Synopsys (SNPS) 10-K risk factor changes: FY2017 vs FY2016

For the fiscal year ended October 31, [removed: 2016][added: 2017]

[removed: ][added: ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See [added: the] definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [removed: company”] [added: company,” and "emerging growth company"] in Rule 12b-2 of the Exchange Act.

| | | | | (Do not check if a smaller reporting company) | | [added: Emerging growth company ¨] |

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately [removed: $4.8] [added: $8.0] billion.

Aggregate market value excludes an aggregate of approximately [removed: 51.7] [added: 41.4] million shares of common stock held by the registrant’s executive officers and directors and by each person known by the registrant to own 5% or more of the outstanding common stock on such date.

On December [removed: 7, 2016, 150,101,203] [added: 11, 2017, 148,713,662] shares of the registrant’s Common Stock, $0.01 par value, were outstanding.

Portions of the registrant’s Proxy Statement relating to the registrant’s [removed: 2017] [added: 2018] Annual Meeting of Stockholders, scheduled to be held on April [removed: 6, 2017,] [added: 5, 2018,] are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated.

Fiscal year ended October 31, [removed: 2016][added: 2017]

| Item 1. | | [removed: [Business](#s4DDD29AAFE9151B183FAD29436DC52CE)] [added: [Business](#s849B27B6D36758FEA25CD8175F4576AF)] | | [removed: [2](#s4DDD29AAFE9151B183FAD29436DC52CE)] [added: [3](#s849B27B6D36758FEA25CD8175F4576AF)] |

| Item 1A. | | [Risk [removed: Factors](#sFE359E0F88BC5BA892A3FADAB436FDB4)] [added: Factors](#s9F9FD76093DC59B38014761BEB38B372)] | | [removed: [12](#sFE359E0F88BC5BA892A3FADAB436FDB4)] [added: [12](#s9F9FD76093DC59B38014761BEB38B372)] |

| Item 1B. | | [Unresolved Staff [removed: Comments](#sD114B0CEEB7C582C8BC8348C7B53733E)] [added: Comments](#s31BE6A4F1773507AB597EBCFDB8096E3)] | | [removed: [22](#sD114B0CEEB7C582C8BC8348C7B53733E)] [added: [23](#s31BE6A4F1773507AB597EBCFDB8096E3)] |

| Item 2. | | [removed: [Properties](#sCD2B8DD7403C579A984576BCDF6B51E7)] [added: [Properties](#s8772B325694F5C2E9964EB1ABCD1C830)] | | [removed: [23](#sCD2B8DD7403C579A984576BCDF6B51E7)] [added: [23](#s8772B325694F5C2E9964EB1ABCD1C830)] |

| Item 3. | | [Legal [removed: Proceedings](#s7C3123B8488B51B4A858A1304351297F)] [added: Proceedings](#sC33BF1A2D2555AC68DE4B6FD0F1C7CF7)] | | [removed: [23](#s7C3123B8488B51B4A858A1304351297F)] [added: [24](#sC33BF1A2D2555AC68DE4B6FD0F1C7CF7)] |

| Item 4. | | [Mine Safety [removed: Disclosures](#s2DDE4A7F7AB459948B27025701835F7E)] [added: Disclosures](#sBE4C3C5425755CFEA817D9CBFA5C36D5)] | | [removed: [24](#s2DDE4A7F7AB459948B27025701835F7E)] [added: [26](#sBE4C3C5425755CFEA817D9CBFA5C36D5)] |

| Item 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s0A7E14ACEFA1557B8FD9369C6BCD0587)] [added: Securities](#s7ABB966F1CCB5F9392359368B4A319BD)] | | [removed: [25](#s0A7E14ACEFA1557B8FD9369C6BCD0587)] [added: [27](#s7ABB966F1CCB5F9392359368B4A319BD)] |

| Item 6. | | [Selected Financial [removed: Data](#sBDD42C44DF3A53DBA727B1D825FC102E)] [added: Data](#s5424ACF3705A59B080B3A7BC0FAB0833)] | | [removed: [28](#sBDD42C44DF3A53DBA727B1D825FC102E)] [added: [30](#s5424ACF3705A59B080B3A7BC0FAB0833)] |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s6BD6CCAE51DE555DA582CEA4E7F715A5)] [added: Operations](#sEDBEFA47AE015FFC8E0D0B99B64B023C)] | | [removed: [28](#s6BD6CCAE51DE555DA582CEA4E7F715A5)] [added: [30](#sEDBEFA47AE015FFC8E0D0B99B64B023C)] |

