change prohibits entities from taking into account contractual restrictions on the sale of equity securities when estimating fair value and introduces required disclosures for such transactions. The standard will become effective for us beginning on November 1, 2024 and will be applied prospectively. Early adoption is permitted. Any future impact from the adoption of this guidance will depend on the facts and circumstances of future transactions.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Note 3.

% % %Design IP % % %Software Integrity % % %Other % % %Total % % %

Contract Balances

The contract assets indicated below are presented as prepaid and other current assets in the consolidated balance sheets. The contract assets are transferred to receivables when the rights to invoice and receive payment become unconditional. Unbilled receivables are presented as accounts receivable, net, in the consolidated balance sheets.

$ Unbilled receivables$ $ Deferred revenue$ $

During fiscal 2023, we recognized revenue of $ billion, including previously unfulfilled contracts that have expired and are no longer subject to an implied promise to provide future services, that was included in the deferred revenue balance as of October 31, 2022. During fiscal 2022, we recognized revenue of $ billion that was included in the deferred revenue balance as of October 31, 2021.

Contracted but unsatisfied or partially unsatisfied performance obligations (backlog) were approximately $ billion as of October 31, 2023, which includes $ billion in non-cancellable Flexible Spending Account (FSA) commitments from customers where actual product selection and quantities of specific products or services are to be determined by customers at a later date. We have elected to exclude future sales-based royalty payments from the remaining performance obligations. Approximately % of the backlog as of October 31, 2023, excluding non-cancellable FSA, is expected to be recognized as revenue over the next months. The majority of the remaining backlog is expected to be recognized in the following . The backlog was approximately $ billion as of October 31, 2022, which included $ billion in non-cancellable FSA commitments from customers.

During fiscal 2023 and 2022, we recognized $ million and $ million, respectively, from performance obligations satisfied from sales-based royalties earned during the periods.

Costs of Obtaining a Contract with Customer

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

million and $ million, respectively. The balances are included in other long-term assets in our consolidated balance sheets. Amortization of these assets were $ million, $ million and $ million during fiscal 2023, 2022 and 2021, respectively, and are included in sales and marketing expense in our consolidated statements of income.

Note 4.

million, net of cash acquired. The aggregate purchase consideration was preliminary and allocated as follows: $ million to identifiable intangible assets, $ million to goodwill, and $ million to net tangible liabilities. The acquired identifiable intangible assets were valued using the income approach and are being amortized over their respective useful lives ranging from to years. The goodwill recognized from these acquisitions was assigned to the Design Automation reporting unit, of which $ million was deductible for income tax purposes.

We have included the financial results of the fiscal 2023 acquisitions in our consolidated financial statements from their respective acquisition date. We do not consider these acquisitions to be material, individually or in the aggregate, to our consolidated financial statements.

Fiscal 2022

NTT Security AppSec Solutions Inc.

On June 22, 2022, we completed the acquisition of all outstanding shares of NTT Security AppSec Solutions Inc. (which operated under the name WhiteHat Security, or WhiteHat), a provider of dynamic application security testing solutions, from NTT Security Corporation for an aggregate purchase price of $ million, net of cash acquired. With this acquisition, we broadened our product offering in the application security testing market.

The aggregate purchase consideration was allocated as follows: $ million to identifiable intangible assets, $ million to goodwill, and $ million to net tangible liabilities. The goodwill was assigned to the Software Integrity reporting unit and the amount recognized was deductible for tax purposes. The acquired identifiable intangible assets of $ million were valued using the income approach and are being amortized over their respective useful lives ranging from to years.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

% equity interest in OpenLight Photonics, Inc. (OpenLight) for cash consideration of $ million. The remaining % equity interest in OpenLight is held by Juniper Networks, Inc. (the Minority Investor) from their contribution of IP and certain tangible assets.

The agreement with the Minority Investor contains redemption features whereby the interest held by the Minority Investor is redeemable either (i) at the option of the Minority Investor on or after the third anniversary of the acquisition or sooner in certain circumstances or (ii) at our option beginning on the third anniversary of the acquisition. This option is exercisable at the greater of fair value at the time of redemption or $ million and was valued at $ million, resulting in a total consideration of $ million.

The purchase price was allocated as follows: $ million to identifiable intangible assets and $ million to goodwill, which were attributable to the Design Automation reporting unit. There was tax-deductible goodwill related to the acquisition.

During fiscal 2023, our ownership interest in OpenLight was reduced to % as a result of the recognition of non-controlling interest upon issuance of OpenLight stock.

During fiscal 2023, OpenLight incurred a net loss of $ million, of which $ million was attributable to redeemable non-controlling interest. As of October 31, 2023, the carrying value of the redeemable non-controlling interest was $ million in the consolidated balance sheets.

Other Fiscal 2022 Acquisitions

During fiscal 2022, we completed other acquisitions for aggregate purchase consideration of $ million, net of cash acquired. The purchase price was allocated as follows: $ million to identifiable intangible assets, $ million to net tangible liabilities, and $ million to goodwill, which were attributable to the Design Automation reporting unit. There was tax-deductible goodwill related to the acquisitions.

Fiscal 2021

During fiscal 2021, we completed several acquisitions for an aggregate consideration of $ million, net of cash acquired. We do not consider these acquisitions to be material, individually or in the aggregate, to our consolidated financial statements. Total purchase consideration was allocated as follows: $ million to identifiable intangible assets, $ million to net tangible liabilities, and $ million to goodwill, of which $ million was attributable to the Design Automation reporting unit, $ million was attributable to the Designed IP reporting unit, and $ million was attributable to the Software Integrity reporting unit.

Approximately $ million of the goodwill related to the fiscal 2021 acquisitions was deductible for tax purposes.

Preliminary Fair Value Estimates

For all acquisitions completed in fiscal 2023, the purchase price was allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their preliminary estimated fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of acquisition. These estimates and assumptions are subject to change as additional information becomes available during the respective measurement period, which is not expected to exceed 12 months from applicable acquisition date. The primary areas of those preliminary estimates relate to certain tangible assets and liabilities, identifiable intangible assets, and income taxes.

