SOURCE: CADENCE DESIGN SYSTEMS, INC.

January 30, 2008 16:05 ET

Cadence Reports Q4 Revenue Up 6% Over Q4 2006

SAN JOSE, CA--(Marketwire - January 30, 2008) - Cadence Design Systems, Inc. (NASDAQ: CDNS) today reported fourth quarter 2007 revenue of $458 million, an increase of 6 percent over the $431 million reported for the same period in 2006. On a GAAP basis, Cadence recognized net income of $120 million, or $0.41 per share on a diluted basis, in the fourth quarter of 2007, compared to $48 million, or $0.16 per share on a diluted basis, in the same period in 2006. Revenues for the fiscal year 2007 totaled $1.62 billion, an increase of 9 percent over 2006 total revenues of $1.48 billion. Net income for the fiscal year 2007 was $296 million, or $1.01 per share, compared to net income of $143 million, or $0.46 per share for the year 2006. Net income on a GAAP basis for the fourth quarter and fiscal year 2007 includes the income tax benefit of a settlement with the Internal Revenue Service of $28 million, or $0.10 per share on a diluted basis for the fourth quarter of 2007, and $0.09 per share on a diluted basis for the fiscal year 2007.

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, which excludes, as applicable, amortization of intangible assets, stock-based compensation expense, in-process research and development charges, certain termination and legal costs, integration and acquisition-related costs, gains and expenses related to non-qualified deferred compensation plan assets, executive severance payments, restructuring charges and credits, losses on extinguishment of debt and equity in losses (income) from investments. Non-GAAP net income 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 fourth quarter of 2007 was $133 million, or $0.46 per share on a diluted basis, as compared to $116 million, or $0.38 per share on a diluted basis, in the same period in 2006. For the fiscal year 2007, non-GAAP net income was $397 million, or $1.35 per share, compared to $336 million and $1.08 per share in 2006.

"Our strategy is on track, our technology has never been stronger, and we continue to focus on delivering solutions to help our customers manage their businesses in a challenging environment," said Mike Fister, president and CEO of Cadence.

"We achieved our long standing goal for operating margin for the year, and will keep our focus on improving our operating efficiency through 2008," added Bill Porter, executive vice president and chief financial officer.

The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not include the impact of any mergers, acquisitions or other business combinations completed after Dec. 29, 2007.

Business Outlook

For the first quarter of 2008, the company expects total revenue in the range of $280 million to $290 million. First quarter GAAP net loss per diluted share is expected to be in the range of $(0.06) to $(0.04). Diluted earnings per share using the non-GAAP measure defined below are expected to be in the range of $0.03 to $0.05.

For the full year 2008, the company expects total revenue in the range of $1.490 billion to $1.540 billion. On a GAAP basis, net income per diluted share for fiscal 2007 is expected to be in the range of $0.69 to $0.77. Using the non-GAAP measure defined below, diluted earnings per share for fiscal 2008 are expected to be in the range of $1.11 to $1.19.

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

Audio Webcast Scheduled

Fister and Porter will host a fourth quarter 2007 financial results audio webcast today, Jan. 30, 2008, 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 Jan. 30, 2008, at 5 p.m. Pacific time and ending at 5 p.m. Pacific time on Feb. 6, 2008. 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. Cadence reported 2007 revenues of approximately $1.6 billion, and has approximately 5,300 employees. 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 the company, its products, and services is available at www.cadence.com.

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

The statements contained above regarding the company's fourth quarter and fiscal year 2007 results, those contained in the Business Outlook section above and the statements by Mike Fister and Bill Porter 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 uncertainties and other factors, many of which are outside Cadence's control, including, among others: Cadence's ability to compete successfully in the design automation product and the commercial electronic design and methodology services industries; the mix of products and services sold and the timing of significant orders for its products; economic uncertainty; fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries in which Cadence does business; and the acquisition of other companies or technologies or the failure to successfully integrate those it acquires.

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 Dec. 30, 2006 and the company's Quarterly Report on Form 10-Q for the quarter ended Sept. 29, 2007.

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, which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended. This measure consists of GAAP net income excluding, as applicable, amortization of intangible assets, stock-based compensation expense, in-process research and development charges, certain termination and legal costs, integration and acquisition-related costs, gains and expenses related to non-qualified deferred compensation plan assets, executive severance payments, restructuring charges and credits (primarily related to excess facilities), losses on extinguishment of debt and equity in losses (income) from investments. 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 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.

