Cadence Reports Q1 Revenue Up 12% Over Q1 2005

Though Cadence management finds its non-GAAP measure is 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 June 16, 2006, 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 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 Second Quarter 2006 Earnings Release is published, which is currently scheduled for July 26, 2006.


                       Cadence Design Systems, Inc.
                  Condensed Consolidated Balance Sheets
                    April 1, 2006 and December 31, 2005
                              (In thousands)
                                (Unaudited)

                                                   April 1,   December 31,
                                                     2006         2005
                                                  ----------- -------------

Current Assets:
    Cash and cash equivalents                     $   872,886 $     861,315
    Short-term investments                             32,054        33,276
    Receivables, net of allowance for
     doubtful accounts of $9,738 and $10,979,
     respectively                                     242,565       282,073
    Inventories                                        23,379        28,902
    Prepaid expenses and other                         78,326        70,736
                                                  ----------- -------------
        Total current assets                        1,249,210     1,276,302

Property, plant and equipment, net of accumulated
 depreciation of $566,381 and $549,593,
 respectively                                         358,141       356,945
Goodwill                                            1,250,430     1,232,926
Acquired intangibles, net                             141,628       153,847
Installment contract receivables                      111,257       102,748
Other assets                                          271,164       278,544
                                                  ----------- -------------
Total Assets                                      $ 3,381,830 $   3,401,312
                                                  =========== =============

Current Liabilities:
    Current portion of long-term debt             $    36,000 $      32,000
    Accounts payable and accrued
     liabilities                                      237,222       300,586
    Current portion of deferred revenue               282,577       273,265
                                                                       -----------  -------------
                Total  current  liabilities                                          555,799              605,851
                                                                                                    -----------  -------------

Long-term  Liabilities:
        Long-term  portion  of  deferred  revenue                            64,508                51,864
        Convertible  notes                                                                  420,000              420,000
        Long-term  debt                                                                          91,000              128,000
        Other  long-term  liabilities                                              362,852              350,893
                                                                                                    -----------  -------------
                Total  long-term  liabilities                                      938,360              950,757
                                                                                                    -----------  -------------

Stockholders'  Equity                                                                1,887,671          1,844,704
                                                                                                    -----------  -------------
Total  Liabilities  and  Stockholders'  Equity                $  3,381,830  $      3,401,312
                                                                                                    ===========  =============


                                              Cadence  Design  Systems,  Inc.
                                  Condensed  Consolidated  Income  Statements
                    For  the  Quarters  Ended  April  1,  2006  and  April  2,  2005
                                  (In  thousands,  except  per  share  amounts)
                                                                (Unaudited)

                                                                                                              Quarters  Ended
                                                                                                    ------------------------
                                                                                                        April  1,          April  2,
                                                                                                            2006                  2005
                                                                                                    -----------    -----------
Revenue:
    Product                                                                                  $      208,122    $      173,409
    Services                                                                                          32,431              32,443
    Maintenance                                                                                    87,661              86,685
                                                                                                    -----------    -----------

        Total  revenue                                                                          328,214            292,537
                                                                                                    -----------    -----------

Costs  and  Expenses:
    Cost  of  product                                                                            20,480              21,933
    Cost  of  services                                                                          24,067              22,488
    Cost  of  maintenance                                                                    16,050              14,267
    Marketing  and  sales                                                                    94,476              79,694
    Research  and  development                                                        116,261              90,386
    General  and  administrative                                                      35,041              25,933
    Amortization  of  acquired  intangibles                                    8,350              10,611
    Deferred  compensation                                                                          -              11,357
    Restructuring  and  other  charges                                                (430)            17,489
    Write-off  of  acquired  in-process  technology                          900                        -
                                                                                                    -----------    -----------

        Total  costs  and  expenses                                                    315,195            294,158
                                                                                                    -----------    -----------

            Income  (loss)  from  operations                                        13,019              (1,621)

    Interest  expense                                                                          (3,540)            (1,381)
    Other  income,  net                                                                        28,450                4,507
                                                                                                    -----------    -----------

            Income  before  provision  for  income  taxes
              and  cumulative  effect  of  change  in
              accounting  principle                                                        37,929                1,505

    Provision  for  income  taxes                                                      16,568                    482
                                                                                                    -----------    -----------

    Net  income  before  cumulative  effect  of  change
      in  accounting  principle                                                          21,361                1,023

    Cumulative  effect  of  change  in  accounting
      principle,  net  of  tax                                                                    418                        -
                                                                                                    -----------    -----------

            Net  income                                                                    $        21,779    $          1,023
                                                                                                    ===========    ===========