Acquisition-Related Transaction Costs

Acquisition-related transaction costs were $ million, $ million and $ million during fiscal 2023, 2022 and 2021, respectively. These costs consist of professional fees and administrative costs and were expensed as incurred in our consolidated statements of income.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Note 5.

reportable segments, and reporting units are determined to be the same as reportable segments. We performed a quantitative impairment assessment by estimating the fair value of our new reporting units and reallocating goodwill to the reporting units using a relative fair value method. impairment of goodwill was identified before and after the change in reporting units. We also performed the required annual goodwill impairment test in the fourth quarter of fiscal 2023 and concluded that goodwill was not impaired. $ $ $ Additions Adjustments Effect of foreign currency translation()() ()Balance at October 31, 2022 Additions Adjustments Effect of foreign currency translation() ()Balance at October 31, 2023$ $ $ $

Intangible Assets

$ $ Customer relationships Contract rights intangible Trademarks and trade names Capitalized software development costs Total$ $ $

Intangible assets as of October 31, 2022 consists of the following:

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ $ Customer relationships Contract rights intangible Trademarks and trade names Capitalized software development costs Total$ $ $ $ $ Customer relationships Contract rights intangible Trademarks and trade names

Capitalized software development costs(1)

Total$ $ $

(1)Amortization of capitalized software development costs is included in cost of products revenue in the consolidated statements of income.

2025 2026 2027 2028 2029 and thereafter Total$

Note 6.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ Unbilled accounts receivable Total accounts receivable Less: allowance for credit losses()()Total$ $ Property and equipment, net:Computer and other equipment$ $ Buildings Furniture and fixtures Land Leasehold improvements

Less: accumulated depreciation (1)

()()Total$ $ Other long-term assets:Deferred compensation plan assets$ $ Capitalized commission, net

Other

Total$ $ Accounts payable and accrued liabilities:Payroll and related benefits$ $

Accrued income taxes

Other accrued liabilities Accounts payable Total$ $ Other long-term liabilities:Deferred compensation plan liabilities$ $

Other

Total$ $

(1)Accumulated depreciation includes write-offs due to retirement of fully depreciated fixed assets.

Note 7.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ $ $ $ U.S. Treasury, agency & T-bills Total:$ $ $ $ $ Short-term investments:U.S. Treasury, agency & T-bills$ $ $()$()$ Municipal bonds () Corporate debt securities ()() Asset-backed securities ()() Total:$ $ $()$()$

(1)See Note 8. Fair Value Measurements for further discussion on fair values.

Our short-term investment portfolio includes both corporate and government debt securities that have a maximum maturity of . The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As yields increase, those securities with a lower yield-at-cost show a mark-to-market unrealized loss. Most of our unrealized losses are due to changes in market interest rates, and bond yields. We believe that we have the ability to realize the full value of all of these investments upon maturity. As of October 31, 2023, our investments that were in a continuous loss position of 12 months or more, as well as the unrealized losses on those investments, were immaterial.

$ 1-5 years 5-10 years >10 years Total$ $

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ $ $ $ Total:$ $ $ $ $ Short-term investments:U.S. Treasury, agency & T-bills$ $ $()$()$ Municipal bonds ()() Corporate debt securities ()() Asset-backed securities ()() Total:$ $ $()$()$

(1)See Note 8. Fair Value Measurements for further discussion on fair values.

$ Restricted cash included in prepaid and other current assets Restricted cash included in other long-term assets Total cash, cash equivalents and restricted cash$ $

Non-marketable equity securities

Our portfolio of non-marketable equity securities consists of strategic investments in privately held companies. There were material impairments of non-marketable equity securities in fiscal 2023, fiscal 2022, or fiscal 2021.

Derivatives

We recognize derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value and provide qualitative and quantitative disclosures about such derivatives. We operate internationally and are exposed to potentially adverse movements in foreign currency exchange rates. We enter into hedges in the form of foreign currency forward contracts to reduce our exposure to foreign currency rate changes on non-functional currency denominated forecasted transactions and balance sheet positions including: (1) certain assets and liabilities, (2) shipments forecasted to occur within approximately , (3) future billings and revenue on previously shipped orders, and (4) certain future intercompany invoices denominated in foreign currencies.

The duration of forward contracts, the majority of which are short-term, ranges from approximately month to months at inception. We do not use foreign currency forward contracts for speculative or trading purposes. We enter into foreign exchange forward contracts with high credit quality financial institutions that are rated "A" or above and to date have not experienced nonperformance by counterparties. In addition, we mitigate credit risk in derivative

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

months or less. Certain forward contracts are rolled over periodically to capture the full length of exposure to our foreign currency risk, which can be up to . To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on the hedged transactions. The related gains or losses resulting from changes in fair value of these hedges is initially reported, net of tax, as a component of other comprehensive income (loss) (OCI) in stockholders’ equity and reclassified into revenue or operating expenses, as appropriate, at the time the hedged transactions affect earnings. We expect a majority of the hedge balance in OCI to be reclassified to the statements of income within the next months.

We did record any gains or losses related to discontinuation of cash flow hedges for fiscal years 2023, 2022 and 2021.

Non-designated Hedging Activities

Our foreign exchange forward contracts that are used to hedge non-functional currency denominated balance sheet assets and liabilities are not designated as hedging instruments. Accordingly, any gains or losses from changes in the fair value of the forward contracts are recorded in other income (expense), net. The gains and losses on these forward contracts generally offset the gains and losses associated with the underlying assets and liabilities, which are also recorded in other income (expense), net. The duration of the forward contracts for hedging our balance sheet exposure is approximately .

We also have certain foreign exchange forward contracts for hedging certain international revenues and expenses that are not designated as hedging instruments. Accordingly, any gains or losses from changes in the fair value of the forward contracts are recorded in other income (expense), net. The gains and losses on these forward contracts generally offset the gains and losses associated with the foreign currency in operating income. The duration of these forward contracts is usually less than . The overall goal of our hedging program is to minimize the impact of currency fluctuations on the net income over the fiscal year.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

)$()$() $ Net fair value$()$()

Our exposure to the market gains or losses will vary over time as a function of currency exchange rates. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.

