10-Q 1 cdns-20221001.htm 10-Q cdns-20221001
0000813672false2022Q3December 3100008136722022-01-022022-10-0100008136722022-10-01xbrli:sharesiso4217:USD00008136722022-01-010000813672cdns:ProductandmaintenanceMember2022-07-032022-10-010000813672cdns:ProductandmaintenanceMember2021-07-042021-10-020000813672cdns:ProductandmaintenanceMember2022-01-022022-10-010000813672cdns:ProductandmaintenanceMember2021-01-032021-10-020000813672us-gaap:TechnologyServiceMember2022-07-032022-10-010000813672us-gaap:TechnologyServiceMember2021-07-042021-10-020000813672us-gaap:TechnologyServiceMember2022-01-022022-10-010000813672us-gaap:TechnologyServiceMember2021-01-032021-10-0200008136722022-07-032022-10-0100008136722021-07-042021-10-0200008136722021-01-032021-10-02iso4217:USDxbrli:shares0000813672us-gaap:CommonStockMember2022-07-020000813672us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-07-020000813672us-gaap:TreasuryStockMember2022-07-020000813672us-gaap:RetainedEarningsMember2022-07-020000813672us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-0200008136722022-07-020000813672us-gaap:RetainedEarningsMember2022-07-032022-10-010000813672us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-032022-10-010000813672us-gaap:CommonStockMember2022-07-032022-10-010000813672us-gaap:TreasuryStockMember2022-07-032022-10-010000813672us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-07-032022-10-010000813672us-gaap:CommonStockMember2022-10-010000813672us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-10-010000813672us-gaap:TreasuryStockMember2022-10-010000813672us-gaap:RetainedEarningsMember2022-10-010000813672us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-010000813672us-gaap:CommonStockMember2021-07-030000813672us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-07-030000813672us-gaap:TreasuryStockMember2021-07-030000813672us-gaap:RetainedEarningsMember2021-07-030000813672us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-0300008136722021-07-030000813672us-gaap:RetainedEarningsMember2021-07-042021-10-020000813672us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-042021-10-020000813672us-gaap:CommonStockMember2021-07-042021-10-020000813672us-gaap:TreasuryStockMember2021-07-042021-10-020000813672us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-07-042021-10-020000813672us-gaap:CommonStockMember2021-10-020000813672us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-10-020000813672us-gaap:TreasuryStockMember2021-10-020000813672us-gaap:RetainedEarningsMember2021-10-020000813672us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-10-0200008136722021-10-020000813672us-gaap:CommonStockMember2022-01-010000813672us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-01-010000813672us-gaap:TreasuryStockMember2022-01-010000813672us-gaap:RetainedEarningsMember2022-01-010000813672us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-010000813672us-gaap:RetainedEarningsMember2022-01-022022-10-010000813672us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-022022-10-010000813672us-gaap:CommonStockMember2022-01-022022-10-010000813672us-gaap:TreasuryStockMember2022-01-022022-10-010000813672us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-01-022022-10-010000813672us-gaap:CommonStockMember2021-01-020000813672us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-01-020000813672us-gaap:TreasuryStockMember2021-01-020000813672us-gaap:RetainedEarningsMember2021-01-020000813672us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-0200008136722021-01-020000813672us-gaap:RetainedEarningsMember2021-01-032021-10-020000813672us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-032021-10-020000813672us-gaap:CommonStockMember2021-01-032021-10-020000813672us-gaap:TreasuryStockMember2021-01-032021-10-020000813672us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-01-032021-10-020000813672cdns:CustomICDesignMember2022-07-032022-10-01xbrli:pure0000813672cdns:CustomICDesignMember2021-07-042021-10-020000813672cdns:CustomICDesignMember2022-01-022022-10-010000813672cdns:CustomICDesignMember2021-01-032021-10-020000813672cdns:DigitalICDesignandSignoffMember2022-07-032022-10-010000813672cdns:DigitalICDesignandSignoffMember2021-07-042021-10-020000813672cdns:DigitalICDesignandSignoffMember2022