Net  income  per  share  before  cumulative  effect  of
  change  in  accounting  principle:
        Basic                                                                                  $            0.08    $            0.00
                                                                                                    ===========    ===========
        Diluted                                                                              $            0.07    $            0.00
                                                                                                    ===========    ===========

Net  income  per  share  after  cumulative  effect  of
  change  in  accounting  principle:
        Basic                                                                                  $            0.08    $            0.00
                                                                                                    ===========    ===========
        Diluted                                                                              $            0.07    $            0.00
                                                                                                    ===========    ===========


Weighted  average  common  shares  outstanding  -
  basic                                                                                                281,642            274,201
                                                                                                    ===========    ===========

Weighted  average  common  shares  outstanding  -
  diluted                                                                                            315,354            307,354
                                                                                                    ===========    ===========


                                              Cadence  Design  Systems,  Inc.
                            Condensed  Consolidated  Statements  of  Cash  Flows
                    For  the  Quarters  Ended  April  1,  2006  and  April  2,  2005
                                                            (In  thousands)
                                                                (Unaudited)

                                                                                                              Quarters  Ended
                                                                                                    ------------------------
                                                                                                        April  1,          April  2,
                                                                                                            2006                  2005
                                                                                                    -----------    -----------

Cash  and  Cash  Equivalents  at  Beginning  of  Period    $      861,315    $      448,517
                                                                                                    -----------    -----------
Cash  Flows  from  Operating  Activities:
      Net  income                                                                                    21,779                1,023
      Adjustments  to  reconcile  net  income  to  net
        cash  provided  by  operating  activities:
            Cumulative  effect  of  change  in  accounting
              principle                                                                                  (418)                      -
            Depreciation  and  amortization                                        40,942              44,354
            Stock  based  compensation                                                  29,665                8,005
            Equity  in  loss  from  investments,  net                                300                2,446
            Gain  on  investments,  net                                                (20,048)          (10,161)
            Write-down  of  investment  securities                              1,001                6,193
            Write-off  of  acquired  in-process  technology                  900                        -
            Non-cash  restructuring  and  other  charges                          44                1,352
            Tax  benefit  of  call  options                                                  954                        -
            Deferred  income  taxes                                                          3,880                        -
            Proceeds  from  the  sale  of  receivables                        24,595              40,933
            Recoveries  for  gains  on  trade  accounts
              receivable  and  sales  returns                                        (1,240)            (1,774)
            Other  non-cash  items                                                            2,251                3,352
            Changes  in  operating  assets  and
              liabilities,  net  of  effect  of  acquired
              businesses:
                  Receivables                                                                      66,015              80,851
                  Inventories                                                                        2,133                    707
                  Prepaid  expenses  and  other                                        (8,492)            (1,807)
                  Installment  contract  receivables                          (57,333)          (35,147)
                  Other  assets                                                                    (2,139)                  407
                  Accounts  payable  and  accrued  liabilities          (89,530)          (60,552)
                  Deferred  revenue                                                            20,693            (15,595)
                  Other  long-term  liabilities                                        5,442                2,406
                                                                                                    -----------    -----------
                      Net  cash  provided  by  operating
                        activities                                                                  41,394              66,993
                                                                                                    -----------    -----------

Cash  Flows  from  Investing  Activities:
    Proceeds  from  sale  of  available-for-sale
      securities                                                                                      3,687                9,953
    Proceeds  from  sale  of  short-term  investments                            -            289,225
    Purchases  of  short-term  investments                                              -          (180,975)
    Proceeds  from  the  sale  of  long-term  investments            20,000                4,607
    Purchases  of  property,  plant  and  equipment                    (15,279)          (19,587)
    Investment  in  venture  capital  partnerships  and
      equity  investments                                                                    (2,000)            (2,430)
    Cash  paid  in  business  combinations  and  asset
      acquisitions,  net  of  cash  acquired                                    (1,329)            (1,411)
                                                                                                    -----------    -----------
                      Net  cash  provided  by  investing
                        activities                                                                    5,079              99,382
                                                                                                    -----------    -----------

Cash  Flows  from  Financing  Activities:
    Principal  payments  on  term  loan                                          (33,000)                  (27)
    Tax  benefits  from  employee  stock  transactions                  6,140                        -
    Proceeds  from  issuance  of  common  stock                              61,460              39,589
    Purchases  of  treasury  stock                                                  (69,032)                      -
                                                                                                    -----------    -----------
                      Net  cash  provided  by  (used  for)
                        financing  activities                                            (34,432)            39,562
                                                                                                    -----------    -----------

Effect  of  exchange  rate  changes  on  cash  and  cash
  equivalents                                                                                          (470)              2,366
                                                                                                    -----------    -----------

Increase  in  cash  and  cash  equivalents                                    11,571            208,303
                                                                                                    -----------    -----------

