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 website.

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 June 12, 2020, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute Cadence’s current expectations. During the Quiet Period, the business outlook in these documents should be considered historical, speaking as of prior to the Quiet Period only and not subject to any update by Cadence. 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 Cadence’s second quarter 2020 earnings release is published, which is currently scheduled for the week of July 20, 2020.

Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
March 28, 2020 and December 28, 2019
(In thousands)
(Unaudited)
		March 28, 2020			December 28, 2019
Current assets:
Cash and cash equivalents		$	946,285		$	705,210
Receivables, net			284,093			304,546
Inventories			60,575			55,802
Prepaid expenses and other			108,554			103,785
Total current assets			1,399,507			1,169,343
Property, plant and equipment, net			281,207			275,855
Goodwill			778,992			661,856
Acquired intangibles, net			258,617			172,375
Deferred taxes			699,194			732,367
Other assets			350,456			345,429
Total assets		$	3,767,973		$	3,357,225
Current liabilities:
Revolving credit facility		$	350,000		$	-
Accounts payable and accrued liabilities			236,813			316,908
Current portion of deferred revenue			425,616			355,483
Total current liabilities			1,012,429			672,391
Long-term liabilities:
Long-term portion of deferred revenue			95,503			73,400
Long-term debt			346,205			346,019
Other long-term liabilities			155,842			162,521
Total long-term liabilities			597,550			581,940
Stockholders' equity			2,157,994			2,102,894
Total liabilities and stockholders' equity		$	3,767,973		$	3,357,225

Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months Ended March 28, 2020 and March 30, 2019
(In thousands, except per share amounts)
(Unaudited)
		Three Months Ended
		March 28, 2020				March 30, 2019
Revenue:
Product and maintenance		$	581,699			$	543,518
Services			36,258				33,224
Total revenue			617,957				576,742
Costs and expenses:
Cost of product and maintenance			55,446				50,522
Cost of services			19,017				20,063
Marketing and sales			125,744				116,830
Research and development			241,668				228,210
General and administrative			33,592				30,102
Amortization of acquired intangibles			4,206				3,308
Restructuring and other credits			(1,067	)			(689	)
Total costs and expenses			478,606				448,346
Income from operations			139,351				128,396
Interest expense			(4,637	)			(5,391	)
Other income (expense), net			(4,534	)			5,241
Income before provision for income taxes			130,180				128,246
Provision for income taxes			6,192				7,691
Net income		$	123,988			$	120,555
Net income per share - basic		$	0.45			$	0.44
Net income per share - diluted		$	0.44			$	0.43
Weighted average common shares outstanding - basic			273,476				273,066
Weighted average common shares outstanding - diluted			279,265				280,615

Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 28, 2020 and March 30, 2019
(In thousands)
(Unaudited)
		Three Months Ended
		March 28,				March 30,
		2020				2019
Cash and cash equivalents at beginning of period		$	705,210			$	533,298
Cash flows from operating activities:
Net income			123,988				120,555
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			33,321				29,740
Amortization of debt discount and fees			254				247
Stock-based compensation			46,482				42,253
(Gain) loss on investments, net			3,215				(2,646	)
Deferred income taxes			3,904				(4,966	)
Recoveries on receivables			(77	)			(183	)
ROU asset amortization and change in operating lease liabilities			706				1,341
Other non-cash items			183				122
Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables			26,475				35,681
Inventories			(5,260	)			(10,618	)
Prepaid expenses and other			(4,964	)			15,618
Other assets			(8,344	)			4,559
Accounts payable and accrued liabilities			(84,839	)			(41,261	)
Deferred revenue			86,914				(4,451	)
Other long-term liabilities			(4,239	)			(577	)
Net cash provided by operating activities			217,719				185,414
Cash flows from investing activities:
Purchases of non-marketable investments			-				(33,664	)
Proceeds from the sale of non-marketable investments			-				2,952
Purchases of property, plant and equipment			(22,179	)			(15,275	)
Cash paid in business combinations, net of cash acquired			(193,820	)			-
Net cash used for investing activities			(215,999	)			(45,987	)
Cash flows from financing activities:
Proceeds from revolving credit facility			350,000				50,000
Payment on revolving credit facility			-				(100,000	)
Proceeds from issuance of common stock			33,312				29,858
Stock received for payment of employee taxes on vesting of restricted stock			(37,528	)			(32,822	)
Payments for repurchases of common stock			(100,022	)			(81,114	)
Net cash provided by (used for) financing activities			245,762				(134,078	)
Effect of exchange rate changes on cash and cash equivalents			(6,407	)			251
Increase in cash and cash equivalents			241,075				5,600
Cash and cash equivalents at end of period		$	946,285			$	538,898

Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
		2019										2020
GEOGRAPHY		Q1		Q2		Q3		Q4		Year		Q1
Americas		44%		42%		44%		46%		44%		43%
China		10%		12%		10%		9%		10%		13%
Other Asia		19%		19%		21%		20%		20%		18%
Europe, Middle East and Africa		18%		20%		18%		18%		18%		19%
Japan		9%		7%		7%		7%		8%		7%
Total		100%		100%		100%		100%		100%		100%
Revenue Mix by Product Group (% of Total Revenue)
		2019										2020
PRODUCT GROUP		Q1		Q2		Q3		Q4		Year		Q1
Functional Verification		24%		22%		20%		24%		23%		23%
Digital IC Design and Signoff		30%		31%		30%		29%		30%		29%
Custom IC Design and Simulation		25%		26%		26%		25%		25%		25%
System Interconnect and Analysis		9%		10%		9%		9%		9%		9%
IP		12%		11%		15%		13%		13%		14%
Total		100%		100%		100%		100%		100%		100%

Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of April 20, 2020
(Unaudited)
		Three Months Ending		Year Ending
		June 27, 2020		January 2, 2021
		Forecast		Forecast
GAAP operating margin as a percent of total revenue		~18%		21% - 22%
Reconciling items to non-GAAP operating margin as a
percent of total revenue:
Amortization of acquired intangibles		3%		2%
Stock-based compensation expense		8%		8%
Acquisition and integration-related costs		1%		1%
Non-GAAP operating margin as a percent of total revenue�nbsp;		~30%		32% - 33%

�nbsp;

The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
As of April 20, 2020
(Unaudited)
		Three Months Ending		Year Ending
		June 27, 2020		January 2, 2021
		Forecast		Forecast
Diluted net income per share on a GAAP basis		$0.28 to $0.32		$1.58 to $1.68
Amortization of acquired intangibles		0.06		0.23
Stock-based compensation expense		0.17		0.71
Non-qualified deferred compensation expenses (credits)		-		(0.02)
Restructuring and other charges (credits)		-		-
Acquisition and integration-related costs		0.02		0.06
Other income or expense related to investments and non-qualified deferred compensation plan assets*		-		0.03
Income tax effect of non-GAAP adjustments		(0.03)		(0.19)
Diluted net income per share on a non-GAAP basis�nbsp;		$0.50 to $0.54		$2.40 to $2.50
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of April 20, 2020
(Unaudited)
		Three Months Ending		Year Ending
		June 27, 2020		January 2, 2021
($ in millions)		Forecast		Forecast
Net income on a GAAP basis		$79 to $89		$441 to $469
Amortization of acquired intangibles		16		64
Stock-based compensation expense		48		200
Non-qualified deferred compensation expenses (credits)		-		(5)
Restructuring and other charges (credits)		-		(1)
Acquisition and integration-related costs		4		16
Other income or expense related to investments and non-qualified deferred compensation plan assets*		1		10
Income tax effect of non-GAAP adjustments		(9)		(53)
Net income on a non-GAAP basis�nbsp;		$139 to $149		$672 to $700

�nbsp;

The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

*

Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

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