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Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities | 6 Months Ended
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Apr. 30, 2025
Debt Disclosure [Abstract] |
Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities | Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities The following table summarizes our borrowings as of April 30, 2025:
|  | Effective Interest Rate |  | Amount (in thousands)
Fixed-rate 4.550% Senior Notes due on April 1, 2027 |  | 4.840 | % |  | $ | 1,000,000 |
Fixed-rate 4.650% Senior Notes due on April 1, 2028 |  | 4.850 | % |  | 1,000,000 |
Fixed-rate 4.850% Senior Notes due on April 1, 2030 |  | 4.980 | % |  | 2,000,000 |
Fixed-rate 5.000% Senior Notes due on April 1, 2032 |  | 5.150 | % |  | 1,500,000 |
Fixed-rate 5.150% Senior Notes due on April 1, 2035 |  | 5.270 | % |  | 2,400,000 |
Fixed-rate 5.700% Senior Notes due on April 1, 2055 |  | 5.800 | % |  | 2,100,000 |
Total |  |  |  | 10,000,000 |
Unamortized discount and issuance costs |  |  |  | (85,989) |
Total Senior Notes |  |  |  | 9,914,011 |
Deferred payment on settlement of interest rate treasury lock |  |  |  | 122,488 |
Other borrowings |  |  |  | 14,144 |
Total |  |  |  | $ | 10,050,643 |
Reported as: |  |  |  |
Short-term debt |  |  |  | 22,962 |
Long-term debt |  |  |  | 10,027,681 |
Total |  |  |  | 10,050,643 |
Senior Notes: On March 17, 2025, we issued $10 billion in aggregate principal amount of senior, unsecured and unsubordinated long-term notes, including $1 billion aggregate principal amount of 4.550% Senior Notes due April 1, 2027 (the "2027 Senior Notes"), $1 billion aggregate principal amount of 4.650% Senior Notes due April 1, 2028 (the "2028 Senior Notes"), $2 billion aggregate principal amount of 4.850% Senior Notes due April 1, 2030,(the "2030 Senior Notes"), $1.5 billion aggregate principal amount of 5.000% Senior Notes due April 1, 2032 (the "2032 Senior Notes"), $2.4 billion aggregate principal amount of 5.150% Senior Notes due April 1, 2035 (the "2035 Senior Notes") and $2.1 billion aggregate principal amount of 5.700% Senior Notes due April 1, 2055 (the "2055 Senior Notes" and together with the 2027 Senior Notes, 2028 Senior Notes, 2030 Senior Notes, 2032 Senior Notes and 2035 Senior Notes, the Senior Notes). Our total proceeds were approximately $9.9 billion, net of original issuance discount of $17.0 million and total issuance costs of $70.2 million. Interest on the Senior Notes is payable semi-annually on April 1 and October 1 of each year, beginning on October 1, 2025. The discount and issuance costs on our Senior Notes are amortized to interest expense over the terms of the respective notes using the effective interest method. The effective rates for the Senior Notes include the interest on the notes, the accretion of the discount and the amortization of issuance costs. The Senior Notes were issued under an indenture, dated as of March 17, 2025 (the Base Indenture), as supplemented by the first supplemental indenture, dated as of March 17, 2025 (the Supplemental Indenture and, together with the Base Indenture, the Indenture), each between Synopsys and U.S. Bank Trust Company, National Association, as trustee. The net proceeds of the Senior Notes are intended to be used to fund a portion of the cash consideration to be paid for the Ansys Merger, related transaction fees and expenses, as well as repay Ansys’ outstanding indebtedness. If (i) the Ansys Merger is not consummated on or before the later of (x) January 31, 2026 and (y) the date that is five business days after any later date upon which “Closing” is permitted to occur under the terms of the Merger Agreement (as mutually agreed upon by the parties to such agreement) (the Special Mandatory Redemption End Date) or (ii) Synopsys notifies the trustee under the Indenture in writing that Synopsys will not pursue consummation of the Ansys Merger, Synopsys will be required to redeem all outstanding 2027 Senior Notes, 2028 Senior Notes, 2030 Senior Notes and 2032 Senior Notes (the Special Mandatory Redemption), at a special mandatory redemption price equal to 101% of the aggregate principal amount of the 2027 Senior Notes, 2028 Senior Notes, 2030 Senior Notes and 2032 Senior Notes, plus accrued and unpaid interest, if any, to, but excluding, the date upon which the 2027 Senior Notes, 2028 Senior Notes, 2030 Senior Notes and 2032 Senior Notes will be redeemed. The 2035 Senior Notes and 2055 Senior Notes are not subject to the Special Mandatory Redemption. In the event of a Special Mandatory Redemption, the proceeds of the 2035 Senior Notes and 2055 Senior Notes will be used for general corporate purposes, which may include repayment of outstanding indebtedness. At any time and from time to time prior to their respective par call dates (as defined in the Indenture and applicable series of Senior Notes or, in the case of the 