$ Accrued liabilities$ $ Balance at October 31, 2022Other current assets$ $ Accrued liabilities$ $

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Revenue$()Foreign exchange contractsOperating expenses Operating expenses()Total$ $()Fiscal year ended October 31, 2022Foreign exchange contractsRevenue$()Revenue$ Foreign exchange contractsOperating expenses()Operating expenses()Total$()$()Fiscal year ended October 31, 2021Foreign exchange contractsRevenue$ Revenue$ Foreign exchange contractsOperating expenses Operating expenses Total$ $

Other Commitments — Credit and Term Loan

The Fifth Amendment increased the existing senior unsecured revolving credit facility (the Revolver) from $ million to $ million and extended the maturity date from January 22, 2024 to December 14, 2027, which could be further extended at our option. The Credit Agreement also provides an uncommitted incremental revolving loan facility of up to $ million in the aggregate principal amount. The Credit Agreement contains a financial covenant requiring us to maintain a maximum consolidated leverage ratio, as well as other non-financial covenants. As of October 31, 2023, we were in compliance with the financial covenant.

Borrowings bear interest at the adjusted term Secured Overnight Financing Rate (SOFR) plus an applicable margin between % and % based upon our consolidated leverage ratio. In addition, facility fees are payable on the Revolver at rates between % and % per year based on our leverage ratio on the daily amount of the revolving commitment.

There was outstanding balance under the Revolver as of October 31, 2023 and October 31, 2022.

In July 2018, we entered into a -year million Renminbi (approximately $ million) credit agreement with a lender in China to support our facilities expansion. Borrowings bear interest at a floating rate based on the -year Loan Prime Rate plus %. As of October 31, 2023, we had a $ million outstanding balance under the agreement. The carrying amount of the short-term and long-term debt approximates the estimated fair value.

Note 8.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

On a recurring basis, we measure the fair value of certain assets and liabilities, which include cash equivalents, short-term investments, non-qualified deferred compensation plan assets, and foreign currency derivative contracts.

Our cash equivalents and short-term investments are classified within Level 1 or Level 2 because they are valued using quoted market prices in an active market or alternative independent pricing sources and models utilizing market observable inputs.

Our non-qualified deferred compensation plan assets consist of money market and mutual funds invested in domestic and international marketable securities that are directly observable in active markets and are therefore classified within Level 1.

Our foreign currency derivative contracts are classified within Level 2 because these contracts are not actively traded and the valuation inputs are based on quoted prices and market observable data of similar instruments.

Our borrowings under our Credit and Term Loan facilities are classified within Level 2 because these borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to us for debt with similar terms and maturities. See Note 7. Financial Assets and Liabilities of the Notes to Consolidated Financial Statements for more information on these borrowings.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ $ $

U.S. Treasury, agency & T-bills

Short-term investments:

U.S. Treasury, agency & T-bills

Municipal bonds Corporate debt securities Asset-backed securities Prepaid and other current assets:Foreign currency derivative contracts Other long-term assets:Deferred compensation plan assets Total assets$ $ $ $ LiabilitiesAccounts payable and accrued liabilities:Foreign currency derivative contracts$ $ $ $ Other long-term liabilities:Deferred compensation plan liabilities Total liabilities$ $ $ $

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ $ $ Short-term investments:

U.S. Treasury, agency & T-bills

Assets/Liabilities Measured at Fair Value on a Non-Recurring Basis

Non-Marketable Equity Securities

Note 9.

years. Because we are not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments. $

Variable lease expense (2)

Total lease expense$ $

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ ROU assets obtained in exchange for operating lease liabilities$ $ Weighted-average discount rate % % 2025 2026 2027 2028 2029 and thereafter

Total future minimum lease payments

Less: Imputed interest

Total lease liabilities

In addition, certain facilities owned by us were leased to third parties under non-cancellable operating lease agreements. These leases have annual escalating payments and have expiration dates through March 31, 2031 in accordance with the terms and conditions of the existing agreement. 2025 2026 2027 2028 2029 and thereafter Total$

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Note 10.

million payment made from us to Mentor. As a result of the settlement, the litigation with Mentor was dismissed and the injunction entered in connection with that litigation was vacated. The settlement included mutual patent cross-licenses between us and Siemens, and between us and Mentor. We and Mentor also amended an existing interoperability agreement to collaborate on a wide range of EDA products for the benefit of our mutual customers. The amendment includes a one-time termination charge between $ and $ million, payable to Mentor under certain conditions.

Tax Matters

We undergo examination from time to time by U.S. and foreign authorities for non-income based taxes, such as sales, use and value-added taxes, and are currently under examination by tax authorities in certain jurisdictions. If the potential loss from such examinations is considered probable and the amount or the range of loss could be estimated, we would accrue a liability for the estimated expense. In addition to the foregoing, we are, from time to time, party to various other claims and legal proceedings in the ordinary course of our business, including with tax and other governmental authorities. For a description of certain of these other matters, refer to Note 15. Income Taxes of the Notes to Consolidated Financial Statements.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Note 11.

)$()Unrealized gains (losses) on derivative instruments, net of taxes()()Unrealized gains (losses) on available-for-sale securities, net of taxes()()Total$()$())$ $ Operating expenses()() Total$()$()$

Amounts reclassified in fiscal 2023, 2022, and 2021 primarily consisted of gains (losses) from our cash flow hedging activities. See Note 7. Financial Assets and Liabilities of the Notes to Consolidated Financial Statements.

Note 12.

billion of our common stock. As of October 31, 2023, $ million remained available for future repurchases under the Program.

In August 2023, we entered into an accelerated stock repurchase agreement (the August 2023 ASR) to repurchase an aggregate of $ million of our common stock. Pursuant to the August 2023 ASR, we made a prepayment of $ million to receive initial deliveries of shares valued at $ million. The remaining balance of $ million was settled in November 2023. Total shares purchased under the August 2023 ASR were approximately million shares, at an average purchase price of $ per share.

Average purchase price per share$ $ $ Aggregate purchase price$ $ $ Reissuance of treasury stock

(1) Excludes shares and $ million equity forward contract that was settled in November 2023.

(2) Excludes shares and $ million equity forward contract that was settled in November 2021.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Note 13.

% of the lesser of the fair market value of the shares at (1) the beginning of an offering period (generally, a rolling period) or (2) the purchase date (generally occurring at the end of each semi-annual purchase period), subject to the terms of ESPP, including a limit on the number of shares that may be purchased in a purchase period.

On April 12, 2022, our stockholders approved amendments to the ESPP to increase the number of shares of common stock authorized for issuance under the plan by million shares. During fiscal 2023, 2022 and 2021, we issued million, million, and million shares, respectively, under the ESPP at average per share prices of $, $ and $, respectively. As of October 31, 2023, million shares of common stock were reserved for future issuance under the ESPP.

