Company: SNPS
Filing Date: 2025-02-26
Form Type: 10-Q
Source: 0000883241-25-000014
Chunk: 137

Company: SYNOPSYS INC
Filing Date: 2025-02-26
Form: 10-Q
Item: Item 8
Chunk 137
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 related to anticipated debt transactions, in the first quarter of fiscal 2025, we entered into treasury rate lock agreements to hedge against unfavorable interest rate changes. The accounting for gains and losses resulting from changes in fair value depends on whether these are designated and qualify for hedge accounting. The assets or liabilities associated with these derivatives are recorded at fair value in other current assets or accrued liabilities in the condensed consolidated balance sheets. The cash flow impact upon settlement of the derivative contracts will be included in net cash used in operating activities in the condensed consolidated statements of cash flows.Cash Flow Hedging ActivitiesCertain foreign exchange forward contracts are designated and qualify as cash flow hedges. These contracts have durations of up to 30 months or less. Certain forward contracts are rolled over periodically to capture the full length of exposure to our foreign currency risk, which can be up to three years. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on the hedged transactions. The related gains or losses resulting from changes in fair value of these hedges is initially reported, net of tax, as a component of other comprehensive income (loss) in stockholders’ equity and reclassified into revenue or operating expenses, as appropriate, at the time the hedged transactions affect earnings. We expect a majority of the hedge balance in other comprehensive income (loss) to be reclassified to the statements of income after the next 12 months.

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During the three months ended January 31, 2025, we entered into 6-month interest rate hedge contracts to manage the variability in cash flows due to changes in benchmark interest rates related to anticipated debt transactions with 10-year and 30-year terms. The contracts had an aggregate notional amount of $2.0 billion and were designated as cash flow hedges with changes in fair value, net of tax, of $(20.1) million, reported in other comprehensive income (loss) and accounts payable and current liabilities in the condensed consolidated balance sheets as of January 31, 2025. To receive hedge accounting treatment, the hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on the hedged transactions. These derivatives are designated as cash flow hedges with unrealized gains and losses deferred in other comprehensive income. Upon the issuance of the underlying debt, the contracts will be settled and the accumulated balance in