v2.4.0.6

Income Taxes (Tables)

12 Months Ended

Oct. 31, 2012

Domestic and Foreign Components of Total Income Before Provision for Income Tax

The domestic and foreign components of the Company’s total income before provision for income taxes are as follows:

		Year Ended October 31,
		2012				2011				2010
		(in thousands)
United States		$	39,855			$	40,434			$	57,795
Foreign			161,280				178,679				140,863
		$	201,135			$	219,113			$	198,658

Components of (Benefit) Provision for Income Taxes

The components of the (benefit) provision for income taxes were as follows:

		Year Ended October 31,
		2012				2011				2010
		(in thousands)
Current:
Federal		$	(12,443	)		$	(6,436	)		$	(17,097	)
State			(547	)			(2,197	)			8
Foreign			6,826				474				25,421
			(6,164	)			(8,159	)			8,332
Deferred:
Federal			22,506				(7,160	)			(25,156	)
State			14				(2,456	)			(9,309	)
Foreign			2,377				15,524				(12,272	)
			24,897				5,908				(46,737	)
Provision (Benefit) for income taxes		$	18,733			$	(2,251	)		$	(38,405	)

Rate Reconciliation Between Provision for Income Taxes and Taxes Computed at Statutory Federal Rate

The provision (benefit) for income taxes differs from the taxes computed with the statutory federal income tax rate as follows:

		Year Ended October 31,
		2012				2011				2010
		(in thousands)
Statutory federal tax		$	70,397			$	76,689			$	69,530
State tax (benefit), net of federal effect			1,078				(4,988	)			(2,491	)
Tax credits			(4,289	)			(19,042	)			(7,451	)
Tax exempt income			(41	)			(354	)			(1,479	)
Tax on foreign earnings less than U.S. statutory tax			(21,288	)			(28,968	)			(11,615	)
Tax settlements			(36,882	)			(32,782	)			(73,045	)
Stock based compensation			9,016				7,817				5,336
Changes in valuation allowance			10				49				(21,612	)
Other			732				(672	)			4,422
		$	18,733			$	(2,251	)		$	(38,405	)

Components of Deferred Tax Assets and Liabilities

The significant components of deferred tax assets and liabilities were as follows:

		October 31,
		2012				2011
		(in thousands)
Net deferred tax assets:
Deferred tax assets:
Accruals and reserves		$	30,317			$	16,274
Deferred revenue			46,247				47,603
Deferred compensation			39,186				36,975
Capitalized costs			94,031				98,420
Capitalized research and development costs			48,059				45,710
Stock compensation			21,229				32,186
Tax loss carryovers			73,492				36,515
Foreign tax credit carryovers			10,766				23,759
Research and other tax credit carryovers			88,973				74,110
Capital loss carryovers			—				1,896
Other			2,449				1,349
Gross deferred tax assets			454,749				414,797
Valuation allowance			(26,259	)			(13,395	)
Total deferred tax assets			428,490				401,402
Deferred tax liabilities:
Intangible assets			116,639				49,948
Undistributed earnings of foreign subsidiaries			831				12,631
Total deferred tax liabilities			117,470				62,579
Net deferred tax assets		$	311,020			$	338,823

Tax Loss and Credit Carryforwards Available to Offset Future Income Tax Liabilities

The Company has the following tax loss and credit carryforwards available to offset future income tax liabilities:

Carryforward		Amount				Expiration Date
		(in thousands)
Federal net operating loss carryforward		$	177,517				2018-2031
Federal research credit carryforward			93,932				2017-2032
Foreign tax credit carryforward			15,598				2015-2021
California research credit carryforward			95,126				Indefinite
Other state research credit carryforward			8,021				2013-2032
State net operating loss carryforward			206,203				2013-2031

Summary of Reconciliation of Beginning and Ending Balance of Gross Unrecognized Tax Benefit

A reconciliation of the beginning and ending balance of gross unrecognized tax benefits is summarized as follows:

		As of October 31, 2012				As of October 31, 2011
		(in thousands)
Beginning balance		$	177,893			$	213,923
Increases in unrecognized tax benefits related to prior year tax positions			6,053				4,188
Decreases in unrecognized tax benefits related to prior year tax positions			(35,010	)			(44,061	)
Increases in unrecognized tax benefits related to current year tax positions			9,431				19,922
Decreases in unrecognized tax benefits related to settlements with taxing authorities			(80,137	)			(1,258	)
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations			(3,499	)			(15,200	)
Increases in unrecognized tax benefits acquired			35,171				350
Changes in unrecognized tax benefits due to foreign currency translation			(222	)			29
		$	109,680			$	177,893

Subsidiaries Remain Subject to Tax Examination

The Company’s subsidiaries remain subject to tax examination in the following jurisdictions:

Jurisdiction		Year(s) Subject to Examination
United States—Synopsys		Fiscal 2012
United States—Magma Design Automation		Fiscal years after 2008
California—Synopsys		Fiscal years after 2007
California—Magma Design Automation		Fiscal years after 2007
Hungary		Fiscal years after 2005
Taiwan and Japan		Fiscal years after 2006
Ireland		Fiscal years after 2007

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