-01-022022-10-010000813672cdns:DigitalICDesignandSignoffMember2021-01-032021-10-020000813672cdns:FunctionalVerificationincludingEmulationandPrototypingHardwareMember2022-07-032022-10-010000813672cdns:FunctionalVerificationincludingEmulationandPrototypingHardwareMember2021-07-042021-10-020000813672cdns:FunctionalVerificationincludingEmulationandPrototypingHardwareMember2022-01-022022-10-010000813672cdns:FunctionalVerificationincludingEmulationandPrototypingHardwareMember2021-01-032021-10-020000813672cdns:IPMember2022-07-032022-10-010000813672cdns:IPMember2021-07-042021-10-020000813672cdns:IPMember2022-01-022022-10-010000813672cdns:IPMember2021-01-032021-10-020000813672cdns:SystemDesignAndAnalysisMember2022-07-032022-10-010000813672cdns:SystemDesignAndAnalysisMember2021-07-042021-10-020000813672cdns:SystemDesignAndAnalysisMember2022-01-022022-10-010000813672cdns:SystemDesignAndAnalysisMember2021-01-032021-10-020000813672cdns:RevenueArrangementRecognizedOverTimeMemberus-gaap:TransferredOverTimeMember2022-07-032022-10-010000813672cdns:RevenueArrangementRecognizedOverTimeMemberus-gaap:TransferredOverTimeMember2021-07-042021-10-020000813672cdns:RevenueArrangementRecognizedOverTimeMemberus-gaap:TransferredOverTimeMember2022-01-022022-10-010000813672cdns:RevenueArrangementRecognizedOverTimeMemberus-gaap:TransferredOverTimeMember2021-01-032021-10-020000813672us-gaap:TransferredOverTimeMembercdns:RevenueArrangementWithNonCancelableCommitmentsMember2022-07-032022-10-010000813672us-gaap:TransferredOverTimeMembercdns:RevenueArrangementWithNonCancelableCommitmentsMember2021-07-042021-10-020000813672us-gaap:TransferredOverTimeMembercdns:RevenueArrangementWithNonCancelableCommitmentsMember2022-01-022022-10-010000813672us-gaap:TransferredOverTimeMembercdns:RevenueArrangementWithNonCancelableCommitmentsMember2021-01-032021-10-020000813672us-gaap:TransferredOverTimeMember2022-07-032022-10-010000813672us-gaap:TransferredOverTimeMember2021-07-042021-10-020000813672us-gaap:TransferredOverTimeMember2022-01-022022-10-010000813672us-gaap:TransferredOverTimeMember2021-01-032021-10-020000813672us-gaap:TransferredAtPointInTimeMember2022-07-032022-10-010000813672us-gaap:TransferredAtPointInTimeMember2021-07-042021-10-020000813672us-gaap:TransferredAtPointInTimeMember2022-01-022022-10-010000813672us-gaap:TransferredAtPointInTimeMember2021-01-032021-10-020000813672cdns:SeniorNotesDueTwentyTwentyFourMemberus-gaap:SeniorNotesMember2022-10-010000813672cdns:SeniorNotesDueTwentyTwentyFourMemberus-gaap:SeniorNotesMember2022-01-010000813672us-gaap:NotesPayableToBanksMembercdns:TermLoanDueTwentyTwentyFiveMember2022-10-010000813672us-gaap:NotesPayableToBanksMembercdns:TermLoanDueTwentyTwentyFiveMember2022-01-010000813672us-gaap:RevolvingCreditFacilityMember2022-10-010000813672us-gaap:RevolvingCreditFacilityMember2022-01-022022-10-010000813672us-gaap:RevolvingCreditFacilityMember2022-07-032022-10-010000813672us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMembersrt:MinimumMember2022-01-022022-10-010000813672us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMembersrt:MaximumMember2022-01-022022-10-010000813672us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMember2022-01-022022-10-010000813672us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMembersrt:MinimumMember2022-01-022022-10-010000813672us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMembersrt:MaximumMember2022-01-022022-10-010000813672us-gaap:RevolvingCreditFacilityMembersrt:MinimumMember2022-01-022022-10-010000813672us-gaap:RevolvingCreditFacilityMembersrt:MaximumMember2022-01-022022-10-010000813672us-gaap:RevolvingCreditFacilityMember2022-01-022022-10-010000813672us-gaap:RevolvingCreditFacilityMember2022-10-010000813672cdns:SeniorNotesDueTwentyTwentyFourMemberus-gaap:SeniorNotesMember2014-10-090000813672cdns:SeniorNotesDueTwentyTwentyFourMemberus-gaap:SeniorNotesMember2014-10-092014-10-090000813672cdns:TermLoanDueTwentyTwentyFiveMember2022-10-010000813672us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembercdns:TermLoanDueTwentyTwentyFiveMembersrt:MinimumMember2022-01-022022-10-010000813672us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembercdns:TermLoanDueTwentyTwentyFiveMembersrt:MaximumMember2022-01-022022-10-010000813672us