SYNOPSYS INCSNPS
SYNOPSYS INC Fair Value Disclosure
Fair Value Measurements
ASC 820-10, Fair Value Measurements and Disclosures, defines fair value, establishes guidelines and enhances disclosure requirements for fair value measurements. The accounting guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The accounting guidance also establishes a fair value hierarchy based on the independence of the source and objective evidence of the inputs used. There are three fair value hierarchies based upon the level of inputs that are significant to fair value measurement:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical instruments in active markets;
Level 2—Observable inputs other than quoted prices for identical instruments in active markets, quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in inactive markets, and model-driven valuations in which all significant inputs and significant value drivers are observable in active markets; and
Level 3—Unobservable inputs derived from fair valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
On a recurring basis, we measure the fair value of certain assets and liabilities, which include cash equivalents, short-term investments, marketable securities, non-qualified deferred compensation plan assets, contingent consideration receivable, and foreign currency derivative contracts.
Our cash equivalents, short-term investments and marketable securities are classified within Level 1 or Level 2 because they are valued using quoted market prices in an active market or alternative independent pricing sources and models utilizing market observable inputs.
Our non-qualified deferred compensation plan assets consist of money market and mutual funds invested in domestic and international marketable securities that are directly observable in active markets and are therefore classified within Level 1.
Our foreign currency derivative contracts are classified within Level 2 because these contracts are not actively traded and the valuation inputs are based on quoted prices and market observable data of similar instruments.
Our borrowings under our Credit and Term Loan facilities are classified within Level 2 because these borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to us for debt with similar terms and maturities. See Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Consolidated Financial Statements in this Annual Report for more information on these borrowings.
Our contingent consideration receivable, which was recorded in connection with the Software Integrity Divestiture, was classified within Level 3 because it was estimated using significant inputs that were not observable in the market. See Note 3. Discontinued Operations of the Notes to Consolidated Financial Statements in this Annual Report for additional information.
Assets/Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below as of October 31, 2025:
| Fair Value Measurement Using | |||||||||||||||||||||||
| Description | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ | 52,978 | $ | 52,978 | $ | — | $ | — | |||||||||||||||
| Short-term investments: | |||||||||||||||||||||||
U.S. Treasury, agency & T-bills | 6,680 | — | 6,680 | — | |||||||||||||||||||
| Municipal bonds | 22,065 | — | 22,065 | — | |||||||||||||||||||
| Corporate debt securities | 43,999 | — | 43,999 | — | |||||||||||||||||||
| Others | 185 | — | 185 | — | |||||||||||||||||||
| Prepaid and other current assets: | |||||||||||||||||||||||
| Foreign currency derivative contracts | 8,863 | — | 8,863 | — | |||||||||||||||||||
Contingent consideration receivable | 22,202 | — | — | 22,202 | |||||||||||||||||||
| Other long-term assets: | |||||||||||||||||||||||
| Deferred compensation plan assets | 447,232 | 447,232 | — | — | |||||||||||||||||||
| Marketable equity securities | 785 | 785 | — | — | |||||||||||||||||||
| Total assets | $ | 604,989 | $ | 500,995 | $ | 81,792 | $ | 22,202 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Accounts payable and accrued liabilities: | |||||||||||||||||||||||
| Foreign currency derivative contracts | $ | 10,097 | $ | — | $ | 10,097 | $ | — | |||||||||||||||
| Other long-term liabilities: | |||||||||||||||||||||||
| Deferred compensation plan liabilities | 447,232 | 447,232 | — | — | |||||||||||||||||||
| Total liabilities | $ | 457,329 | $ | 447,232 | $ | 10,097 | $ | — | |||||||||||||||
Assets and liabilities measured at fair value on a recurring basis are summarized below as of October 31, 2024:
| Description | Total | Fair Value Measurement Using | |||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ | 869,972 | $ | 869,972 | $ | — | $ | — | |||||||||||||||
U.S. Treasury, agency & T-bills | 7,985 | — | 7,985 | — | |||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||
U.S. Treasury, agency & T-bills | 19,449 | — | 19,449 | — | |||||||||||||||||||
| Corporate debt securities | 105,256 | — | 105,256 | — | |||||||||||||||||||
| Asset-backed securities | 29,164 | — | 29,164 | — | |||||||||||||||||||
| Prepaid and other current assets: | |||||||||||||||||||||||
| Foreign currency derivative contracts | 8,851 | — | 8,851 | — | |||||||||||||||||||
Contingent consideration receivable | 22,202 | — | — | 22,202 | |||||||||||||||||||
| Other long-term assets: | |||||||||||||||||||||||
| Deferred compensation plan assets | 386,757 | 386,757 | — | — | |||||||||||||||||||
| Total assets | $ | 1,449,636 | $ | 1,256,729 | $ | 170,705 | $ | 22,202 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Accounts payable and accrued liabilities: | |||||||||||||||||||||||
| Foreign currency derivative contracts | $ | 7,032 | $ | — | $ | 7,032 | $ | — | |||||||||||||||
| Other long-term liabilities: | |||||||||||||||||||||||
| Deferred compensation plan liabilities | 386,757 | 386,757 | — | — | |||||||||||||||||||
| Total liabilities | $ | 393,789 | $ | 386,757 | $ | 7,032 | $ | — | |||||||||||||||
Assets/Liabilities Measured at Fair Value on a Non-Recurring Basis
Non-Marketable Equity Securities
Non-marketable equity securities are classified within Level 3 as they are valued using a combination of observable transaction price and unobservable inputs or data in an inactive market due to the absence of market price and inherent lack of liquidity.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 22, 2025 | Showing above |
| 2024 | Dec 19, 2024 | |
| 2023 | Dec 12, 2023 | |
| 2022 | Dec 12, 2022 | |
| 2021 | Dec 13, 2021 | |
| 2020 | Dec 15, 2020 | |
| 2019 | Dec 20, 2019 | |
| 2018 | Dec 17, 2018 | |
| 2017 | Dec 14, 2017 | |
| 2016 | Dec 12, 2016 | |
| 2015 | Dec 14, 2015 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.