SOURCE: CADENCE DESIGN SYSTEMS, INC.

October 28, 2009 16:05 ET

Cadence Reports Q3 2009 Financial Results

SAN JOSE, CA--(Marketwire - October 28, 2009) - Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the third quarter 2009.

Cadence reported third quarter 2009 revenue of $216 million, compared to revenue of $232 million reported for the same period in 2008. On a GAAP basis, Cadence recognized a net loss of $14 million, or $(0.05) per share on a diluted basis, in the third quarter of 2009, compared to a net loss of $171 million, or $(0.67) per share on a diluted basis in the same period in 2008.

In addition to using GAAP results in evaluating Cadence's business, management believes it is useful to measure results using a non-GAAP measure of net income or net loss, which excludes, as applicable, amortization of intangible assets, stock-based compensation expense, in-process research and development charges, costs related to a withdrawn acquisition proposal and losses on the sale of shares of the target company stock, integration and acquisition-related costs, gains or losses and expenses or credits related to non-qualified deferred compensation plan assets, executive severance costs, restructuring charges and credits, amortization of discount on convertible notes, equity in losses (income) from investments, write-down of investments, impairment charges related to goodwill, intangible assets and fixed assets, and losses related to the liquidation of a subsidiary. Non-GAAP net income or net loss is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company's tax liability. See "GAAP to non-GAAP Reconciliation" below for further information on the non-GAAP measure.

Using this non-GAAP measure, net income in the third quarter of 2009 was $7 million, or $0.03 per share on a diluted basis, as compared to a net loss of $23 million, or $(0.09) per share on a diluted basis, in the same period in 2008.

"The increased level of R&D engagement with customers is well received, and we are winning with technologies that address our customers' need for better design productivity, increased predictability of schedule and results, and faster time-to-market," said Lip-Bu Tan, president and chief executive officer.

Added Kevin S. Palatnik, senior vice president and chief financial officer, "Third quarter results represent strong operational execution by the Cadence team. Sequential revenue growth met expectations, operating profitability improved significantly and we ended the quarter with more than $570 million in cash."

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Business Outlook

For the fourth quarter of 2009, the company expects total revenue in the range of $215 million to $225 million. Fourth quarter GAAP net loss per diluted share is expected to be in the range of $(0.08) to $(0.06). Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.02 to $0.04.

For the full year 2009, the company expects total revenue in the range of $845 million to $855 million. On a GAAP basis, net loss per diluted share for fiscal 2009 is expected to be in the range of $(0.66) to $(0.64). Using the non-GAAP measure defined below, net loss per diluted share for fiscal 2009 is expected to be in the range of $(0.10) to $(0.08).

A schedule showing a reconciliation of the business outlook from GAAP net loss and diluted net loss per share to the non-GAAP net income or net loss and diluted net income or net loss per share is included with this release.

Audio Webcast Scheduled

Lip-Bu Tan, Cadence's President and Chief Executive Officer, and Kevin S. Palatnik, Cadence's Senior Vice President and Chief Financial Officer, will host a third quarter 2009 financial results audio webcast today, October 28, 2009, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the Web site at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting October 28, 2009 at 5 p.m. (Pacific) and ending November 11, 2009 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/company/investor_relations.

About Cadence

Cadence enables global electronic-design innovation and plays an essential role in the creation of today's integrated circuits and electronics. Customers use Cadence® software and hardware, methodologies, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. The company is headquartered in San Jose, Calif., with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about Cadence and its products and services is available at www.cadence.com.

Cadence and the Cadence logo are registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.

The statements contained above regarding the company's third quarter 2009 results, as well as the comments in the Business Outlook section and the statements by Lip-Bu Tan and Kevin S. Palatnik include forward-looking statements based on current expectations or beliefs, as well as a number of preliminary assumptions about future events that are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Readers are cautioned not to put undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence's control, including, among others: (i) Cadence's ability to compete successfully in the electronic design automation product and the commercial electronic design and methodology services industries; (ii) Cadence's ability to successfully complete and realize the expected benefits of the previously announced restructurings without significant unexpected costs or delays, and the success of Cadence's other efforts to improve operational efficiency and growth; (iii) the mix of products and services sold and the timing of significant orders for Cadence's products, and its shift to a ratable license structure, which may result in changes in the mix of license types; (iv) change in customer demands, including the possibility that the previously announced restructurings and other efforts to improve operational efficiency could result in delays in customers' purchases of products and services; (v) economic and industry conditions in regions in which Cadence does business; (vi) fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries in which Cadence does business; (vii) capital expenditure requirements, legislative or regulatory requirements, interest rates and Cadence's ability to access capital and debt markets; (viii) the acquisition of other companies or technologies or the failure to successfully integrate and operate these companies or technologies Cadence acquires; (ix) the effects of the previously announced restructurings and other efforts to improve operational efficiency on Cadence's business, including its strategic and customer relationships, ability to retain key employees and stock prices; and (x) the effects of any litigation or other proceedings to which Cadence is or may become a party.