Equity Compensation Plans

2006 Employee Equity Incentive Plan. On April 25, 2006, our stockholders approved the 2006 Employee Equity Incentive Plan (2006 Employee Plan), which provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights and other forms of equity compensation, including performance stock awards and performance cash awards, as determined by the plan administrator. The terms and conditions of each type of award are set forth in the 2006 Employee Plan and in the award agreements governing particular awards.

Restricted stock units are granted under the 2006 Employee Plan as part of our incentive compensation program. In general, restricted stock units vest over three to and are subject to the employee's continuing service with us. Restricted stock units granted with specific performance criteria vest to the extent performance conditions are met. Restricted stock units granted with certain market conditions vest over two to to the extent these market conditions are met. For each restricted stock unit granted under the 2006 Employee Plan, a share reserve ratio of is applied for the purpose of determining the remaining number of shares reserved for future grants under the plan. Options granted under this plan generally have a contractual term of and generally vest over .

On April 12, 2023, our stockholders amended the 2006 Employee Plan to, among other things, increase the number of shares of common stock reserved for future issuance under the plan by million shares. As of October 31, 2023, an aggregate of million stock options and million restricted stock units were outstanding, and million shares were available for future issuance under the 2006 Employee Plan.

2005 and 2017 Non-Employee Directors Equity Incentive Plans. On April 6, 2017, our stockholders approved the 2017 Non-Employee Directors Equity Incentive Plan (2017 Directors Plan). In connection with stockholder approval of the 2017 Directors Plan, the 2005 Non-Employee Directors Equity Incentive Plan (2005 Directors Plan) was terminated as of April 6, 2017, and no awards could be granted under the 2005 Directors Plan after that date.

Under the 2005 Directors Plan, we granted options, which vest over a period of three to to non-employee directors. As of October 31, 2023, stock options were outstanding under the 2005 Directors Plan.

The 2017 Directors Plan provides for equity awards to non-employee directors in the form of stock options, restricted stock units, restricted stock or a combination thereof. On April 6, 2017, our stockholders approved an aggregate of million shares of common stock reserved under the 2017 Directors Plan.

We grant restricted stock awards and options under the 2017 Directors Plan. Restricted stock awards generally vest on an annual basis and options vest over a period of . As of October 31, 2023, shares of restricted stock awards were unvested and stock options were outstanding, and a total of shares of common stock were reserved for future issuance under the 2017 Directors Plan.

Other Assumed Stock Plans through Acquisitions. We have assumed certain outstanding stock awards of acquired companies, including restricted stock units and options. If these assumed equity awards are canceled, forfeited or expire unexercised, the underlying shares do not become available for future grant. As of October 31, 2023, thousand shares of our common stock remained subject to such outstanding assumed equity awards.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Granted(2)

Vested(4)

()$ $ Forfeited()$ Balance at October 31, 2021 $

Granted(3)

Vested(4)

()$ $ Forfeited()$ Balance at October 31, 2022 $

Granted(3)

Vested(4)

()$ $ Forfeited()$ Balance at October 31, 2023 $

(1)No restricted stock units were assumed in connection with acquisitions in the last three fiscal years, but the balance at fiscal year-end includes certain restricted stock units that were previously assumed in connection with acquisitions.

(2)The number of granted restricted stock units includes those granted to senior management with performance-based vesting criteria (in addition to service-based vesting criteria) (performance-based RSUs) reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied.

(3)The number of granted restricted stock units includes those granted to senior management with market-based and performance-based vesting criteria (in addition to service-based vesting criteria) (market-based RSUs) reported at the maximum possible number of shares that may ultimately be issuable if all applicable market-based and performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied.

(4)The number of vested restricted stock units includes shares that were withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ $ Granted $ Exercised()$ Canceled/forfeited/expired()$ Balance at October 31, 2021 $ $ Granted $ Exercised()$ Canceled/forfeited/expired()$ Balance at October 31, 2022 $ $ Granted $ Exercised()$ Canceled/forfeited/expired()$ Balance at October 31, 2023 $ $ Vested and expected to vest as of October 31, 2023 $ $ Exercisable at October 31, 2023 $ $

(1)No stock options were assumed in connection with acquisitions in the last three fiscal years, but the balance at fiscal year-end includes certain stock options that were previously assumed in connection with acquisitions.

The aggregate intrinsic value in the preceding table represents the pre-tax intrinsic value based on stock options with an exercise price less than our closing stock price of $ as of October 31, 2023.

$ $ Average exercise price per share$ $ $

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Options granted(2)

()

Options canceled/forfeited/expired(2)

Restricted stock units granted(1)(3)

()

Restricted stock units forfeited(1)

Additional shares reserved Balance at October 31, 2021

Options granted(2)

()

Options canceled/forfeited/expired(2)

Restricted stock units granted(1)(4)

()

Restricted stock units forfeited(1)

Additional shares reserved Balance at October 31, 2022

Options granted(2)

()

Options canceled/forfeited/expired(2)

Restricted stock units granted(1)(4)

()

Restricted stock units forfeited(1)

Additional shares reserved Balance at October 31, 2023

(1)Restricted stock units includes awards granted under the 2006 Employee Plan and assumed through acquisitions. The number of RSUs reflects the application of the award multiplier of as described above.

(2)Options granted by us are not subject to the award multiplier ratio described above.

(3)The number of granted restricted stock units includes performance-based RSUs reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied.

(4)The number of granted restricted stock units includes market-based RSUs reported at the maximum possible number of shares that may ultimately be issuable if all applicable market-based and performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ Granted $ Vested()$ Forfeited $

Unvested at October 31, 2021

$ Granted $ Vested()$ Forfeited $ Unvested at October 31, 2022 $ Granted $ Vested()$ Forfeited $ Unvested at October 31, 2023 $

Valuation and Expense of Stock-Based Compensation. We estimate the fair value of stock options and employee stock purchase rights under the ESPP on the grant date. The value of awards expected to vest is recognized as expense over the applicable service periods. We use the Black-Scholes option-pricing model to determine the fair value of stock options and employee stock purchase plan rights. The Black-Scholes option-pricing model incorporates various assumptions including expected volatility, expected term and interest rates. The expected volatility for both stock options and employee stock purchase rights is estimated by a combination of implied volatility for publicly traded options of our common stock with a term of six months or longer and the historical stock price volatility over the estimated expected term of such awards, which is based on historical experience.