Management believes it is useful in measuring Cadence's operations to exclude amortization of intangibles, in-process research and development and integration and acquisition-related costs because these costs are primarily fixed at the time of an acquisition and generally cannot be changed by management in the short term. In addition, 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. Management also believes that it is useful to exclude restructuring charges and credits. Cadence has dramatically reduced the size of its design services business and portions of its product and maintenance businesses over the past several years. As a result, in 2001, 2002 and 2003, Cadence's GAAP statements of operations included significant charges relating to such restructurings. Management believes that in measuring the company's operations it is useful to exclude any such restructuring charges and credits because its level of restructuring activities has significantly decreased. Management also believes it is useful to exclude executive severance costs and certain termination and legal costs as these costs do not occur frequently. Management also believes it is useful to exclude gains and expenses related to its non-qualified deferred compensation plan assets as 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 plan. Finally, management also believes it is useful to exclude the equity in losses (income) from investments, as 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.

In the fourth quarter of 2007, Cadence's non-GAAP measure also excluded the income tax benefit of settling a dispute with the Internal Revenue Service related to Cadence's tax years 1997-1999. This benefit had no impact on Cadence's non-GAAP measure of net income for 2007. Management believes it is useful to exclude the income tax benefit associated with this settlement from Cadence's non-GAAP measure of net income as this tax benefit resulted from an event which is not expected to occur frequently.

In the fourth quarter of 2006, Cadence's non-GAAP measure also excluded the loss associated with retiring a portion of its previously-issued convertible notes at a premium, and writing off related debt issuance costs. Management believes that in measuring Cadence's operations it is useful to exclude the loss on extinguishment of debt as the loss is not directly related to Cadence's operating performance and the associated transaction does not occur frequently.

Management believes that non-GAAP net income provides useful supplemental information to management and investors regarding the performance of the company's business operations and facilitates comparisons to our historical operating results. Management also uses this information internally for forecasting and budgeting. Non-GAAP financial measures should not be considered as a substitute for 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 income in the calculation of non-GAAP net income for the periods shown below:

Net Income Reconciliation                            Quarters Ended
                                                --------------------------
                                                December 29,  December 30,
                                                    2007          2006
                                                ------------  ------------
                                                        (unaudited)
(in thousands)
Net income on a GAAP basis                      $    119,503  $     48,365
   Amortization of acquired intangibles               12,488        12,801
   Stock-based compensation expense                   22,587        23,549
   Non-qualified deferred compensation expense         1,759         1,698
   Certain termination costs                          15,097             -
   Certain legal costs                                 8,070             -
   Restructuring and other charges (credits)            (102)          (71)
   Integration and acquisition-related costs             289           360
   Equity in losses from investments, gain on
    non-qualified deferred compensation plan
    assets - recorded in Other income, net              (558)          (54)
   Loss on extinguishment of debt                          -        40,768
   Income tax benefit from settlement of
    IRS dispute                                      (27,771)            -
   Income tax effect of non-GAAP adjustments         (18,394)      (11,576)
                                                ------------  ------------
Net income on a non-GAAP basis                  $    132,968  $    115,840
                                                ============  ============


Net Income Reconciliation                               Years Ended
                                                --------------------------
                                                December 29,  December 30,
                                                    2007          2006
                                                ------------  ------------
                                                        (unaudited)
(in thousands)
Net income on a GAAP basis                      $    296,252  $    142,592
   Amortization of acquired intangibles               46,639        63,251
   Stock-based compensation expense                  101,415       103,986
   Non-qualified deferred compensation expense         8,786         5,829
   Certain termination costs                          15,097             -
   Certain legal costs                                 8,070             -
   Restructuring and other charges (credits)          (9,686)         (797)
   Write-off of acquired in-process technology         2,678           900
   Integration and acquisition-related costs           1,274         1,748
   Equity in losses from investments, gain on
    non-qualified deferred compensation plan
    assets - recorded in Other income, net            (2,066)       (3,744)
   Loss on extinguishment of debt                          -        40,768
   Income tax benefit from settlement of
    IRS dispute                                      (27,771)            -
   Income tax effect of non-GAAP adjustments         (43,843)      (18,289)
   Cumulative effect of change in accounting
    principle                                              -          (418)
                                                ------------  ------------
Net income on a non-GAAP basis                  $    396,845  $    335,826
                                                ============  ============