For a detailed discussion of these and other cautionary statements, please refer to the company's filings with the Securities and Exchange Commission. These include the company's Annual Report on Form 10-K for the year ended January 3, 2009, the company's Quarterly Report on Form 10-Q for the period ended July 4, 2009, and the company's future filings.

Adoption of accounting principles required by the "Debt with Conversion and Other Options" subtopic of the FASB Accounting Standards Codification

On the first day of fiscal 2009, Cadence adopted new accounting principles as required by the "Debt with Conversion and Other Options" subtopic of the FASB Accounting Standards Codification. Accordingly, Cadence has adjusted the applicable prior period balance sheets and statements of operations to reflect the adjusted balance of the convertible notes and related items, and to record the amortization of the discount on the convertible notes as non-cash interest expense. A reconciliation of Cadence's as-adjusted Condensed Consolidated Balance Sheets as of January 3, 2009 and its as-adjusted Condensed Consolidated Statements of Operations for the three months and nine months ended September 27, 2008 to their respective statements as initially reported is included with this release.

GAAP to non-GAAP Reconciliation

Cadence management evaluates and makes operating decisions using various operating measures. These measures are generally based on the revenues of its product, maintenance and services business operations and certain costs of those operations, such as cost of revenues, research and development, sales and marketing and general and administrative expenses. One such measure is non-GAAP net income or net loss, which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended, and is GAAP net income or net loss excluding, as applicable, amortization of intangible assets, stock-based compensation expense, in-process research and development charges, costs related to a withdrawn acquisition proposal and losses on the sale of shares of the target company stock, integration and acquisition-related costs, gains or losses and expenses or credits related to non-qualified deferred compensation plan assets, executive severance costs, restructuring charges and credits, amortization of discount on convertible notes, equity in losses (income) from investments, write-down of investments, impairment charges related to goodwill, intangible assets and fixed assets, and losses related to the liquidation of a subsidiary. Intangible assets consist primarily of purchased or licensed technology, backlog, patents, trademarks, distribution rights, customer contracts and related relationships and non-compete agreements. Non-GAAP net income or net loss is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company's tax liability.

Cadence's management believes it is useful in measuring Cadence's operations to exclude amortization of intangible assets, in-process research and development charges and integration and acquisition-related costs because these costs are primarily fixed at the time of an acquisition and generally cannot be changed by Cadence's management in the short term. In addition, Cadence's management believes it is useful to exclude stock-based compensation expense because it enhances investors' ability to review Cadence's business from the same perspective as Cadence's management, which believes that stock-based compensation expense is not directly attributable to the underlying performance of the company's business operations. Cadence's management also believes that it is useful to exclude restructuring charges and credits. During the second half of fiscal 2008 and the first half of fiscal 2009, Cadence commenced restructuring programs that it expects to complete in the first half of 2010. Cadence's management believes that in measuring the company's operations, it is useful to exclude any such restructuring charges and credits because Cadence does not undertake significant restructuring on a regular basis, and exclusion of such charges permits consistent evaluations of Cadence's performance before and after such actions are taken. Cadence's management also believes it is useful to exclude executive severance costs because these costs do not occur frequently. Cadence's management believes it is useful to exclude gains or losses and expenses or credits related to the non-qualified deferred compensation plan assets because these gains and expenses are not part of Cadence's direct costs of operations, but reflect changes in the value of assets held in the non-qualified deferred compensation plan. Cadence's management also believes it is useful to exclude the amortization of the discount on convertible notes because this incremental cost recorded as interest expense does not represent a cash obligation of the company and is not part of Cadence's direct cost of operations. Cadence's management also believes it is useful to exclude the equity in losses (income) from investments and write-down of investments because these items are not part of Cadence's direct cost of operations. Rather, these are non-operating items that are included in other income (expense) and are part of the company's investment activities. Finally, Cadence's management also believes it is useful to exclude impairment charges related to goodwill, intangible assets and fixed assets, and losses related to the liquidation of a subsidiary because these do not occur on a regular basis and are not part of the company's direct costs of operations.

