Cadence Reports Q2 Revenue of $329 Million

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. Losses on extinguishment of debt can be incurred on remaining convertible notes. 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 Sept. 12, 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 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 Third Quarter 2008 Earnings Release is published, which is currently scheduled for Oct. 22, 2008.

                       Cadence Design Systems, Inc.
                  Condensed Consolidated Balance Sheets
                    June 28, 2008 and December 29, 2007
                              (In thousands)
                                (Unaudited)


                                                    June 28,   December 29,
                                                      2008         2007
                                                  ------------ ------------

Current Assets:
  Cash and cash equivalents                       $    836,513 $  1,062,920
  Short-term investments                                52,751       15,193
  Receivables, net of allowances of $3,218
   and $2,895, respectively                            315,677      326,211
  Inventories                                           23,689       31,003
  Prepaid expenses and other                            99,153       94,236
                                                  ------------ ------------
    Total current assets                             1,327,783    1,529,563

Property, plant and equipment, net of
 accumulated depreciation of $640,382 and
 $624,680, respectively                                359,023      339,463
Goodwill                                             1,314,238    1,310,211
Acquired intangibles, net                              112,191      127,072
Installment contract receivables                       192,503      238,010
Other assets                                           320,585      326,831
                                                  ------------ ------------
Total Assets                                      $  3,626,323 $  3,871,150
                                                  ============ ============

Current Liabilities:
  Convertible notes                               $    230,385 $    230,385
  Accounts payable and accrued liabilities             246,981      289,934
  Current portion of deferred revenue                    247,758            265,168
                                                                                                    ------------  ------------
        Total  current  liabilities                                                    725,124            785,487
                                                                                                    ------------  ------------

Long-term  Liabilities:
    Long-term  portion  of  deferred  revenue                                122,116            136,655
    Convertible  notes                                                                        500,000            500,000
    Other  long-term  liabilities                                                    350,422            368,942
                                                                                                    ------------  ------------
        Total  long-term  liabilities                                                972,538        1,005,597
                                                                                                    ------------  ------------

Stockholders'  Equity                                                                  1,928,661        2,080,066
                                                                                                    ------------  ------------
Total  Liabilities  and  Stockholders'  Equity                $    3,626,323  $    3,871,150
                                                                                                    ============  ============



                                              Cadence  Design  Systems,  Inc.
                            Condensed  Consolidated  Statements  of  Operations
    For  the  Quarters  and  Six  Months  Ended  June  28,  2008  and  June  30,  2007
                                  (In  thousands,  except  per  share  amounts)
                                                                (Unaudited)


                                                                      Quarters  Ended              Six  Months  Ended
                                                                --------------------    --------------------
                                                                  June  28,      June  30,      June  28,      June  30,
                                                                      2008              2007              2008              2007
                                                                ---------    ---------    ---------    ---------
Revenue:
    Product                                              $  195,444    $  263,793    $  351,637    $  501,697
    Services                                                  33,694          32,816          65,890          64,738
    Maintenance                                          100,340          94,352        199,140        189,711
                                                                ---------    ---------    ---------    ---------
        Total  revenue                                  329,478        390,961        616,667        756,146
                                                                ---------    ---------    ---------    ---------

Costs  and  Expenses:
    Cost  of  product                                    18,018          12,827          30,019          28,479
    Cost  of  services                                  27,213          23,442          52,406          47,057
    Cost  of  maintenance                            14,439          15,295          28,979          30,418
    Marketing  and  sales                            89,907          98,063        182,941        200,761
    Research  and  development                120,087        122,962        245,443        240,027
    General  and  administrative              34,963          41,808          72,671          82,419
    Amortization  of  acquired
      intangibles                                            5,820            4,413          11,580            8,922
    Restructuring  and  other
      charges  (credits)                                  (355)        (1,573)            (355)        (2,518)
    Write-off  of  acquired
      in-process  technology                                -                    -                600                    -
                                                                ---------    ---------    ---------    ---------
        Total  costs  and  expenses            310,092        317,237        624,284        635,565
                                                                ---------    ---------    ---------    ---------

            Income  (loss)  from
              operations                                    19,386          73,724          (7,617)      120,581

    Interest  expense                                  (2,880)        (3,064)        (5,875)        (6,524)
    Other  income  (expense),  net            (1,750)        14,207            4,013          33,737
                                                                ---------    ---------    ---------    ---------

            Income  (loss)  before
              provision  for  income
              taxes                                              14,756          84,867          (9,479)      147,794
    Provision  for  income  taxes                9,760          25,271            4,272          43,777
                                                                ---------    ---------    ---------    ---------
            Net  income  (loss)                  $      4,996    $    59,596    $  (13,751)  $  104,017
                                                                =========    =========    =========    =========


Basic  net  income  (loss)  per
  share                                                    $        0.02    $        0.22    $      (0.05)  $        0.38
                                                                =========    =========    =========    =========

Diluted  net  income  (loss)  per
  share                                                    $        0.02    $        0.20    $      (0.05)  $        0.35
                                                                =========    =========    =========    =========