Cash  and  Cash  Equivalents  at  End  of  Period                $      872,886    $      656,820
                                                                                                    ===========    ===========


                                                Cadence  Design  Systems,  Inc.
                                                        As  of  April  26,  2006
                      Impact  of  Non-GAAP  Adjustments  on  Forward  Looking
                                              Diluted  Net  Income  Per  Share
                                                            (Unaudited)

                                                                                    Quarter  ended            Year  ended
                                                                                          July  1,                  December  30,
                                                                                            2006                            2006
                                                                                ----------------    ----------------
                                                                                        Forecast                    Forecast
                                                                                ----------------    ----------------

Diluted  net  income  per  share  on  a  GAAP
  basis                                                                    $  0.09  to  $  0.11    $  0.47  to  $  0.55

    Amortization  of  acquired  intangibles                0.05                            0.19
    Stock-based  compensation  expense                        0.09                            0.31
    Non-qualified  deferred  compensation
      expense                                                                              -                            0.01
    Integration  and  acquisition-related
      costs                                                                                  -                            0.01
    Income  tax  effect  of  non-GAAP
      adjustments                                                              (0.02)                        (0.02)

                                                                                ----------------    ----------------
Diluted  net  income  per  share  on  a
  non-GAAP  basis                                                  $  0.21  to  $  0.23    $  0.97  to  $  1.05
                                                                                ================    ================


                                                  Cadence  Design  Systems,  Inc.
                                                        As  of  April  26,  2006
                      Impact  of  Non-GAAP  Adjustments  on  Forward  Looking  Net  Income
                                                              (Unaudited)


                                                                                    Quarter  ended            Year  ended
                                                                                          July  1,                December  30,
                                                                                            2006                            2006
                                                                                ----------------    ----------------
($  in  Millions)                                                          Forecast                    Forecast
                                                                                ----------------    ----------------

Net  income  on  a  GAAP  basis                                $  25  to  $  31          $  152  to  $  176

    Amortization  of  acquired  intangibles                    17                                62
    Stock-based  compensation  expense                            27                              101
    Non-qualified  deferred  compensation
      expense                                                                              1                                  5
    Restructuring  and  other  charges                                1                                  1
    Integration  and  acquisition-related
      costs                                                                                  1                                  2
    Equity  in  losses  from  investments,
      gain  on  non-qualified  deferred
      compensation  plan  assets                                            1                                  1
    Income  tax  effect  of  non-GAAP
      adjustments                                                                    (7)                              (5)

                                                                                ----------------    ----------------
Net  income  on  a  non-GAAP  basis                        $  66  to  $  72          $  319  to  $  343
                                                                                ================    ================


                                              Cadence  Design  Systems,  Inc.
                                                                (Unaudited)

Revenue  Mix  by  Geography  (%  of  Total  Revenue)

                                                            2004                                            2005                      2006
                                      ------------------------    ------------------------    ----
GEOGRAPHY                      Q1      Q2      Q3      Q4    Year      Q1      Q2      Q3      Q4    Year      Q1
                                      ------------------------    ------------------------    ----

  North  America            53%    57%    55%    45%    52%      46%    49%    53%    42%    48%      51%
  Europe                          16%    19%    21%    30%    22%      16%    17%    21%    20%    18%      19%
  Japan                            22%    14%    15%    14%    16%      30%    25%    20%    26%    25%      21%
  Asia                                9%    10%      9%    11%    10%        8%      9%      6%    12%      9%        9%

Total                            100%  100%  100%  100%    100%  100%  100%    100%  100%  100%  100%


Revenue  Mix  by  Product  Group  (%  of  Total  Revenue)

                                                              2004                                          2005                      2006
                                        ------------------------    -----------------------    ----
PRODUCT  GROUP                Q1      Q2      Q3      Q4    Year      Q1      Q2    Q3      Q4    Year      Q1
                                        ------------------------    -----------------------    ----

  Functional
    Verification              20%    20%    18%    19%    19%    20%    19%    21%    25%    21%      26%
  Digital  IC  Design      25%    21%    24%    27%    24%    27%    23%    26%    29%    28%      20%
  Custom  IC  Design        27%    24%    27%    27%    27%    23%    31%    27%    22%    25%      27%
  Design  for
    Manufacturing              6%      9%    12%      8%      9%      9%      9%      9%      8%      9%        8%
  System  Interconnect  10%      9%      8%      9%      9%    10%      9%      8%      7%      8%        9%
  Services  &  Other        12%    17%    11%    10%    12%    11%      9%      9%      9%      9%      10%

Total                                100%  100%  100%  100%  100%  100%  100%  100%  100%  100%  100%


Note:  Product  Group  total  revenue  includes  Product  +  Maintenance
 




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