Restricted stock units are valued based on the closing price of our common stock on the grant date. We use the straight-line attribution method to recognize stock-based compensation costs over the service period of the award except for performance-based RSUs and market-based RSUs.

We estimate the probability of achievement of applicable performance goals for performance-based RSUs in each reporting period and recognize related stock-based compensation expense using the graded-vesting method. The amount of stock-based compensation expense recognized in any period can vary based on the attainment or expected attainment of the various performance goals. If such performance goals are not ultimately met, no compensation expense is recognized and any previously recognized compensation expense is reversed.

We estimated the fair value of market-based RSUs on the grant date using a Monte Carlo simulation model. Under the award agreements, the vesting of the market-based RSUs is contingent on achieving total stockholder return (TSR) relative to a peer index as well as revenue growth metrics. The maximum potential awards that may be earned are % of the target number of the initial awards. For market-based RSUs granted in February, May, August and December 2022, the performance period during which the achievement goals will be measured is fiscal 2022 and fiscal 2023. The awards will vest in equal increments in December 2023 and December 2024 if the TSR target, revenue growth metrics, and service conditions are achieved. For market-based RSUs granted in February and August 2023, the performance period during which the achievement goals will be measured is fiscal 2023, fiscal 2024 and fiscal 2025. The awards will vest in December 2025 if the TSR target, revenue growth metrics, and service conditions are achieved.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Risk-free interest rate

%- %

% - %

Volatility

% -%

% - %

%- %

Weighted average estimated fair value

ESPP:

Expected life (in years)

Risk-free interest rate

% - %

Volatility

% - %

Weighted average estimated fair value

—Risk-free interest rate

% - %

—Volatility

% - %

—

Grant date fair value

$ - $

—

$ $ Cost of maintenance and service Research and development expense Sales and marketing expense General and administrative expense Stock-based compensation expense before taxes Income tax benefit()()()Stock-based compensation expense after taxes$ $ $

As of October 31, 2023, we had $ billion of total unrecognized stock-based compensation expense relating to options, RSUs and restricted stock awards, which is expected to be recognized over a weighted average period of years. As of October 31, 2023, we had $ million of total unrecognized stock-based compensation expense relating to the ESPP, which is expected to be recognized over a period of years.

Deferred Compensation Plan. We maintain the Synopsys Deferred Compensation Plan (Deferred Plan), which permits eligible employees to defer up to % of their annual cash base compensation and up to % of their eligible cash variable compensation. Amounts may be withdrawn from the Deferred Plan pursuant to elections made by the employees in accordance with the terms of the plan. Since the inception of the Deferred Plan, we have not made any matching or discretionary contributions to the Deferred Plan. There are no Deferred Plan provisions that

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Plan liabilities recorded in other long-term liabilities(1)

$ $

(1)Undistributed deferred compensation balances due to participants.

Income or loss from the change in fair value of the Deferred Plan assets is recorded in other income (expense), net. The increase or decrease in the fair value of the undistributed Deferred Plan obligation is recorded in total cost of revenue and operating expense.

$()$ Other income (expense), net () Net increase (decrease) to net income$ $ $

Other Retirement Plans. We sponsor various defined contribution retirement plans for our eligible U.S. and non-U.S. employees. Total contributions to these plans were $ million, $ million, and $ million in fiscal 2023, 2022, and 2021, respectively. For employees in the United States and Canada, we match pre-tax employee contributions up to a maximum of U.S. $ and Canadian $, respectively, per participant per year.

Certain of our international subsidiaries sponsor defined benefit retirement plans. The unfunded projected benefit obligation for these defined benefit retirement plans as of October 31, 2023 and 2022 was immaterial and recorded in other long-term liabilities in our consolidated balance sheets.

Note 14.

$ $ Denominator:Weighted average common shares for basic net income per share Dilutive effect of common share equivalents from equity-based compensation Weighted average common shares for diluted net income per share Net income per share attributed to Synopsys:Basic$ $ $ Diluted$ $ $ Anti-dilutive employee stock-based awards excluded

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Note 15.

$ $ Foreign

Total income (loss) before provision for income taxes

$ $ $ $ $ State Foreign Deferred:Federal()()()State() Foreign() ()()()()Provision (benefit) for income taxes$ $ $ $ $ State tax (benefit), net of federal effect ()()Federal tax credits()()()

Tax (benefit) on foreign earnings

() Foreign-derived intangible income deduction()()()Tax settlements() ()Stock-based compensation()()()Changes in valuation allowance Other Provision (benefit) for income taxes$ $ $

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Deferred compensation Intangible and depreciable assets Capitalized research and development costs Stock-based compensation Tax loss carryovers Foreign tax credit carryovers Research and other tax credit carryovers Operating Lease Liabilities

Accruals and reserves

Other

Gross deferred tax assets Valuation allowance()()Total deferred tax assets Deferred tax liabilities:

Intangible assets

Operating lease Right-of-Use-Assets

Accruals and reserves

Undistributed earnings of foreign subsidiaries

Other

Total deferred tax liabilities Net deferred tax assets$ $

It is more likely than not that the results of future operations will be able to generate sufficient taxable income to realize the net deferred tax assets. The valuation allowance provided against our deferred tax assets as of October 31, 2023 is mainly attributable to foreign tax credits available to non-U.S. subsidiaries and the California research credits. The valuation allowance increased by a net of $ million in fiscal 2023 primarily related to the net increase of valuation allowance on California research credits.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

2024-2042Federal research credit carryforward 2024-2038Federal foreign tax credit carryforward 2027-2033International foreign tax credit carryforward IndefiniteInternational net operating loss carryforward 2027-IndefiniteCalifornia research credit carryforward IndefiniteOther state research credit carryforward 2025-2043State net operating loss carryforward 2024-2045

The federal and state net operating loss carryforward is from acquired companies and the annual use of such loss is subject to significant limitations under Internal Revenue Code Section 382 and certain provisions of the Tax Act. Foreign tax credits may only be used to offset tax attributable to foreign source income.

The gross unrecognized tax benefits decreased by approximately $ million during fiscal 2023 resulting in gross unrecognized tax benefits of $ million as of October 31, 2023.