2027 Senior Notes, prior to the maturity date), Synopsys may redeem the applicable series of the Senior Notes at its option, in whole or in part, at any time and from time to time, at the “make-whole” redemption price (calculated as set forth in the Indenture and applicable series of Senior Notes), plus, in each case, accrued and unpaid interest, if any, on the Senior Notes being redeemed to, but excluding, the redemption date. In addition, on or after the applicable par call date (as defined in the Indenture and applicable series of Senior Notes), Synopsys may redeem the 2028 Senior Notes, 2030 Senior Notes, 2032 Senior Notes, 2035 Senior Notes or 2055 Senior Notes at its option, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Senior Notes being redeemed plus accrued and unpaid interest, if any, thereon to, but excluding, the applicable redemption date. The Indenture contains covenants limiting Synopsys’ ability to create certain liens and enter into certain sale and leaseback transactions. These covenants are subject to important limitations and exceptions as set forth in the Indenture. Based on the trading prices of the Senior Notes, the fair value of our Senior Notes was $10.0 billion as of April 30, 2025. While the Senior Notes are recorded at cost, the fair value of long-term debt was determined based on observable market prices in less active markets and categorized as Level 2 for purposes of the fair value measurement hierarchy. As of April 30, 2025, we were in compliance with all of our covenants under the Indenture. During the three months ended January 31, 2025, we entered into 6-month interest rate hedge contracts with an aggregate notional amount of $2.0 billion to manage the variability in cash flows due to changes in benchmark interest rates related to the Senior Notes. These interest rate hedge contracts were terminated and settled during the second quarter of fiscal 2025, and we entered into a deferred payment agreement with the counterparty bank to defer the cash settlement. See Note 8. Financial Assets and Liabilities of the Notes to Condensed Consolidated Financial Statements for more information on these cash flow hedging activities. Bridge Commitment: On January 15, 2024, we entered into the Bridge Commitment Letter with certain financial institutions that committed to provide, subject to the satisfaction of customary closing conditions, the Bridge Commitment. The Bridge Commitment may be terminated in whole or reduced in part, at our discretion. In addition, the Bridge Commitment Letter provides that net cash proceeds received from certain debt and equity issuances, including the Senior Notes, or the sale of certain businesses and assets, including the Software Integrity Divestiture, as well as term loan commitments under certain qualifying term loan facilities, will result in mandatory commitment reductions under the Bridge Commitment. On October 3, 2024, we reduced the Bridge Commitment by $1.1 billion to $10.6 billion following the closing of the Software Integrity Divestiture. On March 17, 2025, we further reduced the Bridge Commitment by $9.9 billion following the issuance of the Senior Notes. The Bridge Commitment currently provides for an aggregate principal amount of up to $690 million. The proceeds of any borrowing under the Bridge Commitment will be used to finance a portion of the cash consideration to be paid for the Ansys Merger, the related fees and expenses, and certain other transactions, as contemplated by the Merger Agreement. As of April 30, 2025, the unamortized bridge financing costs of $1.4 million is included in other long-term assets in our condensed consolidated balance sheets. Term Loan: On February 13, 2024, we entered into the Term Loan Agreement in connection with the financing of the pending Ansys Merger. The Term Loan Agreement provides us with the ability to borrow up to $4.3 billion at the closing of the Ansys Merger, subject to the satisfaction of customary closing conditions for similar facilities, for the purpose of financing a portion of the cash consideration to be paid in the Ansys Merger and paying related fees and expenses in connection with the Ansys Merger and the other transactions contemplated by the Merger Agreement. The Term Loan Agreement provides for two tranches of senior unsecured term loans: a $1.45 billion tranche (Tranche 1) that matures two years after funding and a $2.85 billion tranche (Tranche 2) that matures three years after funding. There was no outstanding balance under the Term Loan Agreement as of April 30, 2025. The Term Loan Agreement contains a financial covenant requiring that Synopsys maintain a maximum consolidated leverage ratio commencing the last day of the first fiscal quarter ending on or after the completion of the Ansys Merger, as well as other non-financial covenants. Under the Term Loan Agreement, borrowings will bear interest on the principal amount