During fiscal year 2008, Cadence's non-GAAP net loss also excluded the impact of tax expense associated with recording a valuation allowance against Cadence's deferred tax assets. Cadence's management believes it is useful to exclude the tax expense associated with this valuation allowance because Cadence does not expect changes in the valuation allowance of the magnitude recorded in the fourth quarter of 2008 to be recorded frequently.

During fiscal year 2008, Cadence's non-GAAP net loss also excluded the impact of tax expense associated with Cadence's repatriation of foreign earnings. Cadence's management believes it is useful to exclude the tax expense associated with the repatriation of foreign earnings because it resulted from an event that is not expected to occur frequently.

During fiscal year 2008, Cadence's non-GAAP net loss also excluded costs related to a withdrawn acquisition proposal and losses on the sale of shares of the target company stock which Cadence acquired as part of the proposed acquisition. Cadence's management believes that in measuring Cadence's operations it is useful to exclude the costs and the losses associated with this proposed acquisition because these items are not directly related to Cadence's operating performance and resulted from events that are not expected to occur frequently.

Cadence's management believes that non-GAAP net income or net loss provides useful supplemental information to Cadence's management and investors regarding the performance of the company's business operations and facilitates comparisons to the company's historical operating results. Cadence's management also uses this information internally for forecasting and budgeting. Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with their most directly comparable GAAP financial results.

The following tables reconcile the specific items excluded from GAAP net loss and GAAP net loss per diluted share in the calculation of non-GAAP net income or net loss and non-GAAP net income or net loss per diluted share for the periods shown below:

Net Income (Loss) Reconciliation                     Three Months Ended
                                                  ------------------------
                                                  October 3,  September 27,
                                                     2009         2008
                                                  ----------  ------------
                                                                  (As
                                                               Adjusted)*
                                                        (unaudited)
 (in thousands)
Net loss on a GAAP basis                          $  (14,047) $   (170,656)
  Amortization of acquired intangibles                 4,391        10,754
  Stock-based compensation expense                    14,455        14,634
  Non-qualified deferred compensation expenses         3,752           188
  Restructuring and other charges (credits)             (175)       48,120
  Cost related to a withdrawn acquisition
   proposal                                                -         3,153
  Integration and acquisition-related costs              155           234
  Amortization of debt discount                        4,837         4,024
  Equity in losses from investments, write-down
   of investments, gains and losses on
   non-qualified deferred compensation plan
   assets - recorded in Other income (expense),
   net                                                (2,913)        2,798
  Losses on the sale of shares of withdrawn
   acquisition target company stock                        -         9,379
  Income tax related to repatriation of foreign
   earnings                                                -        71,047
  Income tax effect of non-GAAP adjustments           (3,055)      (16,352)
                                                  ----------  ------------
Net income (loss) on a non-GAAP basis             $    7,400  $    (22,677)
                                                  ==========  ============

* Adjusted for the retrospective adoption of new accounting principles as
required by the "Debt with Conversion and Other Options" subtopic of the
FASB Accounting Standards Codification.




Diluted Net Income (Loss) per Share
 Reconciliation                                      Three Months Ended
                                                 -------------------------
                                                 October 3,   September 27,
                                                     2009         2008
                                                 -----------  ------------
                                                                  (As
                                                               Adjusted)*
                                                        (unaudited)
 (in thousands, except per share data)
Diluted net loss per share on a GAAP basis       $     (0.05) $      (0.67)
  Amortization of acquired intangibles                  0.02          0.04
  Stock-based compensation expense                      0.05          0.06
  Non-qualified deferred compensation expenses          0.01             -
  Restructuring and other charges (credits)                -          0.19
  Costs related to a withdrawn acquisition
   proposal                                                -          0.01
  Amortization of debt discount                         0.02          0.02
  Equity in losses from investments, write-down
   of investments, gains and losses on
   non-qualified deferred compensation plan
   assets - recorded in Other income (expense),
   net                                                 (0.01)         0.01
  Losses on the sale of shares of withdrawn
   acquisition target company stock                        -          0.04
  Income tax related to repatriation of foreign
   earnings                                                -          0.28
  Income tax effect of non-GAAP adjustments            (0.01)        (0.07)
                                                 -----------  ------------
Diluted net income (loss) per share on a
 non-GAAP basis                                  $      0.03  $      (0.09)
                                                 ===========  ============    
Shares used in calculation of diluted net loss
 per share - GAAP (A)                                259,193       252,915
Shares used in calculation of diluted net income
 (loss) per share - non-GAAP (A)                     262,553       252,915


(A) Shares used in the calculation of GAAP net income (loss) per share are
expected to be the same as shares used in the calculation of non-GAAP net
income (loss) per share, except when the company reports a GAAP net loss
and non-GAAP net income, or GAAP net income and a non-GAAP net loss.