$ Increases in unrecognized tax benefits related to prior year tax positions Decreases in unrecognized tax benefits related to prior year tax positions()()Increases in unrecognized tax benefits related to current year tax positions Decreases in unrecognized tax benefits related to settlements with taxing authorities ()Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations()()Increases in unrecognized tax benefits acquired Changes in unrecognized tax benefits due to foreign currency translation ()Ending balance$ $

As of October 31, 2023 and 2022, approximately $ million and $ million, respectively, of the unrecognized tax benefits would affect our effective tax rate if recognized upon resolution of the uncertain tax positions.

Interest and penalties related to estimated obligations for tax positions taken in our tax returns are recognized as a component of income tax expense (benefit) in the consolidated statements of income and totaled approximately $() million, $ million and $ million for fiscal years 2023, 2022 and 2021, respectively. As of October 31, 2023 and 2022, the combined amount of accrued interest and penalties related to tax positions taken on our tax returns were approximately $ million and $ million, respectively.

The timing of the resolution of income tax examinations, and the amounts and timing of various tax payments that are part of the settlement process, are highly uncertain. Variations in such amounts and/or timing could cause large fluctuations in the balance sheet classification of current and non-current assets and liabilities. We believe that in the coming 12 months, it is reasonably possible that either certain audits and ongoing tax litigation will conclude or the statute of limitations on certain state and foreign income and withholding taxes will expire, or both. Given the uncertainty as to ultimate settlement terms, the timing of payment and the impact of such settlements on other uncertain tax positions, the range of the estimated potential decrease in underlying unrecognized tax benefits is between $ and $ million.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

In addition, we have made acquisitions with operations in several of our significant jurisdictions which may have years subject to examination different from the years indicated in the above table.

IRS Examinations

In fiscal 2021, the Examination Division of the IRS completed its pre-filing review for fiscal 2020 and as a result we recognized approximately $ million in unrecognized tax benefits, primarily due to the allowance of research tax credits.

Non-U.S. Examinations

Hungarian Tax Authority

In 2017, the Hungarian Tax Authority (the HTA) assessed withholding taxes of approximately $ million and interest and penalties of $ million, against our Hungary subsidiary (Synopsys Hungary). Synopsys Hungary contested the assessment with the Hungarian Administrative Court (Administrative Court). In 2019, as required under Hungarian law, Synopsys Hungary paid the assessment and recorded a tax expense due to an unrecognized tax benefit of $ million, which is net of estimated U.S. foreign tax credits. During 2021 and 2022 a series of appeals, hearings and re-hearings occurred at the Administrative Court and Hungarian Supreme Court. Hearings with the Administrative Court were held on June 30, 2022, September 22, 2022 and April 25, 2023. The Administrative Court issued its written decision in favor of Synopsys Hungary on May 17, 2023, and subsequently refunded Synopsys Hungary the tax, penalty and interest paid in fiscal 2018, as well as additional interest all totaling $ million (including the effect of currency movement). The refunded tax, penalty and interest was recognized as an income tax benefit. The HTA had until July 14, 2023, to file an appeal with the Hungarian Supreme Court and the HTA did not appeal. This concludes the litigation. During the third quarter of fiscal 2023, Synopsys released its unrecognized tax benefit and offsetting U.S. foreign tax credits, resulting in a net benefit of $ million.

We are also under examination by the tax authorities in certain other jurisdictions. No material assessments have been proposed in these examinations.

Legislative Developments

On August 16, 2022, the Inflation Reduction Act of 2022 (the IR Act) was enacted in the United States. The IR Act includes a 15% minimum tax based primarily on global consolidated U.S. GAAP profits with a $1 billion minimum threshold. The tax takes effect in fiscal 2024, with the $1 billion threshold measured as an average over three years commencing in the current fiscal year. Computation of the tax includes adjustments which, among others, provide for an offset of income taxes paid or accrued in non-U.S. jurisdictions. The details of the computation will be subject to regulations to be issued by the U.S. Department of the Treasury. Synopsys will monitor regulatory developments and will continue to evaluate the impact, if any, of the minimum tax.

The IR Act imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. The total taxable value of shares repurchased is reduced by the fair market value of any newly issued shares during the taxable year. As of October 31, 2023, this does not have any impact on our consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

Note 16.

$ $ Interest expense()()()Gains (losses) on assets related to deferred compensation plan () Foreign currency exchange gains (losses)() Other, net() ()Total$ $()$

Note 17.

The financial information provided to and used by the CODM to assist in making operational decisions, allocating resources, and assessing performance includes consolidated financial information as well as revenue, adjusted operating income, and adjusted operating margin information for the Design Automation, Design IP and Software Integrity segments, accompanied by disaggregated information relating to revenue by geographic region.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ $ Adjusted operating income Adjusted operating margin % % %Design Automation: Revenue$ $ $ Adjusted operating income Adjusted operating margin % % %

Design IP:

Revenue$ $ $ Adjusted operating income Adjusted operating margin % % %Software Integrity: Revenue$ $ $ Adjusted operating income Adjusted operating margin % % %

Certain operating expenses are not allocated to the segments and are managed at a consolidated level.

$ $ Reconciling items: Amortization of intangible assets()()() Stock-based compensation expense()()() Deferred compensation plan() () Restructuring charges()()() Other()()()Total operating income$ $ $

The CODM does not use total assets by segment to evaluate segment performance or allocate resources. As a result, total assets by segment are not disclosed.

In allocating revenue to particular geographic areas, the CODM considers where individual “seats” or licenses to our products are located. Revenue is defined as revenue from external customers.

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SYNOPSYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

$ $

Europe

China

Korea

Other

Consolidated$ $ $

$ Other Total$ $

Geographic revenue data for multi-regional, multi-product transactions reflect internal allocations and are therefore subject to certain assumptions and to our allocation methodology.

One customer, including its subsidiaries, accounted for %, %, and % of our consolidated revenue in fiscal 2023, 2022, and 2021, respectively. One customer accounted for % of our accounts receivable as of October 31, 2023. No customer accounted for over 10% of our accounts receivable as of October 31, 2022.

Note 18.

million consisting primarily of severance costs and facility exit costs.

During fiscal 2023, we made payments of $ million under the 2023 Plan. As of October 31, 2023, the payroll and related benefits liabilities of $ million were recorded in accounts payable and accrued liabilities, and the remaining outstanding restructuring related liabilities of $ million were recorded in other long-term liabilities in the consolidated balance sheets.