Diluted Net Income per Share Reconciliation          Quarters Ended
                                                --------------------------
                                                December 29,  December 30,
                                                    2007          2006
                                                ------------  ------------
                                                        (unaudited)
(in thousands, except per share data)
Diluted net income per share on a GAAP basis    $       0.41  $       0.16
   Amortization of acquired intangibles                 0.04          0.04
   Stock-based compensation expense                     0.08          0.08
   Non-qualified deferred compensation expense          0.01          0.01
   Certain termination costs                            0.05             -
   Certain legal costs                                  0.03             -
   Restructuring and other charges (credits)               -             -
   Integration and acquisition-related costs               -             -
   Equity in losses from investments, gain on
    non-qualified deferred compensation plan
    assets - recorded in Other income, net                 -             -
   Loss on extinguishment of debt                          -          0.13
   Income tax benefit from settlement of IRS
    dispute                                            (0.10)            -
   Income tax effect of non-GAAP adjustments           (0.06)        (0.04)
                                                ------------  ------------
Diluted net income per share on a non-GAAP
 basis                                          $       0.46  $       0.38
                                                ============  ============
Shares used in calculation of diluted net
 income per share -- GAAP                            290,970       307,472
Shares used in calculation of diluted net
 income per share -- non-GAAP (A)                    290,970       307,472


Diluted Net Income per Share Reconciliation             Years Ended
                                                --------------------------
                                                December 29,  December 30,
                                                    2007          2006
                                                ------------  ------------
                                                        (unaudited)
(in thousands, except per share data)
Diluted net income per share on a GAAP basis    $       1.01  $       0.46
   Amortization of acquired intangibles                 0.16          0.20
   Stock-based compensation expense                     0.34          0.33
   Non-qualified deferred compensation expense          0.03          0.02
   Certain termination costs                            0.05             -
   Certain legal costs                                  0.03             -
   Restructuring and other charges (credits)           (0.03)            -
   Write-off of acquired in-process
    technology                                          0.01             -
   Integration and acquisition-related
    costs                                                  -          0.01
   Equity in losses from investments, gain on
    non-qualified deferred compensation plan
    assets - recorded in Other income, net             (0.01)        (0.01)
   Loss on extinguishment of debt                          -          0.13
   Income tax benefit from settlement of IRS
    dispute                                            (0.09)            -
   Income tax effect of non-GAAP adjustments           (0.15)        (0.06)
   Cumulative effect of change in accounting
    principle                                              -             -
                                                ------------  ------------
Diluted net income per share on a non-GAAP
 basis                                          $       1.35  $       1.08
                                                ============  ============

Shares used in calculation of diluted net
 income per share -- GAAP                            295,591       312,457
Shares used in calculation of diluted net
 income per share -- non-GAAP (A)                    295,591       312,457

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

Investors are encouraged to look at 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. Losses on extinguishment of debt can be incurred on remaining convertible notes. All of these metrics are important to financial performance generally.

Though Cadence management finds its non-GAAP measure is useful in evaluating the performance of Cadence's business, its 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 management typically uses its non-GAAP earnings and earnings per share measures, in conjunction with GAAP earnings and earnings per share measures, to address these limitations.

Cadence believes that presenting its 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 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, the company prefers to allow investors to have this supplemental measure since, with reconciliation to GAAP, it may provide additional insight into its 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 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 Mar. 14, 2008, 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 update by the company. During the Quiet Period, Cadence representatives will not comment on Cadence's business outlook or its financial results or expectations. The Quiet Period will extend until the day when Cadence's First Quarter 2008 Earnings Release is published, which is currently scheduled for Apr. 23, 2008.

                       Cadence Design Systems, Inc.
                  Condensed Consolidated Balance Sheets
                  December 29, 2007 and December 30, 2006
                              (In thousands)
                                (Unaudited)

                                                December 29,  December 30,
                                                    2007          2006
                                                ------------- -------------

Current Assets:
  Cash and cash equivalents                     $   1,062,920 $     934,342
  Short-term investments                               15,193        24,089
  Receivables, net of allowances of $2,895 and
   $3,804, respectively                               326,211       238,438
  Inventories                                          31,003        37,179
  Prepaid expenses and other                           94,236        77,957
                                                ------------- -------------
    Total current assets                            1,529,563     1,312,005

