8-KOther Events

SYNOPSYS INC 8-K Report, Corporate Update (Jan 12, 2010)

Filed January 12, 2010For Securities:SNPS

Summary

Synopsys, Inc. (SNPS) has announced the finalization of a tax settlement with the Internal Revenue Service (IRS) concerning fiscal years 2002-2004. This settlement, which received final approval from the Joint Committee on Taxation of the U.S. Congress on January 4, 2010, resolves a long-standing dispute. The company had previously made a $19 million prepayment related to this settlement and anticipates no further material cash payments. A significant impact for investors is the expected decrease in tax expense for the first quarter of fiscal year 2010, estimated at approximately $85.0 million. This reduction is largely attributed to the release of previously established tax liabilities stemming from the 2002 acquisition of Avant! Corporation.

Key Highlights

  • 1Final IRS tax settlement for fiscal years 2002-2004 approved by the Joint Committee on Taxation.
  • 2Settlement resolves a dispute that began in fiscal year 2009.
  • 3A $19 million prepayment was made in Q4 fiscal 2009 towards the settlement.
  • 4No additional material cash payments are expected by the company.
  • 5Expected decrease in tax expense for Q1 fiscal 2010 is approximately $85.0 million.
  • 6The tax benefit is primarily due to the release of liabilities from the 2002 Avant! Corporation acquisition.
  • 7The event date for this report is January 4, 2010.

Frequently Asked Questions

Synopsys announced the finalization of a tax settlement with the IRS for fiscal years 2002-2004, which has received final approval from the Joint Committee on Taxation.

The settlement is expected to result in a decrease in tax expense of approximately $85.0 million in the first quarter of fiscal year 2010, primarily due to the release of previously established tax liabilities.

Synopsys does not expect to make any additional material cash payments in connection with this settlement, having already made a $19 million prepayment in the fourth quarter of fiscal year 2009.

The significant reduction in tax expense is mainly due to the release of previously established tax liabilities that were related to the acquisition of Avant! Corporation in 2002.