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembercdns:TermLoanDueTwentyTwentyFiveMember2022-01-022022-10-010000813672cdns:TermLoanDueTwentyTwentyFiveMemberus-gaap:BaseRateMembersrt:MinimumMember2022-01-022022-10-010000813672cdns:TermLoanDueTwentyTwentyFiveMemberus-gaap:BaseRateMembersrt:MaximumMember2022-01-022022-10-010000813672cdns:TermLoanDueTwentyTwentyFiveMembersrt:MinimumMember2022-01-022022-10-010000813672cdns:TermLoanDueTwentyTwentyFiveMembersrt:MaximumMember2022-01-022022-10-010000813672cdns:OpenEyeScientificSoftwareIncMember2022-08-310000813672cdns:OpenEyeScientificSoftwareIncMember2022-01-022022-10-010000813672cdns:ExistingTechnologyMembercdns:OpenEyeScientificSoftwareIncMember2022-01-022022-10-010000813672cdns:AgreementsAndRelationshipMembercdns:OpenEyeScientificSoftwareIncMember2022-01-022022-10-010000813672cdns:TradenameTrademarkAndPatentsMembercdns:OpenEyeScientificSoftwareIncMember2022-01-022022-10-010000813672cdns:FFGHoldingsLimitedFutureFacilitiesMember2022-07-140000813672cdns:FFGHoldingsLimitedFutureFacilitiesMember2022-01-022022-10-010000813672cdns:ExistingTechnologyMembercdns:FFGHoldingsLimitedFutureFacilitiesMember2022-01-022022-10-010000813672cdns:AgreementsAndRelationshipMembercdns:FFGHoldingsLimitedFutureFacilitiesMember2022-01-022022-10-010000813672cdns:TradenameTrademarkAndPatentsMembercdns:FFGHoldingsLimitedFutureFacilitiesMember2022-01-022022-10-010000813672cdns:A2022OtherBusinessCombinationMember2022-01-022022-10-010000813672cdns:A2022OtherBusinessCombinationMember2022-10-010000813672cdns:ExistingTechnologyMember2022-10-010000813672cdns:AgreementsAndRelationshipMember2022-10-010000813672cdns:TradenameTrademarkAndPatentsMember2022-10-010000813672cdns:ExistingTechnologyMember2022-01-010000813672cdns:AgreementsAndRelationshipMember2022-01-010000813672cdns:TradenameTrademarkAndPatentsMember2022-01-010000813672us-gaap:CostOfSalesMember2022-07-032022-10-010000813672us-gaap:CostOfSalesMember2021-07-042021-10-020000813672us-gaap:CostOfSalesMember2022-01-022022-10-010000813672us-gaap:CostOfSalesMember2021-01-032021-10-020000813672cdns:CostOfServicesMember2022-07-032022-10-010000813672cdns:CostOfServicesMember2021-07-042021-10-020000813672cdns:CostOfServicesMember2022-01-022022-10-010000813672cdns:CostOfServicesMember2021-01-032021-10-020000813672us-gaap:SellingAndMarketingExpenseMember2022-07-032022-10-010000813672us-gaap:SellingAndMarketingExpenseMember2021-07-042021-10-020000813672us-gaap:SellingAndMarketingExpenseMember2022-01-022022-10-010000813672us-gaap:SellingAndMarketingExpenseMember2021-01-032021-10-020000813672us-gaap:ResearchAndDevelopmentExpenseMember2022-07-032022-10-010000813672us-gaap:ResearchAndDevelopmentExpenseMember2021-07-042021-10-020000813672us-gaap:ResearchAndDevelopmentExpenseMember2022-01-022022-10-010000813672us-gaap:ResearchAndDevelopmentExpenseMember2021-01-032021-10-020000813672us-gaap:GeneralAndAdministrativeExpenseMember2022-07-032022-10-010000813672us-gaap:GeneralAndAdministrativeExpenseMember2021-07-042021-10-020000813672us-gaap:GeneralAndAdministrativeExpenseMember2022-01-022022-10-010000813672us-gaap:GeneralAndAdministrativeExpenseMember2021-01-032021-10-020000813672cdns:StockoptionandrestrictedstockgrantsMember2022-10-010000813672cdns:StockoptionandrestrictedstockgrantsMember2022-01-022022-10-0100008136722021-08-040000813672cdns:ShareRepurchaseOnOpenMarketMember2022-07-032022-10-010000813672cdns:ShareRepurchaseOnOpenMarketMember2022-01-022022-10-010000813672cdns:AcceleratedShareRepurchaseProgramMember2022-07-032022-10-010000813672cdns:AcceleratedShareRepurchaseProgramMember2022-04-032022-07-020000813672cdns:AcceleratedShareRepurchaseProgramMember2022-01-022022-10-010000813672us-gaap:PerformanceSharesMember2022-07-032022-10-010000813672us-gaap:PerformanceSharesMember2021-07-042021-10-020000813672us-gaap:PerformanceSharesMember2022-01-022022-10-010000813672us-gaap:PerformanceSharesMember2021-01-032021-10-020000813672us-gaap:EmployeeStockOptionMember2022-07-032022-10-010000813672us-gaap:EmployeeStockOptionMember2021-07-042021-10-020000813672us-gaap:EmployeeStockOptionMember2022-01-022022-10-010000813672us-gaap:EmployeeStockOptionMember2021-01-032021-10-020000813672us-gaap:RestrictedStockMember2022-07-032022-10-010000813672us-gaap:RestrictedStockMember