outstanding at a floating rate based on, at Synopsys’ election, (i) the Adjusted Term SOFR Rate (as defined in the Term Loan Agreement) plus an applicable margin based on the credit ratings of Synopsys ranging from 0.875% to 1.375% (in the case of Tranche 1) or 1.000% to 1.500% (in the case of Tranche 2) or (ii) the ABR (as defined in the Term Loan Agreement) plus an applicable margin based on the credit ratings of Synopsys ranging from 0.000% to 0.375% (in the case of Tranche 1) or 0.000% to 0.500% (in the case of Tranche 2). On May 14, 2024, a ticking fee began to accrue under the Term Loan Agreement in an amount equal to a rate per annum equal to 0.10% times the actual daily undrawn portion of the commitments in respect of the term loan facility. This ticking fee will accrue until the earlier of (i) termination or expiration of the commitments under the term loan facility or (ii) the funding of the commitments, at which point the accrued amount of the ticking fee will become payable. Revolving Credit Facilities: On February 13, 2024, we entered into a Sixth Amendment Agreement (the Sixth Amendment), which amended and restated our previous revolving credit agreement, dated as of December 14, 2022 (as amended and restated, the Revolving Credit Agreement). The Revolving Credit Agreement provides an unsecured $850.0 million committed multicurrency revolving credit facility and an unsecured uncommitted incremental revolving loan facility of up to $150.0 million. The maturity date of the revolving credit facility is December 14, 2027, which may be extended at our option. Under the Sixth Amendment, certain amendments became effective on February 13, 2024 and certain additional amendments will become effective upon the completion of the Ansys Merger. Upon the effective date, the Sixth Amendment amended the financial covenant to allow netting of the cash proceeds of certain debt incurred to finance the Ansys Merger as well as certain other modifications set forth therein. Upon the completion of the Ansys Merger, the Sixth Amendment, among other things: (i) amends the applicable margin used to determine the interest that accrues on loans and the facility fee payable under the revolving credit facility to be based on our credit ratings, (ii) amends the financial covenant thresholds under the financial covenant in the Revolving Credit Agreement requiring us to maintain a maximum consolidated leverage ratio and (iii) amends certain conditions to borrowing, other non-financial covenants and events of default. The Revolving Credit Agreement contains a financial covenant requiring us to maintain a maximum consolidated leverage ratio, as well as other non-financial covenants. As of April 30, 2025, we were in compliance with the financial covenant. Interest accrues on dollar-denominated loans at a floating rate based on, at Synopsys’ election, (i) the Adjusted Term SOFR Rate (as defined in the Revolving Credit Agreement) plus an applicable margin or (ii) the ABR (as defined in the Revolving Credit Agreement) plus an applicable margin. The applicable margin for Adjusted Term SOFR Rate based loans ranges from 0.785% to 0.975%, based upon Synopsys’ consolidated leverage ratio. The applicable margin for ABR based loans is 0.000%. In addition to the interest on any outstanding loans, Synopsys is also required to pay a facility fee on the entire portion of the revolving credit facility ranging from 0.09% to 0.15% based on Synopsys’ consolidated leverage ratio on the daily amount of the revolving commitment. Subject to the completion of the Ansys Merger, interest under the Revolving Credit Agreement will accrue on dollar-denominated loans at a floating rate based on, at Synopsys’ election, (i) the Adjusted Term SOFR Rate plus an applicable margin based on our credit ratings ranging from 0.795% to 1.200% or (ii) the ABR plus an applicable margin based on our credit ratings ranging from 0.000% to 0.200%. In addition to the interest on any outstanding loans, Synopsys will also be required to pay a facility fee on the entire portion of the revolving credit facility ranging from 0.080% to 0.175% based on the credit ratings of Synopsys on the daily amount of the revolving commitment. There was no outstanding balance under the Revolving Credit Agreement as of April 30, 2025 and October 31, 2024. Other Borrowings: 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 April 30, 2025, we had $14.1 million outstanding balance under the agreement. The carrying amount of the short-term and long-term debt approximates the estimated fair value. The future principal payments of debt as of April 30, 2025 are as follows:
| Principal Payments
Fiscal year | (in thousands)
Remainder of fiscal 2025 | $ | 12,344 |
2026 | 24,689 |
2027 | 1,024,689 |
2028 | 1,024,689 |
2029 | 24,689 |
2030 and thereafter | 8,024,689 |
Total | $ | 10,135,789 |

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