Discontinued Operations

6 Months Ended

Apr. 30, 2024

Discontinued Operations and Disposal Groups [Abstract]

Pursuant to the Purchase Agreement, and subject to the satisfaction or waiver of customary closing conditions specified therein, we will sell our Software Integrity business to Buyer (the Software Integrity Divestiture) for a purchase price of up to $2.1 billion in cash, comprised of: (i) $1.5 billion, payable at closing; (ii) $125 million, payable in equal installments over five fiscal quarters beginning on the first business day after the day that is the 75th day of our first full fiscal quarter following the closing, subject to acceleration at our option prior to the closing of our pending acquisition of ANSYS, Inc. (Ansys); and (iii) up to $475 million, payable upon the Sponsors achieving a specified rate of return in the event of one or more potential liquidity transactions.

The Software Integrity Divestiture, which was unanimously approved by our Board of Directors, is currently expected to close in the second half of 2024, subject to customary closing conditions including the receipt of required regulatory approvals.

In accordance with the Accounting Standards Codification (ASC) 205-20-45-1B, management believes that the Software Integrity Divestiture has met the criteria to be disclosed as discontinued operations as it represents a significant strategic shift that has a major effect on our operations and financial results. The results of the Software Integrity business are presented as discontinued operations in the consolidated statements of income and, as such, have been excluded from both continuing operations and segment results for all periods presented. Further, we reclassified the assets and liabilities of Software Integrity business as assets and liabilities held for sale in the condensed consolidated statements of balance sheets for all periods presented. The condensed consolidated statements of cash flows are presented on a consolidated basis for both continuing operations and discontinued operations. We did not allocate any general corporate overhead to the Software Integrity business. Unless otherwise noted, reference within these Notes to Condensed Consolidated Financial Statements relates to continuing operations.

The financial results of the Software Integrity business are presented as income from discontinued operations, net of income taxes on our condensed consolidated statements of income. The following table presents the major components of financial results of our Software Integrity business for the periods presented:


	Three Months Ended April 30,				Six Months Ended April 30,
	2024		2023		2024		2023
Revenue	$	126,421	$	132,119	$	264,662	$	259,962
Cost of revenue	45,749		49,773		95,731		98,138
Operating expenses	89,626		87,389		170,891		167,558
Interest and other income (expense), net	340		41		996		398
Income (loss) from discontinued operations before income taxes	(8,614)		(5,002)		(964)		(5,336)
Income tax provisions (benefits)	(1,610)		(2,310)		(5,622)		(4,496)
Income (loss) from discontinued operations, net of income taxes	$	(7,004)	$	(2,692)	$	4,658	$	(840)

As of April 30, 2024, the assets and liabilities of our Software Integrity business are classified as current in our condensed consolidated balance sheets, as it is probable that the sale will occur within one year. The following table represents the aggregated carrying amounts of classes of assets and liabilities that are classified as discontinued operations on the condensed consolidated balance sheets for the periods presented:


	April 30, 2024
Assets:

Cash and cash equivalents	$	6,445
Accounts receivable, net	91,906
Prepaid and other assets	44,311
Property and equipment, net	6,758
Operating lease right-of use assets, net	6,541
Goodwill	724,306
Intangible assets, net	119,141
Deferred income taxes	20,950
Total current assets held for sale	$	1,020,358
Liabilities:

Accounts payable and accrued liabilities	$	83,206
Operating lease liabilities	7,016
Deferred revenue	240,380
Total current liabilities held for sale	$	330,602


	October 31, 2023
Assets:

Cash and cash equivalents	$	4,947
Accounts receivable, net	90,307
Prepaid and other current assets	19,400
Total current assets held for sale	$	114,654
Property and equipment, net	$	7,424
Operating lease right-of use assets, net	8,906
Goodwill	724,271
Intangible assets, net	134,617
Deferred income taxes	7,388
Other long-term assets	26,153
Total long-term assets held for sale	$	908,759
Liabilities:

Accounts payable and accrued liabilities	$	63,847
Operating lease liabilities	5,858
Deferred revenue	216,539
Total current liabilities held for sale	$	286,244
Long-term operating lease liabilities	$	4,349
Long-term deferred revenue	24,301
Other long-term liabilities	4,607
Total long-term liabilities held for sale	$	33,257

The following table presents significant non-cash items and capital expenditures of discontinued operations for the periods presented:


	Six Months Ended April 30,
	2024		2023
Amortization and depreciation	$	16,317	$	25,007
Reduction of operating lease right-of-use assets	$	2,588	$	2,315
Amortization of capitalized costs to obtain revenue contracts	$	14,260	$	13,328
Stock-based compensation	$	30,291	$	24,527
Deferred income taxes	$	13,562	$	7,388
Purchases of property and equipment	$	929	$	1,644