| Item 7A. | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s023D97D0B6725A23A01D2550B5261A6E)] [added: Risk](#s45CED9ABFF745F579CFD6EC866C7000B)] | | [removed: [43](#s023D97D0B6725A23A01D2550B5261A6E)] [added: [46](#s45CED9ABFF745F579CFD6EC866C7000B)] |

| Item 8. | | [Financial Statements and Supplementary [removed: Data](#s3043E03397FD5466B930D62E7AF51A25)] [added: Data](#sE7F2FA14F3845B5795DE531FD8F1F952)] | | [removed: [46](#s3043E03397FD5466B930D62E7AF51A25)] [added: [49](#sE7F2FA14F3845B5795DE531FD8F1F952)] |

| Item 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s04A0011FAA445B12A23F92240BA0BD73)] [added: Disclosure](#s3F74EE80E0AD5C0794323697DB318CCB)] | | [removed: [84](#s04A0011FAA445B12A23F92240BA0BD73)] [added: [86](#s3F74EE80E0AD5C0794323697DB318CCB)] |

| Item 9A. | | [Controls and [removed: Procedures](#s9BCAB8F1CB245A9CAF1B14A3B789C870)] [added: Procedures](#sE9FD19F14E285186BB6C70CD201905B2)] | | [removed: [84](#s9BCAB8F1CB245A9CAF1B14A3B789C870)] [added: [86](#sE9FD19F14E285186BB6C70CD201905B2)] |

| Item 9B. | | [Other [removed: Information](#s79506F58627B50259CB1872DC42610DE)] [added: Information](#sA7CFD0A95F6B5888BD80982B34745997)] | | [removed: [85](#s79506F58627B50259CB1872DC42610DE)] [added: [87](#sA7CFD0A95F6B5888BD80982B34745997)] |

| [PART [removed: III](#s2947CECBEBDA5D66A89DC7F8E6293533)] [added: III](#s3FA55E3BD50852F2B5E1EA2A6069C2F0)] | | | | |

| Item 10. | | [Directors, Executive Officers and Corporate [removed: Governance](#s597D5464F7E45E7C9E87664718830D37)] [added: Governance](#sEBC675CE367D59DDB94171A853785EE9)] | | [removed: [86](#s597D5464F7E45E7C9E87664718830D37)] [added: [88](#sEBC675CE367D59DDB94171A853785EE9)] |

| Item 11. | | [Executive [removed: Compensation](#sB0E0F183FF695A23A534B054FC68E010)] [added: Compensation](#s2A1EFFFE512D525FBFC8B6314FC29321)] | | [removed: [86](#sB0E0F183FF695A23A534B054FC68E010)] [added: [88](#s2A1EFFFE512D525FBFC8B6314FC29321)] |

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s9D910EB6BAC45EE1BE6818C479773A4D)] [added: Matters](#sB17E5F6C7D0E5D7FAE36051A9B1904FF)] | | [removed: [86](#s9D910EB6BAC45EE1BE6818C479773A4D)] [added: [88](#sB17E5F6C7D0E5D7FAE36051A9B1904FF)] |

| Item 13. | | [Certain Relationships and Related Transactions and Director [removed: Independence](#s11E2A6C3A8D7508DBA46F54B32F2B4BA)] [added: Independence](#s8DE3BBBA38D45015957076DC99CFE142)] | | [removed: [86](#s11E2A6C3A8D7508DBA46F54B32F2B4BA)] [added: [88](#s8DE3BBBA38D45015957076DC99CFE142)] |

| Item 14. | | [Principal Accountant Fees and [removed: Services](#sEEC52888B1D35056947B97123F0D02FE)] [added: Services](#s39F2365F4FB155269275EAAC7DE21735)] | | [removed: [86](#sEEC52888B1D35056947B97123F0D02FE)] [added: [88](#s39F2365F4FB155269275EAAC7DE21735)] |

| Item 15. | | [Exhibits and Financial Statement [removed: Schedules](#sDC24F820EB8D53FEBAEDC02E46E9C14F)] [added: Schedules](#sB87548E8E549528FA225661E6A5D362E)] | | [removed: [87](#sDC24F820EB8D53FEBAEDC02E46E9C14F)] [added: [89](#sB87548E8E549528FA225661E6A5D362E)] |

Words such as “may,” “will,” “could,” “would,” “can,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “project,” “continue,” “forecast,” [added: “likely,” “potential,” “seek,”] or the negatives of such terms, and similar expressions are intended to identify forward-looking statements.

| • | prior and future acquisitions, including the expected benefits [added: and risks] of completed acquisitions; |

Fiscal [added: 2017,] 2016, [removed: 2015,] and [removed: 2014] [added: 2015] were 52-week years ending on October [added: 28, 2017, October] 29, 2016, [added: and] October 31, 2015, [removed: and November 1, 2014,] respectively.

