Cadence Design Systems, Inc.

Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures

For the Year Ended January 3, 2015

(In thousands)

(Unaudited)

Year Ended

January 3, 2015

GAAP

Adjustments

Non-GAAP

Revenue:

Product and maintenance

$     1,479,151

$                     -

$  1,479,151

Services

101,781

-

101,781

Total revenue

1,580,932

-

1,580,932

Costs and expenses:

Cost of product and maintenance

156,333

(39,586)

 (J) 

116,747

Cost of services

67,373

(3,997)

 (J) 

63,376

Marketing and sales

399,688

(25,410)

 (J) 

374,278

Research and development

603,006

(68,141)

 (J) 

534,865

General and administrative

113,619

(22,416)

 (J) 

91,203

Amortization of acquired intangibles

24,017

(24,017)

 (J) 

-

Restructuring and other charges

10,252

(10,252)

-

Total costs and expenses

1,374,288

(193,819)

1,180,469

Income from operations

206,644

193,819

400,463

Interest expense

(34,121)

17,602

 (K) 

(16,519)

Other income, net

8,479

(4,629)

(L)

3,850

Income before provision for income taxes

181,002

206,792

387,794

Provision for income taxes

22,104

78,723

(M)

100,827

Net income 

$        158,898

$           128,069

$     286,967

Notes: 

(J) For the year ended January 3, 2015 adjustments to GAAP are as follows for the line items specified:

Amortization of
acquired
intangibles

Stock-based
compensation
expense

Non-qualified
deferred
compensation
expenses

Acquisition and
integration-
related costs

Special
charges (N)

Total
adjustments

Cost of product and maintenance

$              36,907

$            2,244

$                    34

$                      -

$          401

$     39,586

Cost of services

-

3,280

50

-

667

3,997

Marketing and sales

-

20,580

149

2,768

1,913

25,410

Research and development

-

43,173

1,886

17,228

5,854

68,141

General and administrative

-

14,515

1,296

4,624

1,981

22,416

Amortization of acquired intangibles

24,017

-

-

-

-

24,017

Total

$              60,924

$          83,792

$               3,415

$              24,620

$     10,816

$   183,567

(K) Amortization of debt discount related to convertible notes

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

(M) Income tax effect of non-GAAP adjustments 

(N) Comprised of costs related to a voluntary retirement program