During fiscal 2022, we recorded restructuring charges of $ million and made payments of $ million under the 2021 restructuring plan (the 2021 Plan) initiated in the third quarter of fiscal 2021.There was outstanding balance under the 2021 Plan as of October 31, 2022.

million and made payments of $ million under the 2021 Plan. As of October 31, 2021, $ million of payroll and related benefits liabilities remained outstanding and was recorded in accounts payable and accrued liabilities in the consolidated balance sheets.

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Note 19.

million to $ million in the first quarter of fiscal 2024.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.


Item 9A. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures. As of October 28, 2023, Synopsys carried out an evaluation under the supervision and with the participation of Synopsys’ management, including the Chief Executive Officer 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 Chief Executive Officer and Chief Financial Officer have concluded that, as of October 28, 2023, 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 Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding its required disclosure.

(b)Management’s Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) for Synopsys.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of October 28, 2023. In assessing the effectiveness of our internal control over financial reporting, our management used the framework established in Internal Control Integrated Framework (2013) issued by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Our management has concluded that, as of October 28, 2023, our internal control over financial reporting was effective based on these criteria. Our independent registered public accounting firm, KPMG LLP, has issued an auditors’ report on the effectiveness of our internal control over financial reporting, which is included herein.

(c)Changes in Internal Control Over Financial Reporting. There were no changes in Synopsys’ internal control over financial reporting during the fiscal quarter ended October 28, 2023 that have materially affected, or are reasonably likely to materially affect, Synopsys’ internal control over financial reporting.

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Item 9B. Other Information

Insider Adoption or Termination of Trading Arrangements

of our directors or officers informed us of the adoption, modification or termination of a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as those terms are defined in Item 408(c) of Regulation S-K) during the quarterly period covered by this report, except as described in the table below:

Name and Title

Action

Date Adopted

Character of Trading Arrangement(1)

Aggregate Number of Common Stock to be Purchased or Sold Pursuant to Trading Arrangement

Expiration Date(2)

Rule 10b5-1 Trading Arrangement

Up to shares to be sold

9/20/2024

Rule 10b5-1 Trading Arrangement

Up to shares to be sold

1/19/2024

Rule 10b5-1 Trading Arrangement

(3)

9/13/2024

Rule 10b5-1 Trading Arrangement

Up to shares to be sold

7/19/2024

(1)Except as indicated by footnote, each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the Rule).

(2)Except as indicated by footnote, each trading arrangement permitted or permits transactions through and including the earlier to occur of (a) the completion of all purchases or sales or (b) the date listed in the table. Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” only permitted or only permits transactions upon expiration of the applicable mandatory cooling-off period under the Rule.

(3)The aggregate number of common stock to be sold pursuant to Mr. Mahoney's Rule 10b5-1 Trading Arrangement includes:

a. shares of common stock held by Mr. Mahoney;

b.75% of net after-tax shares of common stock received upon the payout of performance-based restricted stock units (PRSUs), which were granted in fiscal 2022. The number of shares that will be earned will depend on our performance. See the Compensation Discussion and Analysis in our most recent proxy statement, which was filed on February 17, 2023 for more information. In addition, the actual number of shares that will be released to Mr. Mahoney in connection with the 2022 PRSUs and sold under the Rule 10b5-1 Trading Arrangement will be net of the number of shares withheld to satisfy tax withholding obligations arising from the vesting of such shares and is not yet determinable; and

c.75% of the net after-tax shares received upon the vesting of restricted stock units, which represents1/4th of a grant of restricted stock units of shares.


Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

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PART III


Item 10. Directors, Executive Officers and Corporate Governance

For information required by this Item relating to our executive officers, see Information about our Executive Officers in Part I, Item 1 of this Annual Report on Form 10-K.

The information required by this Item relating to our directors and nominees is included under the heading “Proposal 1 — Election of Directors,” in our definitive Proxy Statement to be filed within 120 days after October 28, 2023 for the 2024 Annual Meeting of Stockholders (our Proxy Statement) and is incorporated herein by reference. The information required by this Item regarding our Audit Committee is included under the headings “Audit Committee Report” and “Corporate Governance” in our Proxy Statement and is incorporated herein by reference. We will provide disclosure of delinquent Section 16(a) reports, if any, in our Proxy Statement, and such disclosure, if any, is incorporated herein by reference.

The information required by this Item relating to our code of ethics and its applicability to our Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer is included under the subheading “Ethics and Business Conduct” under the heading “Corporate Governance” in our Proxy Statement and is incorporated herein by reference.


Item 11. Executive Compensation

The information required by this Item relating to director and executive compensation is included under the headings “Compensation Discussion and Analysis” (and all subheadings thereunder), “Executive Compensation Tables” (and all subheadings thereunder), “Director Compensation,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” in our Proxy Statement and is incorporated herein by reference.


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item relating to security ownership of certain beneficial owners and management is included under the heading “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement, and the information required by this Item relating to securities authorized for issuance under equity compensation plans is included under the heading “Equity Compensation Plan Information” in our Proxy Statement, and, in each case, is incorporated herein by reference.


Item 13. Certain Relationships and Related Transactions and Director Independence

The information required by this Item relating to the review, approval or ratification of transactions with related persons is included under the heading “Transactions with Related Persons” in our Proxy Statement, and the information required by this Item relating to director independence is included under the heading “Director Independence,” and, in each case, is incorporated herein by reference.


Item 14. Principal Accountant Fees and Services

The information required by this Item is included under the subheadings “Fees and Service of Independent Registered Public Accounting Firm” and “Audit Committee Pre-Approval Policies and Procedures” under the proposal titled “Ratification of Selection of Independent Registered Public Accounting Firm” in our Proxy Statement and is incorporated herein by reference.

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PART IV


Item 15. Exhibits and Financial Statement Schedules

(a)The following documents are filed as part of this Form 10-K:

(1)Financial Statements

The following documents are included as Part II, Item 8 of this Form 10-K:


			Page
Report of Independent Registered Public Accounting Firm (, , PCAOB ID: )			50
Consolidated Balance Sheets			52
Consolidated Statements of Income			53
Consolidated Statements of Comprehensive Income			54
Consolidated Statements of Stockholders’ Equity			55
Consolidated Statements of Cash Flows			56
Notes to Consolidated Financial Statements			57

(2)Financial Statement Schedules

Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes herein.