Property, plant and equipment, net of
 accumulated depreciation of $624,680
 and $615,768, respectively                           339,463       354,575
Goodwill                                            1,310,211     1,267,579
Acquired intangibles, net                             127,072       112,738
Installment contract receivables                      238,010       149,584
Other assets                                          326,831       246,341
                                                ------------- -------------
Total Assets                                    $   3,871,150 $   3,442,822
                                                ============= =============

Current Liabilities:
  Convertible notes                             $     230,385 $           -
  Current portion of long-term debt                         -        28,000
  Accounts payable and accrued liabilities            289,934       259,790
  Current portion of deferred revenue                 265,168       260,275
                                                ------------- -------------
    Total current liabilities                         785,487       548,065
                                                ------------- -------------

Long-term Liabilities:
  Long-term portion of deferred revenue               136,655        95,018
  Convertible notes                                   500,000       730,385
  Other long-term liabilities                         368,942       370,063
                                                ------------- -------------
    Total long-term liabilities                     1,005,597     1,195,466
                                                ------------- -------------

Stockholders' Equity                                2,080,066     1,699,291
                                                ------------- -------------
Total Liabilities and Stockholders' Equity      $   3,871,150 $   3,442,822
                                                ============= =============


                       Cadence Design Systems, Inc.
                 Condensed Consolidated Income Statements
 For the Quarters and Years Ended December 29, 2007 and December 30, 2006
                 (In thousands, except per share amounts)
                                (Unaudited)

                             Quarters Ended             Years Ended
                        ------------------------  ------------------------
                        December 29, December 30, December 29, December 30,
                           2007         2006         2007         2006
                        -----------  -----------  -----------  -----------
Revenue:
  Product               $   328,474  $   297,847  $ 1,103,970  $   982,673
  Services                   29,875       35,097      125,838      134,895
  Maintenance                99,594       98,076      385,205      366,327
                        -----------  -----------  -----------  -----------

    Total revenue           457,943      431,020    1,615,013    1,483,895
                        -----------  -----------  -----------  -----------

Costs and Expenses:
  Cost of product            17,767       12,100       60,069       66,769
  Cost of services           22,939       25,502       93,360       96,497
  Cost of maintenance        15,444       16,319       61,079       63,833
  Marketing and sales       109,224      116,515      407,148      405,579
  Research and
   development              128,614      117,931      494,032      460,064
  General and
   administrative            45,831       34,050      168,997      143,317
  Amortization of
   acquired intangibles       5,760        5,159       19,421       23,141
  Restructuring and
   other charges
  (credits)                    (102)         (71)      (9,686)        (797)
  Write-off of acquired
   in-process technology          -            -        2,678          900
                        -----------  -----------  -----------  -----------

    Total costs and
     expenses               345,477      327,505    1,297,098    1,259,303
                        -----------  -----------  -----------  -----------

      Income from
       operations           112,466      103,515      317,915      224,592

  Loss on extinguishment
   of debt                        -      (40,768)           -      (40,768)
  Interest expense           (3,001)      (2,468)     (12,374)     (12,348)
  Other income, net          10,592       17,211       58,530       70,402
                        -----------  -----------  -----------  -----------

     Income before
      provision for
      income taxes and
      cumulative effect
      of change in
      accounting
      principle             120,057       77,490      364,071      241,878

  Provision for income
   taxes                        554       29,125       67,819       99,704
                        -----------  -----------  -----------  -----------

  Net income before
   cumulative effect of
   change in accounting
   principle                119,503       48,365      296,252      142,174

  Cumulative effect of
   change in accounting
   principle, net of
   tax                            -            -            -          418
                        -----------  -----------  -----------  -----------

      Net income        $   119,503  $    48,365  $   296,252  $   142,592
                        ===========  ===========  ===========  ===========

Net income per share
 before cumulative
 effect of change in
 accounting principle:
    Basic               $      0.44  $      0.18  $      1.09  $      0.51
                        ===========  ===========  ===========  ===========
    Diluted             $      0.41  $      0.16  $      1.01  $      0.46
                        ===========  ===========  ===========  ===========

Net income per share
 after cumulative
 effect of change in
 accounting principle:
    Basic               $      0.44  $      0.18  $      1.09  $      0.51
                        ===========  ===========  ===========  ===========
    Diluted             $      0.41  $      0.16  $      1.01  $      0.46
                        ===========  ===========  ===========  ===========


Weighted average common
 shares outstanding -
 basic                      268,659      274,164      271,455      279,354
                        ===========  ===========  ===========  ===========

Weighted average common
 shares outstanding -
 diluted                    290,970      307,472      295,591      312,457
                        ===========  ===========  ===========  ===========


