Cadence Design Systems, Inc.

Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures

For the Three Months Ended September 28, 2013

(In thousands)

(Unaudited)

Three Months Ended

September 28, 2013

GAAP

Adjustments

Non-GAAP

Revenue:

Product and maintenance

$      341,601

$                                 -

$   341,601

Services

25,046

-

25,046

Total revenue

366,647

-

366,647

Costs and expenses:

Cost of product and maintenance

32,546

(8,339)

 (F) 

24,207

Cost of services

17,190

(662)

 (F) 

16,528

Marketing and sales

98,094

(5,655)

 (F) 

92,439

Research and development

138,078

(16,713)

 (F) 

121,365

General and administrative

27,582

(4,055)

 (F) 

23,527

Amortization of acquired intangibles

5,141

(5,141)

 (F) 

-

Restructuring and other charges 

86

(86)

-

Total costs and expenses

318,717

(40,651)

278,066

Income from operations

47,930

40,651

88,581

Interest expense

(9,583)

5,693

(G)

(3,890)

Other income, net

2,535

(1,544)

(H)

991

Income before provision for income taxes

40,882

44,800

85,682

Provision for income taxes

2,382

19,895

(I)

22,277

Net income 

$        38,500

$                       24,905

$    63,405

Notes: 

(F) For the three months ended September 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
(J)

Total
adjustments

Cost of product and maintenance

$              7,886

$                 438

$                  15

$                           -

$                        -

$              8,339

Cost of services

-

641

21

-

-

662

Marketing and sales

-

4,594

3

578

480

5,655

Research and development

-

9,356

60

7,297

-

16,713

General and administrative

-

3,537

87

166

265

4,055

Amortization of acquired intangibles

5,141

-

-

-

-

5,141

Total

$                13,027

$           18,566

$                186

$                  8,041

$                   745

$           40,565

(G) Amortization of debt discount related to convertible notes

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

(I) Income tax effect of non-GAAP adjustments

(J) Comprised of executive severance costs