* Adjusted for the retrospective adoption of new accounting principles as
required by the "Debt with Conversion and Other Options" subtopic of the
FASB Accounting Standards Codification.

Investors are encouraged to look at the GAAP results as the best measure of financial performance. For example, amortization of intangibles or in-process technology are important to consider because they may represent initial expenditures that under GAAP are reported across future fiscal periods. Likewise, stock-based compensation expense is an obligation of the company that should be considered. Restructuring charges can be triggered by acquisitions or product adjustments, as well as overall company performance within a given business environment. All of these metrics are important to financial performance generally.

Although Cadence's management finds the non-GAAP measure useful in evaluating the performance of Cadence's business, reliance on this measure is limited because items excluded from such measures often have a material effect on Cadence's earnings and earnings per share calculated in accordance with GAAP. Therefore, Cadence's management typically uses the non-GAAP earnings and earnings per share measures, in conjunction with the GAAP earnings and earnings per share measures, to address these limitations.

Cadence's management believes that presenting the non-GAAP measure of earnings and earnings per share provides investors with an additional tool for evaluating the performance of the company's business, which Cadence's management uses in its own evaluation of performance, and an additional baseline for assessing the future earnings potential of the company. While the GAAP results are more complete, Cadence's management prefers to allow investors to have this supplemental measure since it may provide additional insights into the company's financial results.

Cadence expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings, Cadence may reiterate the business outlook published in this press release. At the same time, Cadence will keep this press release, including the business outlook, publicly available on its Web site.

Prior to the start of the Quiet Period (described below), the public may continue to rely on the business outlook contained herein as still being Cadence's current expectations on matters covered unless Cadence publishes a notice stating otherwise.

Beginning December 18, 2009, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the company's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute the company's current expectations. During the Quiet Period, the business outlook in these documents should be considered to be historical, speaking as of prior to the Quiet Period only and not subject to any update by the company. During the Quiet Period, Cadence's representatives will not comment on Cadence's business outlook, financial results or expectations. The Quiet Period will extend until the day when Cadence's Fourth Quarter 2009 Earnings Release is published, which is currently scheduled for February 3, 2010.


                       Cadence Design Systems, Inc.
                  Condensed Consolidated Balance Sheets
                    October 3, 2009 and January 3, 2009
                              (In thousands)
                                (Unaudited)


                                            October 3, 2009 January 3, 2009
                                            --------------- ---------------
                                                            (As Adjusted)*
Current Assets:
  Cash and cash equivalents                 $       570,617 $       568,255
  Short-term investments                              4,756           3,840
  Receivables, net of allowances of $15,208
   and $7,524, respectively                         195,468         298,665
  Inventories                                        25,626          28,465
  Prepaid expenses and other                         64,694          54,765
                                            --------------- ---------------
    Total current assets                            861,161         953,990

Property, plant and equipment, net of
 accumulated depreciation of $630,155 and
 $625,010, respectively                             313,398         354,852
Acquired intangibles, net of accumulated
 amortization of $122,677 and
 $134,688, respectively                              33,438          49,082
Installment contract receivables, net of
 allowances of $9,724 and $0, respectively           64,859         160,742
Other assets                                        141,361         161,187
                                            --------------- ---------------
Total Assets                                $     1,414,217 $     1,679,853
                                            =============== ===============

Current Liabilities:
  Accounts payable and accrued liabilities          159,728         261,099
  Current portion of deferred revenue               245,528         303,111
                                            --------------- ---------------
    Total current liabilities                       405,256         564,210
                                            --------------- ---------------

Long-Term Liabilities:
  Long-term portion of deferred revenue             108,941         130,354
  Convertible notes                                 431,072         416,572
  Other long-term liabilities                       372,756         382,004
                                            --------------- ---------------
    Total long-term liabilities                     912,769         928,930
                                            --------------- ---------------

Stockholders' Equity                                 96,192         186,713
                                            --------------- ---------------
Total Liabilities and Stockholders' Equity  $     1,414,217 $     1,679,853
                                            =============== ===============


* Adjusted for the retrospective adoption of new accounting principles,
  as required by the "Debt with Conversion and Other Options" subtopic
  of the FASB Accounting Standards Codification, on the first day of
  fiscal 2009.