                       Cadence Design Systems, Inc.
              Condensed Consolidated Statements of Cash Flows
        For the Years Ended December 29, 2007 and December 30, 2006
                              (In thousands)
                                (Unaudited)

                                                        Years Ended
                                                --------------------------
                                                December 29,  December 30,
                                                    2007          2006
                                                ------------  ------------

Cash and Cash Equivalents at Beginning of
 Period                                         $    934,342  $    861,315
                                                ------------  ------------
Cash Flows from Operating Activities:
   Net income                                        296,252       142,592
   Adjustments to reconcile net income to net
    cash provided by operating activities:
      Cumulative effect of change in accounting
       principle                                           -          (418)
      Depreciation and amortization                  130,649       147,117
      Loss on extinguishment of debt                       -        40,768
      Stock-based compensation                       101,415       103,986
      Equity in loss from investments, net             3,027         1,200
      Gain on investments, net                       (18,090)      (32,903)
      Gain on sale and leaseback of land and
       buildings                                     (13,141)            -
      Write-down of investment securities              2,550         2,467
      Write-off of acquired in-process
       technology                                      2,678           900
      Non-cash restructuring and other charges
       (credits)                                      (7,106)          194
      Tax benefit (expense) from call options         11,346        (6,159)
      Deferred income taxes                           12,811        29,535
      Proceeds from the sale of receivables,
       net                                           215,444       180,580
      Recoveries for gains on trade accounts
       receivable and sales returns                     (586)       (6,777)
      Other non-cash items                            11,219         4,630
      Changes in operating assets and
       liabilities, net of effect of acquired
       businesses:
         Receivables                                  15,762        92,977
         Installment contract receivables           (393,658)     (261,983)
         Inventories                                   6,197       (10,872)
         Prepaid expenses and other                     (603)        6,128
         Other assets                                   (628)          749
         Accounts payable and accrued
          liabilities                                 20,352       (51,462)
         Deferred revenue                             44,775        24,444
         Other long-term liabilities                 (38,227)       13,523
                                                ------------  ------------
            Net cash provided by operating
             activities                              402,438       421,216
                                                ------------  ------------

Cash Flows from Investing Activities:
  Proceeds from sale of available-for-sale
   securities                                          6,271         7,637
  Proceeds from sale of short-term investments           197             -
  Purchases of short-term investments                      -          (147)
  Proceeds from the sale of long-term
   investments                                         6,323        26,054
  Proceeds from the sale of property, plant and
   equipment                                          46,500           317
  Purchases of property, plant and equipment         (81,795)      (67,636)
  Purchases of software licenses                      (2,000)       (8,409)
  Investment in venture capital partnerships
   and equity investments                             (3,214)       (3,800)
  Cash paid in business combinations and asset
   acquisitions, net of cash acquired,
   and acquisition of intangibles                    (80,725)      (65,778)
                                                ------------  ------------
           Net cash used for investing
            activities                              (108,443)     (111,762)
                                                ------------  ------------

Cash Flows from Financing Activities:
  Principal payments on term loan                    (28,000)     (132,000)
  Proceeds from issuance of convertible notes
   due 2011 and 2013                                       -       500,000
  Payment of convertible notes due 2023                    -      (228,480)
  Payment of convertible notes issuance costs              -       (12,032)
  Purchase of call options in connection with
   convertible notes due 2011 and 2013                     -      (119,750)
  Proceeds from sale of call options in
   connection with convertible notes due 2023              -        55,864
  Proceeds from sale of common stock warrants
   in connection with convertible
      notes due 2011 and 2013                              -        39,400
  Purchase of common stock warrants in
   connection with convertible notes due 2023              -       (10,201)
  Tax benefit from employee stock transactions        21,090        10,712
  Proceeds from issuance of common stock             255,462       156,648
  Purchases of treasury stock                       (418,618)     (494,088)
                                                ------------  ------------
           Net cash used for financing
            activities                              (170,066)     (233,927)
                                                ------------  ------------

Effect of exchange rate changes on cash and
 cash equivalents                                      4,649        (2,500)
                                                ------------  ------------

Increase in cash and cash equivalents                128,578        73,027
                                                ------------  ------------

Cash and Cash Equivalents at End of Period      $  1,062,920  $    934,342
                                                ============  ============


                       Cadence Design Systems, Inc.
                          As of January 30, 2008
            Impact of Non-GAAP Adjustments on Forward Looking
                   Diluted Net Income (Loss) Per Share
                                (Unaudited)

