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Income Taxes (Tables)

12 Months Ended

Oct. 31, 2015

Income Tax Disclosure [Abstract]

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

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

	Year Ended October 31,
	2015				2014				2013
	(in thousands)
United States	$	42,571			$	(7,638	)		$	61,818
Foreign	239,039				279,780				213,848
	$	281,610			$	272,142			$	275,666

Components of (Benefit) Provision for Income Taxes

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

	Year Ended October 31,
	2015				2014				2013
	(in thousands)
Current:
Federal	$	(21,911	)		$	(14,951	)		$	11,692
State	1,385				279				(5,949		)
Foreign	39,319				42,085				29,428
	18,793				27,413				35,171
Deferred:
Federal	44,462				(4,612		)		4,969
State	(2,282		)		(4,141		)		933
Foreign	(5,297		)		(5,642		)		(13,207		)
	36,883				(14,395		)		(7,305		)
Provision (Benefit) for income taxes	$	55,676			$	13,018			$	27,866

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,
	2015				2014				2013
	(in thousands)
Statutory federal tax	$	98,564			$	95,251			$	96,483
State tax (benefit), net of federal effect	(4,764		)		(4,306		)		(2,697		)
Tax credits (1)	(13,301		)		(5,153		)		(24,972		)
Tax on foreign earnings less than U.S. statutory tax	(56,536		)		(61,376		)		(40,156		)
Deferred tax reversal resulting from merger of foreign affiliate	—				—				(6,808		)
Tax settlements	(6,251		)		(19,645		)		(1,130		)
Stock based compensation	5,406				5,675				4,671
Changes in valuation allowance	(216		)		(235		)		(776		)
Federal statute lapses	(2,265		)		(6,746		)		—
Integration of acquired technologies	33,015				4,715				3,486
Other	2,024				4,838				(235		)
	$	55,676			$	13,018			$	27,866

(1) As a result of the reinstatement of the U.S. federal research tax credit in fiscal 2013, the Company reflected a tax benefit of approximately $19.0 million in the above amount for the period January 1, 2012 through October 31, 2013. The credit expired on December 31, 2013, resulting in only two months of credit for fiscal 2014. The credit was reinstated in fiscal 2015, resulting in a tax benefit of approximately $12.4 million in the above amount for the period January 1 through December 31, 2014.

Components of Deferred Tax Assets and Liabilities

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

	October 31,
	2015				2014
	(in thousands)
Net deferred tax assets:
Deferred tax assets:
Accruals and reserves	$	40,373			$	28,608
Deferred revenue	36,460				42,766
Deferred compensation	69,716				56,920
Capitalized costs	60,998				66,616
Capitalized research and development costs	24,748				32,710
Stock compensation	18,001				18,508
Tax loss carryovers	50,987				64,273
Foreign tax credit carryovers	1,064				18,846
Research and other tax credit carryovers	80,327				110,247
Other	5,340				4,689
Gross deferred tax assets	388,014				444,183
Valuation allowance	(48,700		)		(45,996		)
Total deferred tax assets	339,314				398,187
Deferred tax liabilities:
Intangible assets	66,345				81,218
Undistributed earnings of foreign subsidiaries	933				726
Total deferred tax liabilities	67,278				81,944
Net deferred tax assets	$	272,036			$	316,243

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	$	108,533			2016-2034
Federal research credit carryforward	120,243				2019-2035
Federal foreign tax credit carryforward	4,586				2017-2023
International foreign tax credit carryforward	10,104				Indefinite
California research credit carryforward	135,858				Indefinite
Other state research credit carryforward	5,395				2016-2030
State net operating loss carryforward	217,914				2016-2035

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

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

	As of October 31, 2015				As of October 31, 2014
	(in thousands)
Beginning balance	$	124,102			$	117,760
Increases in unrecognized tax benefits related to prior year tax positions	10,922				2,037
Decreases in unrecognized tax benefits related to prior year tax positions	(7,526		)		(23,271		)
Increases in unrecognized tax benefits related to current year tax positions	13,232				35,277
Decreases in unrecognized tax benefits related to settlements with taxing authorities	—				(1,858		)
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations	(5,996		)		(8,816		)
Increases in unrecognized tax benefits acquired	976				3,575
Changes in unrecognized tax benefits due to foreign currency translation	(3,656		)		(602		)
	$	132,054			$	124,102

Subsidiaries Remain Subject to Tax Examination

The Company and/or its subsidiaries remain subject to tax examination in the following jurisdictions:

Jurisdiction	Year(s) Subject to Examination
United States—Synopsys	Fiscal 2015
United States—Magma Design Automation	Fiscal 2012
California—Synopsys	Fiscal years after 2010
California—Magma Design Automation	Fiscal years after 2010
Hungary	Fiscal years after 2008
Ireland, Japan, and Taiwan	Fiscal years after 2009

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