                       Cadence Design Systems, Inc.
              Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended October 3, 2009 and September 27, 2008
                 (In thousands, except per share amounts)
                                (Unaudited)


                        Three Months Ended          Nine Months Ended
                    --------------------------  --------------------------
                     October 3,   September 27,   October 3,  September 27,
                        2009         2008            2009         2008
                    ------------  ------------  ------------  ------------
                                      (As                         (As
                                   Adjusted)*                  Adjusted)*
Revenue:
  Product           $     96,932  $    107,572  $    286,295  $    422,365
  Services                26,669        32,873        83,684        98,763
  Maintenance             92,521        92,043       262,374       290,151
                    ------------  ------------  ------------  ------------
    Total revenue        216,122       232,488       632,353       811,279
                    ------------  ------------  ------------  ------------

Costs and Expenses:
  Cost of product          6,405        11,829        23,828        39,241
  Cost of services        21,139        25,677        69,602        78,083
  Cost of
   maintenance            11,105        13,910        35,423        42,889
  Marketing and
   sales                  68,282        91,075       214,603       274,016
  Research and
   development            88,049       112,486       273,394       357,929
  General and
   administrative         28,732        32,937       101,311       105,608
  Amortization of
   acquired
   intangibles             2,726         5,626         8,694        17,206
  Restructuring and
   other charges
   (credits)                (175)       48,120        17,833        47,765
  Write-off of
   acquired
   in-process
   technology                  -             -             -           600
                    ------------  ------------  ------------  ------------
    Total costs and
     expenses            226,263       341,660       744,688       963,337
                    ------------  ------------  ------------  ------------
      Loss from
       operations        (10,141)     (109,172)     (112,335)     (152,058)

  Interest expense        (7,278)       (7,042)      (21,592)      (20,696)
  Other income
   (expense), net          2,917        (7,714)       (5,765)       (3,701)
                    ------------  ------------  ------------  ------------
      Loss before
       provision
       (benefit)
       for income
       taxes             (14,502)     (123,928)     (139,692)     (176,455)

  Provision
   (benefit) for
   income taxes             (455)       46,728        11,969        46,155
                    ------------  ------------  ------------  ------------
      Net loss      $    (14,047) $   (170,656) $   (151,661) $   (222,610)
                    ============  ============  ============  ============
Basic and diluted
 net loss per share $      (0.05) $      (0.67) $      (0.59) $      (0.87)
                    ============  ============  ============  ============
Weighted average
 common shares
 outstanding -
 basic and diluted       259,193       252,915       256,792       256,119
                    ============  ============  ============  ============


* Adjusted for the retrospective adoption of new accounting principles,
  as required by the "Debt with Conversion and Other Options" subtopic of
  the FASB Accounting Standards Codification, on the first day of fiscal
  2009.




                       Cadence Design Systems, Inc.
              Condensed Consolidated Statements of Cash Flows
     For the Nine Months Ended October 3, 2009 and September 27, 2008
                              (In thousands)
                                (Unaudited)


                                                  Nine Months Ended
                                            ------------------------------
                                              October 3,    September 27,
                                                 2009            2008
                                            --------------  --------------
                                                            (As Adjusted)*