(3)Exhibits

See Item 15(b) below.

(b)Exhibits

EXHIBIT INDEX

Exhibit Number

Exhibit Description

Incorporated By Reference

Filed or
Furnished
Herewith

Form

File No.

Exhibit

Filing Date

3.1

Amended and Restated Certificate of Incorporation

10-Q

000-19807

3.1

9/15/2003

3.2

Amended and Restated Bylaws

10-K

000-19807

3.2

12/15/2020

4.1

Description of Synopsys' Capital Stock

10-K

000-19807

4.2

12/15/2020

10.1

Fifth Extension and Amendment Agreement, dated December 14, 2022, among Synopsys as Borrower, the Lenders parties thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders.

8-K

000-19807

10.1

12/14/2022

10.2*

2006 Employee Equity Incentive Plan, as amended

8-K

000-19807

10.2

4/14/2023

10.3*

Form of Restricted Stock Unit Grant Notice and Award Agreement under 2006 Employee Equity Incentive Plan

8-K

000-19807

10.3

4/14/2023

101

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Exhibit Number

Exhibit Description

Incorporated By Reference

Filed or
Furnished
Herewith

Form

File No.

Exhibit

Filing Date

10.4*

Form of Stock Option Grant Notice and Award Agreement under 2006 Employee Equity Incentive Plan

8-K

000-19807

10.4

4/14/2023

10.5*

Employee Stock Purchase Plan, as amended

8-K

000-19807

10.6

4/15/2022

10.6*

2017 Non-Employee Directors Equity Incentive Plan

8-K

000-19807

10.8

4/10/2017

10.7*

Form of Restricted Stock Grant Notice and Award Agreement under 2017 Non-Employee Directors Equity Incentive Plan

10-K

000-19807

10.9

12/14/2017

10.8*

Form of Stock Options Grant Notice and Option Agreement under 2017 Non-Employee Directors Equity Incentive Plan

10-K

000-19807

10.10

12/14/2017

10.9*

Deferred Compensation Plan as restated effective August 1, 2002

10-Q

000-19807

10.5

6/10/2004

10.10*

Synopsys Amended and Restated Deferred Compensation Plan II

10-Q

000-19807

10.23

3/9/2009

10.11

Form of Indemnification Agreement for directors and executive officers

8-K

000-19807

99.2

7/14/2011

10.12*

Director’s and Officer’s Insurance and Company Reimbursement Policy

S-1

33-45138

10.2

2/24/1992
(effective date)

10.13*

Amended and Restated Employment Agreement, dated December 15, 2016 between Synopsys, Inc. and Dr. Aart de Geus

8-K

000-19807

10.16

12/21/2016

10.14*

Executive Incentive Plan, as amended

10-Q

000-19807

10.1

2/17/2023

10.15*

Amended and Restated Executive Change of Control Severance Benefit Plan

8-K

000-19807

10.19

12/21/2016

10.16*

Executive Severance Benefit and Transition Plan

8-K

000-19807

10.1

2/9/2021

10.17*

Relocation Assistance Agreement, dated April 30, 2021, by and between Synopsys, Inc. and Sassine Ghazi

10-Q

000-19807

10.2

5/21/2021

10.18*

Offer Letter, dated November 23, 2022, by and between Synopsys, Inc. and Shelagh Glaser

8-K

000-19807

10.1

11/29/2022

21.1

Subsidiaries of Synopsys, Inc.

102

Table of Contents

Exhibit Number

Exhibit Description

Incorporated By Reference

Filed or
Furnished
Herewith

Form

File No.

Exhibit

Filing Date

23.1

Consent of KPMG LLP, Independent Registered Public Accounting Firm

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

32.1+

Certification of Chief Executive Officer and Chief Financial Officer furnished pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

97.1

Compensation Recovery Policy

101

The following financial statements from the Company’s Annual Report on Form 10-K for the year ended October 28, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets as of October 28, 2023 and October 29, 2022, (ii) Consolidated Statements of Income for the Years Ended October 28, 2023, October 29, 2022 and October 30, 2021 (iii) Consolidated Statements of Comprehensive Income for the Years Ended October 28, 2023, October 29, 2022 and October 30, 2021 (iv) Consolidated Statements of Stockholders' Equity for the Years Ended October 28, 2023, October 29, 2022 and October 30, 2021 , (v) Consolidated Statements of Cash Flows for the Years Ended October 28, 2023, October 29, 2022 and October 30, 2021 (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags

* Indicates a management contract, compensatory plan or arrangement.

+ This exhibit is furnished with this Annual Report on Form 10-K and is not deemed filed with the Securities and Exchange Commission and is not incorporated by reference in any filing of Synopsys, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing.

103

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SYNOPSYS, INC.

Date: December 12, 2023

By:

/s/ SHELAGH GLASER

Shelagh Glaser
Chief Financial Officer
(Principal Financial Officer)

104

Table of Contents

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Name

Title

Date

/S/ AART J. DE GEUS

Chief Executive Officer (Principal Executive Officer) and Chair of the Board of Directors

December 12, 2023

Aart J. de Geus

/S/ SHELAGH GLASER

Chief Financial Officer (Principal Financial Officer)

December 12, 2023

Shelagh Glaser

/S/ SUDHINDRA KANKANWADI

Chief Accounting Officer (Principal Accounting Officer)

December 12, 2023

Sudhindra Kankanwadi

/S/ SASSINE GHAZI

President, Chief Operating Officer and Director

December 12, 2023

Sassine Ghazi

/S/ LUIS BORGEN

Director

December 12, 2023

Luis Borgen

/S/ MARC CASPER

Director

December 12, 2023

Marc Casper

/S/ JANICE D. CHAFFIN

Director

December 12, 2023

Janice D. Chaffin

/S/ BRUCE R. CHIZEN

Director

December 12, 2023

Bruce R. Chizen

/S/ MERCEDES JOHNSON

Director

December 12, 2023

Mercedes Johnson

/S/ ROBERT PAINTER

Director

December 12, 2023

Robert Painter

/s/ JEANNINE SARGENT

Director

December 12, 2023

Jeannine Sargent

/S/ JOHN G. SCHWARZ

Director

December 12, 2023

John G. Schwarz

/S/ ROY VALLEE

Director

December 12, 2023

Roy Vallee

105

SYNOPSYS INC - Annual Report: 2023 (Form 10-K)

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