Summary of Significant Accounting Policies (Tables)

12 Months Ended

Oct. 31, 2019

The following table represents the components of accounts receivable, net:



	October 31,
	2019			2018
	(in thousands)
Accounts receivable	$	524,766		$	495,763
Unbilled accounts receivable	38,175			64,067
Total accounts receivable	562,941			559,830
Less allowance for doubtful accounts	(9,046		)	(5,613		)
Total accounts receivable, net	$	553,895		$	554,217

Changes in Allowance for Doubtful Accounts

The following table presents the changes in the allowance for doubtful accounts:



Fiscal Year	Balance at Beginning of Period		Provisions		Write-offs(1)			Balance at End of Period
	(in thousands)
2019	$	5,613	$	11,669	$	(8,236	)	$	9,046
2018	$	5,165	$	3,368	$	(2,920	)	$	5,613
2017	$	3,201	$	2,149	$	(185	)	$	5,165

(1)

Balances written off, net of recoveries.

Components of Property and Equipment

A summary of property and equipment, at cost less accumulated depreciation and amortization, as of October 31, 2019 and 2018 is as follows:



	October 31,
	2019			2018
	(in thousands)
Computer and other equipment	$	678,901		$	604,117
Buildings	68,708			68,522
Furniture and fixtures	72,437			61,070
Land	18,849			18,849
Leasehold improvements	273,985			183,430
	1,112,880			935,988
Less accumulated depreciation and amortization(1)	(683,348		)	(626,678		)
Total	$	429,532		$	309,310

(1)

Accumulated depreciation and amortization includes write-offs due to retirement of fully amortized fixed assets.

Useful Lives of Depreciable Assets

The useful lives of depreciable assets are as follows:



	Useful Life in Years
Computer and other equipment	3-8
Buildings	30
Furniture and fixtures	5
Leasehold improvements	Shorter of the lease term or the estimated useful life

Components of Accounts Payable and Accrued Liabilities

The balance consists of:



	October 31,
	2019		2018
	(in thousands)
Payroll and related benefits	$	417,157	$	413,307
Other accrued liabilities	69,487		79,973
Accounts payable	19,815		85,046
Total	$	506,459	$	578,326

Components of Other Long Term Liabilities

The balance consists of:



	October 31,
	2019		2018
	(in thousands)
Deferred compensation liability (See Note 10)	$	249,822	$	212,165
Other long-term liabilities	73,903		53,395
Total	$	323,725	$	265,560

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The following table summarizes the effects of adopting ASC 606 on the consolidated statements of operations for fiscal 2019:



	Year Ended October 31, 2019
	As reported under ASC 606		Adjustments			Adjusted under ASC 605
	(in thousands, except per share amounts)
Revenue:
Time-based products	$	2,197,965	$	206,904		$	2,404,869
Upfront products	619,791		(235,398		)	384,393
Maintenance and service	542,938		(74,037		)	468,901
Total revenue	3,360,694		(102,531		)	3,258,163
Cost of Revenue:
Products	459,127		—			459,127
Maintenance and service	234,196		—			234,196
Amortization of intangible assets	59,623		—			59,623
Total cost of revenue	752,946		—			752,946
Gross margin	2,607,748		(102,531		)	2,505,217
Operating expenses:
Research and development	1,136,932		—			1,136,932
Sales and marketing	632,890		4,121			637,011
General and administrative	229,218		—			229,218
Amortization of intangible assets	41,291		—			41,291
Restructuring charges	47,186		—			47,186
Total operating expenses	2,087,517		4,121			2,091,638
Operating income	520,231		(106,652		)	413,579
Other income (expense), net	25,275		—			25,275
Income before income taxes	545,506		(106,652		)	438,854
Provision (benefit) for income taxes	13,139		(18,499		)	(5,360		)
Net income	$	532,367	$	(88,153	)	$	444,214
Net income per share:
Basic	$	3.55	$	(0.59	)	$	2.96
Diluted	$	3.45	$	(0.57	)	$	2.88
Shares used in computing per share amounts:
Basic	149,872					149,872
Diluted	154,190					154,190

The following table summarizes the effects of adopting ASC 606 on certain account balances of the consolidated balance sheets that were impacted as of October 31, 2019:

Disaggregation of Revenue

The following table shows the percentage of revenue by product groups:



	Year Ended October 31,
	2019		2018		2017
EDA	59	%	62	%	66	%
IP & System Integration	31	%	29	%	28	%
Software Integrity Products & Services	10	%	9	%	6	%
Other	—	%	—	%	—	%
Total	100	%	100	%	100	%

Contract with Customer, Asset and Liability

Contract balances are as follows:



	Balance as of October 31, 2019		Balance as of October 31, 2018
			as adjusted
	(in thousands)
Contract assets	$	210,557	$	126,897
Unbilled receivables	38,175		36,699
Deferred revenue	1,302,578		1,104,110

Reconciliation of Weighted Average Common Shares Used to Calculate Basic Net Income Per Share

The table below reconciles the weighted average common shares used to calculate basic net income per share with the weighted average common shares used to calculate diluted net income per share:



	Year Ended October 31,
	2019		2018		2017
	(in thousands, except per share amounts)
Numerator:
Net income	$	532,367	$	432,518	$	136,563
Denominator:
Weighted average common shares for basic net income per share	149,872		149,036		150,457
Dilutive effect of common share equivalents from equity-based compensation	4,318		4,357		4,417
Weighted average common shares for diluted net income per share	154,190		153,393		154,874
Net income per share:
Basic	$	3.55	$	2.90	$	0.91
Diluted	$	3.45	$	2.82	$	0.88
Anti-dilutive employee stock-based awards excluded(1)	171		850		345

(1)

These stock options and unvested restricted stock units were anti-dilutive for the respective periods and are excluded in calculating diluted net income per share. While such awards were anti-dilutive for the respective periods, they could be dilutive in the future.