Cash and Cash Equivalents at Beginning of
 Period                                     $      568,255  $    1,062,920
                                            --------------  --------------
Cash Flows from Operating Activities:
   Net loss                                       (151,661)       (222,610)
   Adjustments to reconcile net loss to net
    cash provided by operating activities:
      Depreciation and amortization                 71,334          96,037
      Amortization of debt discount and fees        15,557          13,323
      Stock-based compensation                      43,690          57,678
      Equity in loss from investments, net             369             823
      Loss on investments, net                       4,307          11,440
      (Gain) loss on sale and leaseback of
       land and buildings                             (122)            350
      Write-down of investment securities            5,207          10,666
      Write-off of acquired in-process
       technology                                        -             600
      Tax benefit of call options                        -           2,994
      Impairment of property, plant and
       equipment                                     6,603           2,004
      Deferred income taxes                         (6,520)        (11,094)
      Proceeds from the sale of
       receivables, net                              5,827          48,124
      Provisions for losses on trade and
       installment contract receivables and
       sales returns                                18,668             462
      Other non-cash items                          (3,962)         (3,119)
      Changes in operating assets and
       liabilities, net of effect of
       acquired businesses:
         Receivables                                56,444          21,489
         Installment contract receivables          122,302          46,198
         Inventories                                 2,846           5,486
         Prepaid expenses and other                 (4,041)         (3,421)
         Other assets                               11,809          (1,849)
         Accounts payable and accrued
          liabilities                              (79,395)        (41,582)
         Deferred revenue                          (83,760)        (32,243)
         Other long-term liabilities               (10,773)         35,972
                                            --------------  --------------
            Net cash provided by operating
             activities                             24,729          37,728
                                            --------------  --------------

Cash Flows from Investing Activities:
  Proceeds from the sale of
   available-for-sale securities                       139          53,783
  Purchases of available-for-sale
   securities                                            -         (62,447)
  Proceeds from the sale of long-term
   investments                                           -           3,250
  Purchases of property, plant and
   equipment                                       (30,504)        (81,112)
  Purchases of software licenses                      (774)         (1,199)
  Investment in venture capital
   partnerships and equity investments              (2,300)         (4,053)
  Cash paid in business combinations and
   asset acquisitions, net of cash
   acquired, and acquisition of
   intangibles                                     (14,126)        (20,621)
                                            --------------  --------------
           Net cash used for investing
            activities                             (47,565)       (112,399)
                                            --------------  --------------

Cash Flows from Financing Activities:
  Proceeds from receivable sale financing                -          17,970
  Principal payments on receivable sale
   financing                                        (2,467)              -
  Payment of convertible notes due 2023                  -        (230,207)
  Tax benefit from employee stock
   transactions                                          -             427
  Proceeds from issuance of common stock            27,862          48,116
  Stock received for payment of employee
   taxes on vesting of restricted stock             (4,055)         (3,693)
  Purchases of treasury stock                            -        (273,950)
                                            --------------  --------------
           Net cash provided by (used for)
            financing activities                    21,340        (441,337)
                                            --------------  --------------
Effect of exchange rate changes on cash and
 cash equivalents                                    3,858           4,841
                                            --------------  --------------
Increase (decrease) in cash and cash
 equivalents                                         2,362        (511,167)
                                            --------------  --------------
Cash and Cash Equivalents at End of Period  $      570,617  $      551,753
                                            ==============  ==============


* Adjusted for the retrospective adoption of new accounting principles,
  as required by the "Debt with Conversion and Other Options" subtopic of
  the FASB Accounting Standards Codification, on the first day of fiscal
  2009.




                       Cadence Design Systems, Inc.
                          As of October 28, 2009
        Impact of Non-GAAP Adjustments on Forward Looking Diluted
                            Net Loss Per Share
                                (Unaudited)


                                  Three Months Ending      Year Ending
                                    January 2, 2010      January 2, 2010
                                  -------------------  -------------------
                                        Forecast             Forecast
                                  -------------------  -------------------

Diluted net loss per share on a
 GAAP basis                        $(0.08) to $(0.06)   $(0.66) to $(0.64)

  Amortization of acquired
   intangibles                            0.02                 0.08
  Stock-based compensation
   expense                                0.05                 0.22
  Non-qualified deferred
   compensation expenses
   (credits)                                -                 (0.02)
  Restructuring and other charges         0.01                 0.08
  Equity in losses from
   investments, write-down of
   investments, gains and losses
   on non-qualified deferred
   compensation plan assets                 -                  0.04
  Amortization of debt discount           0.02                 0.07
  Income tax effect of non-GAAP
   adjustments                              -                  0.09

                                  -------------------  -------------------
Diluted net income (loss) per
 share on a non-GAAP basis           $0.02 to $0.04     $(0.10) to $(0.08)
                                  ===================  ===================




                       Cadence Design Systems, Inc.
                          As of October 28, 2009
       Impact of Non-GAAP Adjustments on Forward Looking Net Loss
                               (Unaudited)


                                  Three Months Ending      Year Ending
                                    January 2, 2010      January 2, 2010
                                  -------------------  -------------------
($ in Millions)                        Forecast             Forecast
                                  -------------------  -------------------