                                     Quarter ended         Year ended
                                    March 29, 2008       January 3, 2009
                                  -------------------  -------------------
                                        Forecast             Forecast
                                  -------------------  -------------------

Diluted net income (loss) per
 share on a GAAP basis             $(0.06) to $(0.04)     $0.69 to $0.77

  Amortization of acquired
   intangibles                            0.04                 0.15
  Stock-based compensation
   expense                                0.08                 0.31
  Integration and
   acquisition-related costs                 -                    -
  Equity in losses from
   investments, gain on
   non-qualified deferred
   compensation plan assets                  -                 0.01
  Income tax effect of non-GAAP
   adjustments                           (0.03)               (0.05)

                                  -------------------  -------------------
Diluted net income per share on
 a non-GAAP basis                    $0.03 to $0.05       $1.11 to $1.19
                                  ===================  ===================


                          Cadence Design Systems, Inc.
                            As of January 30, 2008
       Impact of Non-GAAP Adjustments on Forward Looking Net Income (Loss)
                                    (Unaudited)

                                     Quarter ended          Year ended
                                    March 29, 2008       January 3, 2009
                                  -------------------  -------------------
($ in Millions)                         Forecast             Forecast
                                  -------------------  -------------------

Net income (loss) on a GAAP basis    $(17) to $(11)        $192 to $216

  Amortization of acquired
   intangibles                             11                   43
  Stock-based compensation
   expense                                 23                   89
  Integration and
   acquisition-related costs                -                    1
  Equity in losses from
   investments, gain on
   non-qualified deferred
   compensation plan assets                 1                    4
  Income tax effect of non-GAAP
   adjustments                            (11)                 (14)

                                  -------------------  -------------------
Net income on a non-GAAP basis         $7 to $13           $315 to $339
                                  ===================  ===================


                       Cadence Design Systems, Inc.
                                (Unaudited)


Revenue Mix by Geography (% of Total Revenue)


                            2005                         2006
                ============================  ============================
GEOGRAPHY        Q1    Q2    Q3    Q4   Year   Q1    Q2    Q3    Q4   Year
                ====  ====  ====  ====  ====  ====  ====  ====  ====  ====

 North America    46%   49%   53%   42%   48%   51%   48%   54%   60%   54%
 Europe           16%   17%   21%   20%   18%   19%   18%   22%   19%   19%
 Japan            30%   25%   20%   26%   25%   21%   24%   13%   10%   17%
 Asia              8%    9%    6%   12%    9%    9%   10%   11%   11%   10%
Total            100%  100%  100%  100%  100%  100%  100%  100%  100%  100%


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

 North America    48%   52%   41%   50%   49%
 Europe           15%   17%   25%   17%   18%
 Japan            27%   14%   22%   22%   21%
 Asia             10%   17%   12%   11%   12%
Total            100%  100%  100%  100%  100%


Revenue Mix by Product Group (% of Total Revenue)


                            2005                          2006
                ============================  ============================
PRODUCT GROUP    Q1    Q2    Q3    Q4   Year   Q1    Q2    Q3    Q4   Year
                ====  ====  ====  ====  ====  ====  ====  ====  ====  ====

 Functional
  Verification    20%   19%   21%   25%   21%   26%   22%   24%   23%   24%
 Digital IC
  Design          27%   23%   26%   29%   28%   20%   26%   19%   26%   24%
 Custom IC
  Design          23%   31%   27%   22%   25%   27%   27%   30%   26%   27%
 Design for
  Manufacturing    9%    9%    9%    8%    9%    8%    8%    8%    6%    7%
 System
  Interconnect    10%    9%    8%    7%    8%    9%    8%   10%   11%    9%
 Services &
  Other           11%    9%    9%    9%    9%   10%    9%    9%    8%    9%
Total            100%  100%  100%  100%  100%  100%  100%  100%  100%  100%


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

 Functional
  Verification    24%   24%   20%   26%   24%
 Digital IC
  Design          26%   29%   27%   27%   27%
 Custom IC
  Design          24%   24%   32%   25%   27%
 Design for
  Manufacturing    7%    7%    6%    6%    6%
 System
 Interconnect     10%    8%    7%    9%    8%
 Services &
 Other             9%    8%    8%    7%    8%
Total            100%  100%  100%  100%  100%


Note: Product Group total revenue includes Product + Maintenance

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