Cadence Design Systems, Inc.

Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures

For the Year Ended December 28, 2013

(In thousands)

(Unaudited)

Year Ended

December 28, 2013

GAAP

Adjustments

Non-GAAP

Revenue:

Product and maintenance

$   1,357,934

$                -

$ 1,357,934

Services

102,182

-

102,182

Total revenue

1,460,116

-

1,460,116

Costs and expenses:

Cost of product and maintenance

132,245

(26,352)

 (O) 

105,893

Cost of services

67,956

(2,373)

 (O) 

65,583

Marketing and sales

378,157

(17,828)

 (O) 

360,329

Research and development

534,022

(53,403)

 (O) 

480,619

General and administrative

121,314

(27,273)

 (O) 

94,041

Amortization of acquired intangibles

19,416

(19,416)

 (O) 

-

Restructuring and other charges

17,999

(17,999)

-

Total costs and expenses

1,271,109

(164,644)

1,106,465

Income from operations

189,007

164,644

353,651

Interest expense

(37,581)

22,315

(P)

(15,266)

Other income, net

7,570

(5,280)

(Q)

2,290

Income before provision (benefit) for income taxes

158,996

181,679

340,675

Provision (benefit) for income taxes

(5,247)

93,823

(R)

88,576

Net income 

$      164,243

$        87,856

$    252,099

Notes: 

(O) For the year ended December 28, 2013 adjustments to GAAP are as follows for the line items specified:

Amortization
and sale of
acquired
intangibles

Stock-based
compensation
expense

Non-qualified
deferred
compensation
expenses

Acquisition and
integration-related
costs

Special
charges (S)

Total
adjustments

Cost of product and maintenance

$           24,718

$          1,596

$               38

$                     -

$            -

$     26,352

Cost of services

-

2,321

52

-

-

2,373

Marketing and sales

-

15,642

239

1,467

480

17,828

Research and development

-

32,999

1,700

18,704

-

53,403

General and administrative

-

13,727

1,264

11,801

481

27,273

Amortization of acquired intangibles

19,416

-

-

-

-

19,416

Total

$           44,134

$        66,285

$          3,293

$              31,972

$          961

$   146,645

(P) Amortization of debt discount related to convertible notes

(Q) Other income or expense related to investments and non-qualified deferred compensation plan assets

(R) Income tax effect of non-GAAP adjustments

(S) Comprised of executive severance costs