<SEC-DOCUMENT>0001193125-16-515193.txt : 20160504
<SEC-HEADER>0001193125-16-515193.hdr.sgml : 20160504
<ACCEPTANCE-DATETIME>20160323171936
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ACCESSION NUMBER:		0001193125-16-515193
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20160323

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SYNOPSYS INC
		CENTRAL INDEX KEY:			0000883241
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PREPACKAGED SOFTWARE [7372]
		IRS NUMBER:				561546236
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		690 E MIDDLEFIELD RD
		CITY:			MOUNTAIN VIEW
		STATE:			CA
		ZIP:			94043
		BUSINESS PHONE:		6505845000

	MAIL ADDRESS:	
		STREET 1:		690 E MIDDLEFIELD RD
		CITY:			MOUNTAIN VIEW
		STATE:			CA
		ZIP:			94043
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<TYPE>CORRESP
<SEQUENCE>1
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<TITLE>CORRESPONDENCE</TITLE>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">March&nbsp;23, 2016 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Stephen Krikorian </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Accounting Branch Chief </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporation Finance </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and
Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">100 F Street, N.E. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, D.C.
20549 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>Re:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Synopsys, Inc. </B></TD></TR></TABLE> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><B>Form 10-K for the Fiscal Year Ended October 31, 2015 </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><B>Filed December 14, 2015 </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><B>File No. 000-19807 </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear
Mr.&nbsp;Krikorian: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">On behalf of Synopsys, Inc. (&#147;<B><I>Synopsys</I></B>&#148; or the &#147;<B><I>Company</I></B>&#148;) this letter
is being transmitted in response to comments received from the staff (the &#147;<B><I>Staff</I></B>&#148;) of the Securities and Exchange Commission (the &#147;<B><I>Commission</I></B>&#148;) by letter dated March&nbsp;9, 2016, with respect to the
periodic report referenced above. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Consolidated Financial Statements </U></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Notes to Consolidated Financial Statements </U></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Note 11. Income Taxes, page 75 </U></B></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><I>1.</I></TD>
<TD ALIGN="left" VALIGN="top"><I>Please clarify the nature of the $33 million reconciling item relating to &#147;integration of acquired technologies.&#148; Considering the significance of this item to your income taxes, please tell us what
consideration was given to providing additional disclosure surrounding the line item. Further, we note your disclosure on page 78 that in the third quarter of fiscal 2015, the company reached final settlement with the Examination Division of the IRS
on the integration of acquired technologies for fiscal 2015. Please tell us if this exposure was considered in your unrecognized tax benefits and indicate the factors you considered in making this determination. Tell us how you expect the
integration of acquired technologies to impact your effective tax rate in the future and what consideration you gave to disclosing these factors, including any uncertainties with respect to the positions you have taken. </I></TD></TR></TABLE>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">Mr. Stephen Krikorian </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">March 23, 2016 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"> Page
 2
 </P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As part of our tax planning and transfer pricing practices, the Company regularly transfers intangible assets
among various Company-controlled entities in different countries. Generally, these intangible assets result from the acquisition of technology by a Company-controlled entity as part of a business or asset acquisition. The tax effect of these
intangible asset transfers varies from year to year depending upon the jurisdiction of the Company-controlled entity acquiring the technology, the amount of intangible assets acquired, and the timing of integrating such acquired technology into the
Company&#146;s general transfer pricing policies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We account for the tax effect of these transfers under ASC 740-10-25-3. Typically, the tax effect of
these transfers has not been material in any particular year. In November 2014, the Company transferred a large amount of intangible assets resulting primarily from integrating the acquired technology from several recent and older U.S. acquisitions
to controlled entities outside the U.S. While the transfers were routine, the resulting tax impact in fiscal 2015 was greater than 5% of the tax on income before taxes computed at the U.S. statutory tax rate. Therefore, we disclosed this integration
of technologies event separately as an item in the rate reconciliation table in the Income Taxes footnote of our consolidated financial statements. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">After
considering the materiality of the tax effect of integrating these acquired technologies, we provided additional disclosure in two distinct sections of the Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations.
First, in the &#147;Fiscal 2015 Financial Performance Summary&#148; (on page 27), we indicated that the higher provision for income taxes resulted primarily from the integration of acquired technologies. Second, in the &#147;Income Taxes&#148;
section (on page 37), we indicated that the effective tax rate for fiscal 2015 included, among other things, the $33 million tax expense resulting from the integration of acquired technologies. We also discussed the impact of intercompany transfer
pricing more generally on our effective tax rate in the Risk Factors section of our Annual Report on Form 10-K (page 15). Consequently, we determined that our tax disclosures were adequate. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As we account for the transfer of assets over five years, pursuant to ASC 740-10-25-3(e), it is likely that these intercompany intangible asset transfers will
again, in the future, be material to the Company&#146;s overall tax provision. While we consider our disclosures adequate, we will add the disclosure below to the Income Taxes footnote in our Annual Report on Form 10-K for the fiscal year ending
October&nbsp;29, 2016: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>&#147;The integration of acquired technologies represents the income tax effect resulting from the transfer of certain
intangible assets among company-controlled entities. The income tax effect is generally recognized over five years. These intangible assets generally result from the acquisition of technology by a company-controlled entity as part of a business or
asset acquisition. The tax impact of the integration of acquired technologies in fiscal 2016 was $XX million compared to $33 million in fiscal 2015 and $4.7 million in fiscal 2014.&nbsp;The tax impact in fiscal 2016 and fiscal 2015 was higher
compared to fiscal 2014 due to the higher value of the intangible assets that were transferred to certain wholly owned foreign subsidiaries in November 2014.&#148; </I></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We participate in the Compliance Assurance Process program with the Internal Revenue Service (&#147;IRS&#148;) where we work collaboratively with the IRS to
identify and resolve potential tax issues before the tax return is filed each year. As a result, in our third quarter of fiscal 2015, we reached final settlement with the Examination Division of the IRS with regard to the tax effect of the
</P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">Mr. Stephen Krikorian </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">March 23, 2016 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"> Page
 3
 </P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
fiscal 2015 integration of acquired technologies. Accordingly, there were no unrecognized U.S. tax benefits as of the end of fiscal 2015 with respect to the fiscal 2015 integration of acquired
technologies. We disclosed these facts in the Income Taxes footnote on page 78 of our Annual Report on Form 10-K. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">*** </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As requested in the Staff&#146;s letter, the Company acknowledges: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">the Company is responsible for the adequacy and accuracy of the disclosure in its filings; </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Should you have additional questions or need additional information, please contact the undersigned at (650)&nbsp;584-2632, or Erika Varga
McEnroe, Vice President, Deputy General Counsel, at (650)&nbsp;584-4241. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top">Very truly yours,</TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ TRAC PHAM</P></TD></TR>
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<TD VALIGN="top">Trac Pham</TD></TR>
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<TD VALIGN="top">Chief Financial Officer</TD></TR>
</TABLE></DIV> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">cc Erika Varga McEnroe, Vice President, Deputy General Counsel </P>
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