Cadence Reports Solid Third Quarter Results

Investors are encouraged to look at GAAP results as the best measure of financial performance. For example, amortization of intangibles or amortization of deferred stock compensation or in-process technology are important to consider because they may represent initial expenditures that under GAAP are reported across future fiscal periods. Likewise, deferred stock 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. All of these metrics are important to financial performance generally.

Though Cadence management finds its non-GAAP measure useful in evaluating the performance of Cadence's business, its 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 management typically uses its non-GAAP earnings and earnings per share measures in conjunction with GAAP earnings and earnings per share measures, to address these limitations.

Cadence believes that presenting its 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 management uses in its own evaluation of performance, and an additional base line for assessing the future earnings potential of the company. While the GAAP results are more complete, the company prefers to allow investors to have this supplemental measure since, with reconciliation to GAAP, it may provide additional insight into our 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 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 December 17, 2004, Cadence will observe a "Quiet Period" during which the Business Outlook as provided in this press release and the company's most recent 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 update by the company. During the Quiet Period, Cadence representatives will not comment on Cadence's business outlook or its financial results or expectations. The Quiet Period will extend until the day when Cadence's 2004 Year End Earnings Release is published, currently scheduled for January 26, 2005.

                     Cadence Design Systems, Inc.
                 Condensed Consolidated Balance Sheets
                  October 2, 2004 and January 3, 2004
                            (In thousands)

                                              October 2,   January 3,
                                                 2004         2004
                                              ----------   ----------

Current Assets:
   Cash and cash equivalents                  $  423,557   $  384,525
   Short-term investments                         28,943       33,898
   Receivables, net of allowance for doubtful
    accounts of $9,832 and $9,067,
    respectively                                 355,692      348,680
   Inventories                                    20,293       16,926
   Prepaid expenses and other                     67,725       58,212
                                              ----------   ----------
      Total current assets                       896,210      842,241

Property, plant and equipment, net               394,723      403,847
Goodwill                                         988,919      922,797
Acquired intangibles, net                        218,869      237,508
Installment contract receivables, net             85,986      121,627
Other assets                                     235,259      289,882
                                              ----------   ----------
Total Assets                                  $2,819,966   $2,817,902
                                              ==========   ==========

Current Liabilities:
   Accounts payable and accrued liabilities      244,820      243,450
   Current portion of deferred revenue           250,559      238,478
                                              ----------   ----------
      Total current liabilities                  495,379      481,928
                                                                  ----------      ----------

Long-term  Liabilities:
      Long-term  portion  of  deferred  revenue                    18,019              16,287
      Convertible  notes                                                          420,000            420,000
      Other  long-term  liabilities                                      292,490            327,406
                                                                                            ----------      ----------
            Total  long-term  liabilities                                730,509            763,693
                                                                                            ----------      ----------

Stockholders'  Equity                                                      1,594,078        1,572,281
                                                                                            ----------      ----------
Total  Liabilities  and  Stockholders'  Equity        $2,819,966      $2,817,902
                                                                                            ==========      ==========

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