Net loss on a GAAP basis             $(19) to $(15)      $(171) to $(167)

  Amortization of acquired
   intangibles                              4                   20
  Stock-based compensation
   expense                                 13                   56
  Non-qualified deferred
   compensation expenses
   (credits)                                -                   (4)
  Restructuring and other charges           2                   20
  Integration and
   acquisition-related costs                -                    1
  Equity in losses from
   investments, write-down of
   investments, gains and losses
   on non-qualified deferred
   compensation plan assets                 -                   10
  Amortization of debt discount             5                   19
  Income tax effect of non-GAAP
   adjustments                              1                   24

                                  -------------------  -------------------
Net income (loss) on a non-GAAP
 basis                                  $6 to $10         $(25) to $(21)
                                  ===================  ===================




                        Cadence Design Systems, Inc.
                                (Unaudited)


Revenue Mix by Geography (% of Total Revenue)

                           2007                          2008
               ============================  ============================
GEOGRAPHY       Q1    Q2    Q3    Q4   Year   Q1    Q2    Q3    Q4   Year
               ====  ====  ====  ====  ====  ====  ====  ====  ====  ====

  Americas       48%   52%   41%   50%   49%   43%   48%   43%   45%   45%
  Europe         15%   17%   25%   17%   18%   24%   21%   23%   22%   22%
  Japan          27%   14%   22%   22%   21%   21%   19%   20%   18%   20%
  Asia           10%   17%   12%   11%   12%   12%   12%   14%   15%   13%
Total           100%  100%  100%  100%  100%  100%  100%  100%  100%  100%


                     2009
               ================
GEOGRAPHY       Q1    Q2    Q3
               ====  ====  ====

  Americas       42%   48%   43%
  Europe         24%   21%   20%
  Japan          19%   17%   23%
  Asia           15%   14%   14%
Total           100%  100%  100%


Revenue Mix by Product Group (% of Total Revenue)

                           2007                          2008
               ============================  ============================
PRODUCT GROUP   Q1    Q2    Q3    Q4   Year   Q1    Q2    Q3    Q4   Year
               ====  ====  ====  ====  ====  ====  ====  ====  ====  ====

  Functional
   Verification  24%   24%   20%   26%   24%   22%   25%   22%   17%   22%
  Digital IC
   Design        26%   29%   27%   27%   27%   24%   24%   20%   26%   24%
  Custom IC
   Design        24%   24%   32%   25%   27%   26%   23%   26%   23%   24%
  Design for
   Manufacturing  7%    7%    6%    6%    6%    5%    7%    7%    7%    6%
  System
   Interconnect  10%    8%    7%    9%    8%   11%   10%   11%   12%   11%
  Services &
   Other          9%    8%    8%    7%    8%   12%   11%   14%   15%   13%
Total           100%  100%  100%  100%  100%  100%  100%  100%  100%  100%


                     2009
               ================
PRODUCT GROUP   Q1    Q2    Q3
               ====  ====  ====

  Functional
   Verification  20%   23%   21%
  Digital IC
   Design        19%   24%   19%
  Custom IC
   Design        26%   25%   28%
  Design for
   Manufacturing  9%    5%    9%
  System
   Interconnect  12%   10%   11%
  Services &
   Other         14%   13%   12%
Total           100%  100%  100%

Note: Product Group total revenue includes Product + Maintenance




                       Cadence Design Systems, Inc.
                Impact of Retrospective Adoption of the
                "Debt with Conversion and Other Options"
          Subtopic of the FASB Accounting Standards Codification
    On Previously Reported Condensed Consolidated Balance Sheets as of
                             January 3, 2009
                              (In thousands)
                                (Unaudited)


                                           As of January 3, 2009
                                 -----------------------------------------
                                     As
                                 Previously                        As
                                  Reported    Adjustments       Adjusted
                                 -----------  -----------      -----------

Current assets                   $   954,548  $      (558) (A) $   953,990
Property, plant and equipment,
 net                                 351,961        2,891  (B)     354,852
Acquired intangibles, net             49,082            -           49,082
Installment contract receivables     160,742            -          160,742
Other assets                         162,381       (1,194) (C)     161,187
                                 -----------  -----------      -----------
    Total Assets                 $ 1,678,714  $     1,139      $ 1,679,853
                                 ===========  ===========      ===========