Synopsys, Inc. [added: (Synopsys or the Company)] provides software, intellectual [removed: property,] [added: property] and services used by designers across the entire silicon to software spectrum, from engineers creating advanced semiconductors to software developers seeking to ensure the [removed: quality and] security [added: and quality] of their applications.

[removed: We are a global leader in supplying the electronic design automation] (EDA) software that engineers use to design and test integrated circuits (ICs), also known as chips.

To complement these offerings, [removed: which are sold primarily to semiconductor and electronics companies,] we provide technical services and support to help our customers develop advanced chips and electronic systems.

We are also a leading provider of software tools [added: and services] that [removed: developers use] [added: are used] to improve the [removed: quality and] security [added: and quality] of software code in a wide variety of industries, including electronics, financial services, [removed: energy, industrials,] [added: media, automotive, medicine, energy] and [removed: automotive.][added: industrials.]

We have approximately [removed: 103] [added: 112] offices worldwide.

[removed: Many thousands of] [added: Numerous] software applications [removed: (“apps”)] [added: (apps)] have been developed to expand the potential of these connected devices.

10-K 1 snps10311710-k.htm 10-K

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| [PART I](#s67B9579847615F5BAB33DA0D3F72BD21) | | | | |

| [PART II](#sFF68D2E5B41C5C2ABAEE527C5D0D690A) | | | | |

| [PART IV](#sB749C347947A525EAFF4209C8142B8D0) | | | | |

| [SIGNATURES](#sA2CDD1C3A3E6546681CA2D9434B37E19) | | | | [93](#sA2CDD1C3A3E6546681CA2D9434B37E19) |

| • | the expected realization of our backlog; |

Fiscal 2018 will be a 53-week year.

software spectrum, from engineers creating advanced semiconductors to software developers seeking to ensure

the quality and security of their applications.

We are a global leader in supplying the electronic design automation

| • | Verdi Coverage, our verification planning and coverage technology; |

Our Verification IP portfolio, part of our Verification Continuum platform, is also part of the IP Products category.

Our System-Level verification solutions include the following elements of our Verification Continuum platform:

| • | HAPS® FPGA-based prototyping systems, which provide design and verification teams an integrated and scalable hardware-software solution for early software development and to improve their SoC schedules; |

| • | Virtualizer™ virtual prototyping solutions, which addresses the increasing development challenges associated with software-rich semiconductor and electronic products by accelerating both the development and deployment of virtual prototypes; and |

| • | Platform Architect solution, which provides architects and system designers with tools and efficient methods for early analysis and optimization of multi-core SoC architectures for performance and power. |

Our Software Integrity platform is a comprehensive solution for building integrity—security and quality—into our customers’ software development lifecycle and supply chain.

These testing tools, services and programs enable our customers to detect and remediate defects across their entire software development lifecycle.

Our offerings include security testing, managed services, programs and professional services, and training.

Key offerings in the security testing space include:

| • | Seeker® IAST tool, which identifies exploitable security vulnerabilities while web applications are running, thereby verifying results and eliminating false positives. |

Managed Services allow developers to test code across many dimensions, and to rapidly respond to changing testing requirements and evolving threats.

This includes Mobile AST services to find vulnerabilities in mobile applications as well as DAST services which identify security vulnerabilities while web applications are running, without the need for source code.

Programs and Professional Services address unique security and quality needs with specialized consulting by skilled experts, including Building Security in Maturity Mode (BSIMM), which measures the effectiveness of software security initiatives by assessing the current state as compared to industry benchmarks.

Finally, training includes eLearning and instructor-led training that prepares developers and security professionals to build security and quality into their software development process and remediate found vulnerabilities and defects.

Professional services related to the security and quality of the software embedded on the chip or elsewhere are included in the Software Integrity Solutions category and further described above.

We cannot predict the stability of the economy as a whole or the industries in which we operate.

There is uncertainty regarding how proposed, contemplated or future changes to the complex law, and regulations governing our industry, the banking and financial services industry, and the economy could affect our business.

In addition, economic conditions could deteriorate in the future, and, in particular, the semiconductor and electronics industries could fail to grow.

In the event of future improvements in

Any of the foregoing could cause adverse effects on our business, operating results and financial condition, and could cause our stock price to decline.

| • | Changes in tax rules, as well as changes to our effective tax rate, including the tax effects of infrequent or unusual transactions; |

In the area of IP products, we compete against numerous other IP providers as well as our customers' internally developed IP.