Weighted  average  common  shares
  outstanding  -  basic                            252,629        274,425        257,724        272,043
                                                                =========    =========    =========    =========

Weighted  average  common  shares
  outstanding  -  diluted                        269,060        302,746        257,724        297,048
                                                                =========    =========    =========    =========



                                              Cadence  Design  Systems,  Inc.
                            Condensed  Consolidated  Statements  of  Cash  Flows
                  For  the  Six  Months  Ended  June  28,  2008  and  June  30,  2007
                                                            (In  thousands)
                                                                (Unaudited)


                                                                                                            Six  Months  Ended
                                                                                                    ------------------------
                                                                                                        June  28,          June  30,
                                                                                                            2008                  2007
                                                                                                    -----------    -----------

Cash  and  Cash  Equivalents  at  Beginning  of  Period    $  1,062,920    $      934,342
                                                                                                    -----------    -----------
Cash  Flows  from  Operating  Activities:
      Net  income  (loss)                                                                    (13,751)          104,017
      Adjustments  to  reconcile  net  income  (loss)  to
        net  cash  provided  by  operating  activities:
            Depreciation  and  amortization                                        65,553              63,308
            Stock-based  compensation                                                  43,044              54,709
            Equity  in  loss  from  investments,  net                                718                1,720
            (Gain)  loss  on  investments,  net                                      1,729            (12,093)
            Gain  on  sale  and  leaseback  of  land  and
              buildings                                                                              (1,070)          (12,071)
            Write-down  of  investment  securities                              8,304                    550
            Write-off  of  acquired  in-process  technology                  600                        -
            Tax  benefit  of  call  options                                                      -                4,292
            Deferred  income  taxes                                                              880                1,332
            Proceeds  from  the  sale  of  receivables,  net              46,025              76,311
            Provisions  (recoveries)  for  losses  (gains)
              on  trade  accounts  receivable  and  sales
              returns                                                                                        324                  (106)
            Other  non-cash  items                                                          (1,503)              5,045
            Changes  in  operating  assets  and
              liabilities,  net  of  effect  of  acquired
              businesses:
                  Receivables                                                                      11,007              24,168
                  Installment  contract  receivables                              7,298          (153,636)
                  Inventories                                                                        7,350                  (972)
                  Prepaid  expenses  and  other                                        (8,075)            (7,760)
                  Other  assets                                                                    (4,562)                  810
                  Accounts  payable  and  accrued  liabilities          (56,629)          (19,493)
                  Deferred  revenue                                                          (37,187)          (16,926)
                  Other  long-term  liabilities                                    (12,580)              6,940
                                                                                                    -----------    -----------
                        Net  cash  provided  by  operating
                          activities                                                                57,475            120,145
                                                                                                    -----------    -----------

Cash  Flows  from  Investing  Activities:
    Proceeds  from  the  sale  of  available-for-sale
      securities                                                                                      3,693                3,256
    Purchase  of  available-for-sale  investments                    (31,758)                      -
    Proceeds  from  the  sale  of  long-term  investments              3,250                6,241
    Proceeds  from  the  sale  of  property,  plant  and
      equipment                                                                                                -              46,500
    Purchases  of  property,  plant  and  equipment                    (60,769)          (37,996)
    Purchases  of  software  licenses                                                  (375)                      -
    Investment  in  venture  capital  partnerships  and
      equity  investments                                                                    (1,419)            (1,948)
    Cash  paid  in  business  combinations  and  asset
      acquisitions,  net  of  cash  acquired,
      and  acquisition  of  intangibles                                            (6,189)            (7,394)
                                                                                                    -----------    -----------
                      Net  cash  provided  by  (used  for)
                        investing  activities                                            (93,567)              8,659
                                                                                                    -----------    -----------

Cash  Flows  from  Financing  Activities:
    Principal  payments  on  term  loan                                                      -            (28,000)
    Tax  benefit  from  employee  stock  transactions                        288              17,732
    Proceeds  from  issuance  of  common  stock                              26,637            205,219
    Stock  received  for  payment  of  employee  taxes  on
      vesting  of  restricted  stock                                                  (3,287)          (10,337)
    Purchases  of  treasury  stock                                                (216,236)        (121,455)
                                                                                                    -----------    -----------
                      Net  cash  provided  by  (used  for)
                        financing  activities                                          (192,598)            63,159
                                                                                                    -----------    -----------

Effect  of  exchange  rate  changes  on  cash  and  cash
  equivalents                                                                                        2,283                2,224
                                                                                                    -----------    -----------

Increase  (decrease)  in  cash  and  cash  equivalents          (226,407)          194,187
                                                                                                    -----------    -----------

Cash  and  Cash  Equivalents  at  End  of  Period                $      836,513    $  1,128,529
                                                                                                    ===========    ===========



                                              Cadence  Design  Systems,  Inc.
                                                        As  of  July  23,  2008
Impact  of  Non-GAAP  Adjustments  on  Forward  Looking  Diluted  Net  Income  (Loss)
                                                                Per  Share
                                                              (Unaudited)