Current liabilities              $   564,210  $         -      $   564,210

Long-Term Liabilities:
    Long-term portion of
     deferred revenue                130,354            -          130,354
    Convertible notes                500,178      (83,606) (D)     416,572
    Other long-term liabilities      382,004            -          382,004
                                 -----------  -----------      -----------
        Total long-term
         liabilities               1,012,536      (83,606)         928,930
                                 -----------  -----------      -----------

Stockholders' Equity:
    Common stock and capital in
     excess of par value           1,562,079       97,223  (E)   1,659,302
    Treasury stock, at cost         (695,152)           -         (695,152)
    Accumulated deficit             (802,201)     (12,478) (F)    (814,679)
    Accumulated other
     comprehensive income             37,242            -           37,242
                                 -----------  -----------      -----------
        Total stockholders'
         equity                      101,968       84,745          186,713
                                 -----------  -----------      -----------

                                 -----------  -----------      -----------
Total Liabilities and
 Stockholders' Equity            $ 1,678,714  $     1,139      $ 1,679,853
                                 ===========  ===========      ===========

(A) This amount represents the cumulative adjustments to the current
    portion of debt issuance costs associated with Cadence's Convertible
    Senior Notes.

(B) This amount represents the cumulative capitalized interest related to
    the amortization of debt discount.

(C) This amount represents the cumulative adjustments to the long-term
    portion of debt issuance costs associated with Cadence's Convertible
    Senior Notes and the cumulative impact on the net deferred tax assets
    related to the amortization of debt discount.

(D) This amount represents the remaining unamortized debt discount on
    Cadence's Convertible Senior Notes as of January 3, 2009.

(E) This amount represents the equity component of Cadence's Convertible
    Senior Notes, net of tax adjustments to the tax benefit of call
    options, due to the amortization of debt discount.

(F) This amount represents the cumulative Net loss impact of the
    amortization of debt discount and the associated tax adjustments
    since inception of Cadence's Convertible Senior Notes.




                       Cadence Design Systems, Inc.
                Impact of Retrospective Adoption of the
                "Debt with Conversion and Other Options"
          Subtopic of the FASB Accounting Standards Codification
  On Previously Reported Condensed Consolidated Statements of Operations
          For the Three and Nine Months Ended September 27, 2008
                 (In thousands, except per share amounts)
                                (Unaudited)


                                   Three Months Ended September 27, 2008
                                 -----------------------------------------
                                     As
                                 Previously                        As
                                  Reported    Adjustments       Adjusted
                                 -----------  -----------      -----------

Revenue                          $   232,488  $         -      $   232,488
Costs and expenses                   341,660            -          341,660
                                 -----------  -----------      -----------
    Loss from operations            (109,172)           -         (109,172)
                                 -----------  -----------      -----------

Interest expense                      (3,180)      (3,862) (G)      (7,042)
Other expense, net                    (7,714)           -           (7,714)
                                 -----------  -----------      -----------
    Loss before provision for
     income taxes                   (120,066)      (3,862)        (123,928)

Provision for income taxes            49,000       (2,272) (H)      46,728

                                 -----------  -----------      -----------
    Net loss                     $  (169,066) $    (1,590)     $  (170,656)
                                 ===========  ===========      ===========
Basic and diluted net loss per
 share                           $     (0.67)                  $     (0.67)
                                 ===========                   ===========


                                   Nine Months Ended September 27, 2008
                                 -----------------------------------------
                                     As
                                 Previously                        As
                                  Reported    Adjustments       Adjusted
                                 -----------  -----------      -----------

Revenue                          $   811,279  $         -      $   811,279
Costs and expenses                   963,337            -          963,337
                                 -----------  -----------      -----------
    Loss from operations            (152,058)           -         (152,058)
                                 -----------  -----------      -----------

Interest expense                      (9,055)     (11,641) (G)     (20,696)
Other expense, net                    (3,701)           -           (3,701)
                                 -----------  -----------      -----------
    Loss before provision for
     income taxes                   (164,814)     (11,641)        (176,455)

Provision for income taxes            50,269       (4,114) (H)      46,155

                                 -----------  -----------      -----------
    Net loss                     $  (215,083) $    (7,527)     $  (222,610)
                                 ===========  ===========      ===========
Basic and diluted net loss per
 share                           $     (0.84)                  $     (0.87)
                                 ===========                   ===========

(G) This amount represents the amortization of debt discount, net of the
    decrease in interest expense associated with the debt issuance costs.

(H) This amount represents the tax adjustments associated with the
    increased expense during the period.

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