Cadence Reports Third Quarter 2012 Financial Results

During the third quarter of 2012, Cadence's non-GAAP net income also excluded the effect of an income tax benefit associated with Cadence's acquisition of Sigrity, Inc. Cadence's management believes it is useful to exclude the tax benefit associated with this acquisition because Cadence does not expect an acquisition-related income tax benefit of the magnitude recorded in the third quarter of 2012 to be recorded frequently.

Cadence's management believes that non-GAAP net income 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 income and GAAP net income per diluted share in the calculation of non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:

                                                                            
Net Income Reconciliation                          Three Months Ended       
                                             ------------------------------ 
                                              September 29,    October 1,   
                                                  2012            2011      
                                             --------------  -------------- 
                                                       (unaudited)          
(in thousands)                                                              
Net income on a GAAP basis                   $       58,584  $       28,106 
  Amortization of acquired intangibles                7,750           6,692 
  Stock-based compensation expense                   12,399          11,891 
  Non-qualified deferred compensation                                       
   expenses (credits)                                  (839)            229 
  Restructuring and other charges (credits)              57            (433)
  Shareholder litigation costs                      - - - -             179 
  Executive and other employee severance                                    
   costs                                            - - - -           1,331 
  Integration and acquisition-related costs           3,016             766 
  Amortization of debt discount                       5,279           6,697 
  Other income or expense related to                                        
   investments and non-qualified deferred                                   
   compensation plan assets*                          1,954          (5,544)
  Acquisition-related income tax benefit            (14,806)        - - - - 
  Income tax effect of non-GAAP adjustments         (14,054)        (12,619)
                                             --------------  -------------- 
Net income on a non-GAAP basis               $       59,340  $       37,295 
                                             ==============  ============== 
                                                                                
*  Includes,  as  applicable,  equity  in  losses  or  income  from  investments,          
    write-down  of  investments,  gains  or  losses  on  sale  of  investments  and          
    gains  or  losses  on  non-qualified  deferred  compensation  plan  assets                
    recorded  in  Other  income  (expense),  net.                                                                    
                                                                                                                                                        
Diluted  Net  Income  per  Share  Reconciliation                Three  Months  Ended              
                                                                                          ------------------------------  
                                                                                            September  29,        October  1,      
                                                                                                    2012                        2011            
                                                                                          --------------    --------------  
                                                                                                              (unaudited)                    
(in  thousands,  except  per  share  data)                                                                              
Diluted  net  income  per  share  on  a  GAAP  basis  $                  0.21    $                  0.10  
    Amortization  of  acquired  intangibles                                  0.03                        0.03  
    Stock-based  compensation  expense                                          0.04                        0.04  
    Non-qualified  deferred  compensation                                                                              
      expenses  (credits)                                                              -  -  -  -                  -  -  -  -  
    Restructuring  and  other  charges  (credits)                  -  -  -  -                  -  -  -  -  
    Shareholder  litigation  costs                                            -  -  -  -                  -  -  -  -  
    Executive  and  other  employee  severance                                                                        
      costs                                                                                        -  -  -  -                        0.01  
    Integration  and  acquisition-related  costs                        0.01                  -  -  -  -  
    Amortization  of  debt  discount                                                0.02                        0.02  
    Other  income  or  expense  related  to                                                                                
      investments  and  non-qualified  deferred                                                                      
      compensation  plan  assets*                                                -  -  -  -                      (0.02)
    Acquisition-related  income  tax  benefit                            (0.05)                -  -  -  -  
    Income  tax  effect  of  non-GAAP  adjustments                      (0.05)                    (0.04)
                                                                                          --------------    --------------  
Diluted  net  income  per  share  on  a  non-GAAP                                                                    
  basis                                                                              $                  0.21    $                  0.14  
                                                                                          ==============    ==============  
Shares  used  in  calculation  of  diluted  net                                                                      
  income  per  share  --GAAP**                                                    283,328                  270,741  
Shares  used  in  calculation  of  diluted  net                                                                      
  income  per  share  --non-GAAP**                                            283,328                  270,741  
                                                                                                                                                        
  *  Includes,  as  applicable,  equity  in  losses  or  income  from  investments,        
      write-down  of  investments,  gains  or  losses  on  sale  of  investments  and        
      gains  or  losses  on  non-qualified  deferred  compensation  plan  assets              
      recorded  in  Other  income  (expense),  net.                                                                  
                                                                                                                                                        
**  Shares  used  in  the  calculation  of  GAAP  net  income  per  share  are  expected  
      to  be  the  same  as  shares  used  in  the  calculation  of  non-GAAP  net  income    
      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.                                    
                                                                                                                                                        
 

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