In the area of Software Integrity solutions, we compete with numerous other solution providers, many of which focus on specific aspects of software security or quality analysis.

We also compete with frequent new entrants, which include start-up companies and more established software companies.

At the same time, our customers and

We offer software security and quality testing solutions.

| • | Uncertain economic and political conditions in countries where we do business; |

As our business volume increases in the Asia Pacific region, there is inherent risk, based on the complex relationships between certain Asian countries and the United States, that governmental influences could result in trade disruptions.

10-K 1 snps10311610-k.htm 10-K

| | |

| --- | --- |

SYNOPSYS, INC.

| [PART I](#sF1F646CA26F45A0AA7B0563BBD2E2352) | | | | |

| [PART II](#s4087805858925D0E921AE76EB54939B1) | | | | |

| [PART IV](#s88A033AA331B5C0799A7A15B65D7707C) | | | | |

| [SIGNATURES](#s20EFBD894C355852ACC5ACDE8AEF884F) | | | | [91](#s20EFBD894C355852ACC5ACDE8AEF884F) |

| |

| • | FPGA design, which includes software tools to design FPGAs-the complex, configurable form of ICs. |

| • | Verification IP portfolio; |

| • | Verdi Coverage, our verification planning and coverage technology-in addition to its inclusion in our Verification Compiler™ solution, this verification technology also continues to be sold as individual point tools; |

This category also includes our Verification IP portfolio.

Escalating software content and complexity in today’s electronic devices are driving the adoption of advanced tools and methods to accelerate architectural exploration, software development, hardware-software integration, and system validation.

Our prototyping solutions are supported by extensive libraries of pre-verified models and DesignWare IP Prototyping Kits to speed development and reduce risk.

The solutions are also an important component of Synopsys’ Verification Continuum platform.

They include the following:

| • | Platform Architect™ tool for SoC architecture analysis and optimization for performance and power; |

| • | Virtual prototyping solution, including the Virtualizer™ tool and broad portfolio of transaction-level models (TLMs) for creating virtual prototypes and Virtualizer Development Kits (VDKs) for early software development and services to ensure project success; |

| • | Physical prototyping solution, consisting of HAPS® hardware and HAPS ProtoCompiler tools, that dramatically accelerates high-performance hardware and software tools with real-world interfaces to enable faster hardware-software integration and full system validation; and |

| • | Hybrid prototyping solution, which integrates Virtualizer virtual prototypes with HAPS series FPGA-based prototyping. |

Synopsys’ Software Integrity platform includes software quality and security testing tools that help companies reduce the risk of defects and vulnerabilities in development, and across the software supply chain before their software is released.

Our products include:

| • | Seeker® IAST tool, which finds confirmed vulnerabilities in web applications with a zero-false positive rate; and |

| • | AbuseSA™ situational awareness tool, which aggregates, contextualizes, and visualizes security threat data from a variety of sources. |

Geographic revenue, which is based on where individual "seats" or licenses to our products are located, is shown below as a percentage of total revenue for the last three fiscal years.

*Our IP, Systems and Software Integrity category was referred to as IP and Software Solutions in fiscal 2014.

Hardware revenue is not material to our total revenue.

| Brian M. Beattie | | 63 | | Executive Vice President, Business Operations and Chief Administrative Officer |

Brian M.

Beattie is our Executive Vice President, Business Operations and Chief Administrative Officer.

Prior to his promotion to that role in December 2014, Mr. Beattie had served as our Chief Financial Officer since January 2006.

Prior to Synopsys, from October 1999 to January 2006, he was Executive Vice President of Finance and Administration and Chief Financial Officer of SupportSoft, Inc. From May 1998 to May 1999, he served as Vice President of Finance, Mergers and Acquisitions, of Nortel Networks Corporation.

Mr. Beattie currently serves on the board of directors and audit committee for Lattice Semiconductor Corporation.

He served on the board of directors of Unwired Planet, Inc. from December 2010 until November 2012.

Mr. Beattie holds a Bachelor of Commerce and an M.B.A. from Concordia University in Montreal.

President of Business Development and General Counsel.

Weakness in the global economy has adversely affected consumer confidence and the growth of the semiconductor industry in recent years, causing semiconductor companies to behave cautiously and focus on their costs, including their research and development budgets, which capture spending on EDA products and services.

We cannot predict when widespread global economic confidence will be restored.

Accordingly, our future business and financial results are subject to uncertainty, and our stock price is at risk of volatile change.