                                                                          Quarter  ended                  Year  ended
                                                                    September  27,  2008          January  3,  2009
                                                                    -------------------    -------------------
                                                                                Forecast                          Forecast
                                                                    -------------------    -------------------

Diluted  net  loss  per  share  on  a
  GAAP  basis                                                $(0.27)  to  $(0.25)      $(0.54)  to  $(0.50)

    Amortization  of  acquired
      intangibles                                                        0.04                                  0.17
    Stock-based  compensation
      expense                                                                0.08                                  0.33
    Non-qualified  deferred
      compensation  expenses
      (credits)                                                                  -                                (0.01)
    Write-off  of  acquired
      in-process  technology                                          -                                        -
    Integration  and
      acquisition-related  costs                                  -                                        -
    Equity  in  losses  from
      investments,  gains  and  losses
      on  non-qualified  deferred
      compensation  plan  assets                                    -                                  0.05
    Income  tax  effect  of  non-GAAP
      adjustments                                                        0.04                                  0.01

                                                                    -------------------    -------------------
Diluted  net  income  (loss)  per
  share  on  a  non-GAAP  basis                  $(0.11)  to  $(0.09)          $0.01  to  $0.05
                                                                    ===================    ===================



                                              Cadence  Design  Systems,  Inc.
                                                        As  of  July  23,  2008
        Impact  of  Non-GAAP  Adjustments  on  Forward  Looking  Net  Income  (Loss)
                                                                (Unaudited)


                                                                          Quarter  ended                  Year  ended
                                                                    September  27,  2008          January  3,  2009
                                                                    -------------------    -------------------
($  in  Millions)                                                  Forecast                      Forecast
                                                                    -------------------    -------------------

Net  loss  on  a  GAAP  basis                          $(72)  to  $(66)            $(138)  to  $(128)

    Amortization  of  acquired
      intangibles                                                            11                                      44
    Stock-based  compensation
      expense                                                                    21                                      84
    Non-qualified  deferred
      compensation  expenses
      (credits)                                                                  -                                      (3)
    Write-off  of  acquired
      in-process  technology                                          -                                        1
    Integration  and
      acquisition-related  costs                                  -                                        1
    Equity  in  losses  from
      investments,  gains  and  losses
      on  non-qualified  deferred
      compensation  plan  assets                                    -                                      13
    Income  tax  effect  of  non-GAAP
      adjustments                                                            10                                        2

                                                                    -------------------    -------------------
Net  income  (loss)  on  a  non-GAAP
  basis                                                              $(30)  to  $(24)                  $4  to  $14
                                                                    ===================    ===================



                                              Cadence  Design  Systems,  Inc.
                                                                (Unaudited)


Revenue  Mix  by  Geography  (%  of  Total  Revenue)

                                                    2006                                          2007                          2008
                                ========================  ========================  ========
GEOGRAPHY                Q1      Q2      Q3      Q4    Year    Q1      Q2      Q3      Q4    Year    Q1      Q2
                                ===    ===    ===    ===    ====  ===    ===    ===    ===    ====  ===    ===

    Americas              51%    48%    54%    60%    54%    48%    52%    41%    50%    49%    40%    49%
    Europe                  19%    18%    22%    19%    19%    15%    17%    25%    17%    18%    22%    21%
    Japan                    21%    24%    13%    10%    17%    27%    14%    22%    22%    21%    26%    18%
    Asia                        9%    10%    11%    11%    10%    10%    17%    12%    11%    12%    12%    12%
Total                      100%  100%  100%  100%  100%  100%  100%  100%  100%  100%  100%  100%



Revenue  Mix  by  Product  Group  (%  of  Total  Revenue)

                                                    2006                                          2007                          2008
                                ========================  ========================  ========
PRODUCT  GROUP        Q1      Q2      Q3      Q4    Year    Q1      Q2      Q3      Q4    Year    Q1      Q2
                                ===    ===    ===    ===    ====  ===    ===    ===    ===    ====  ===    ===

    Functional
      Verification    26%    22%    24%    23%    24%    24%    24%    20%    26%    24%    20%    25%
    Digital  IC
      Design                20%    26%    19%    26%    24%    26%    29%    27%    27%    27%    27%    23%
    Custom  IC
      Design                27%    27%    30%    26%    27%    24%    24%    32%    25%    27%    25%    26%
    Design  for
      Manufacturing    8%      8%      8%      6%      7%      7%      7%      6%      6%      6%      6%      7%
    System
      Interconnect      9%      8%    10%    11%      9%    10%      8%      7%      9%      8%    11%      9%
    Services  &
      Other                  10%      9%      9%      8%      9%      9%      8%      8%      7%      8%    11%    10%
Total                      100%  100%  100%  100%  100%  100%  100%  100%  100%  100%  100%  100%


Note:  Product  Group  total  revenue  includes  Product  +  Maintenance
 

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