2021-07-042021-10-020000813672us-gaap:RestrictedStockMember2022-01-022022-10-010000813672us-gaap:RestrictedStockMember2021-01-032021-10-020000813672us-gaap:MoneyMarketFundsMember2022-10-010000813672us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2022-10-010000813672us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2022-10-010000813672us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2022-10-010000813672us-gaap:FairValueInputsLevel1Member2022-10-010000813672us-gaap:FairValueInputsLevel2Member2022-10-010000813672us-gaap:FairValueInputsLevel3Member2022-10-010000813672us-gaap:MoneyMarketFundsMember2022-01-010000813672us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2022-01-010000813672us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2022-01-010000813672us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2022-01-010000813672us-gaap:FairValueInputsLevel1Member2022-01-010000813672us-gaap:FairValueInputsLevel2Member2022-01-010000813672us-gaap:FairValueInputsLevel3Member2022-01-010000813672us-gaap:FairValueInputsLevel3Member2022-07-020000813672us-gaap:ValuationTechniqueDiscountedCashFlowMembercdns:A2022OtherBusinessCombinationMembersrt:MinimumMemberus-gaap:FairValueInputsLevel3Member2022-04-032022-07-020000813672us-gaap:ValuationTechniqueDiscountedCashFlowMembercdns:A2022OtherBusinessCombinationMembersrt:MaximumMemberus-gaap:FairValueInputsLevel3Member2022-04-032022-07-020000813672us-gaap:TechnologyBasedIntangibleAssetsMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Membercdns:OpenEyeScientificSoftwareIncMember2021-07-042021-10-020000813672us-gaap:TechnologyBasedIntangibleAssetsMembercdns:FFGHoldingsLimitedFutureFacilitiesMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Member2021-07-042021-10-020000813672us-gaap:CustomerRelationshipsMembersrt:MinimumMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Membercdns:OpenEyeScientificSoftwareIncMember2021-07-042021-10-020000813672us-gaap:CustomerRelationshipsMembersrt:MaximumMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Membercdns:OpenEyeScientificSoftwareIncMember2021-07-042021-10-020000813672us-gaap:CustomerRelationshipsMembercdns:FFGHoldingsLimitedFutureFacilitiesMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Member2021-07-042021-10-020000813672cdns:FFGHoldingsLimitedFutureFacilitiesMemberus-gaap:CustomerRelationshipsMembersrt:MinimumMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Member2021-07-042021-10-020000813672cdns:FFGHoldingsLimitedFutureFacilitiesMemberus-gaap:CustomerRelationshipsMembersrt:MaximumMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Member2021-07-042021-10-020000813672us-gaap:AccumulatedTranslationAdjustmentMember2022-10-010000813672us-gaap:AccumulatedTranslationAdjustmentMember2022-01-010000813672us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-10-010000813672us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-010000813672country:US2022-07-032022-10-010000813672country:US2021-07-042021-10-020000813672country:US2022-01-022022-10-010000813672country:US2021-01-032021-10-020000813672cdns:OtherAmericaMember2022-07-032022-10-010000813672cdns:OtherAmericaMember2021-07-042021-10-020000813672cdns:OtherAmericaMember2022-01-022022-10-010000813672cdns:OtherAmericaMember2021-01-032021-10-020000813672srt:AmericasMember2022-07-032022-10-010000813672srt:AmericasMember2021-07-042021-10-020000813672srt:AmericasMember2022-01-022022-10-010000813672srt:AmericasMember2021-01-032021-10-020000813672country:CN2022-07-032022-10-010000813672country:CN2021-07-042021-10-020000813672country:CN2022-01-022022-10-010000813672country:CN2021-01-032021-10-020000813672cdns:OtherAsiaMember2022-07-032022-10-010000813672cdns:OtherAsiaMember2021-07-042021-10-020000813672cdns:OtherAsiaMember2022-01-022022-10-010000813672cdns:OtherAsiaMember2021-01-032021-10-020000813672srt:AsiaMember2022-07-032022-10-010000813672srt:AsiaMember2021-07-042021-10-020000813672srt:AsiaMember2022-01-022022-10-010000813672srt:AsiaMember2021-01-032021-10-020000813672us-gaap:EMEAMember2022-07-032022-10-010000813672us-gaap:EMEAMember2021-07-042021-10-020000813672us-gaap:EMEAMember2022-01-022022-10-010000813672us-gaap:EMEAMember2021-01-032021-10-020000813672country:JP2022-07-032022-10-010000813672country:JP2021-07-042021-10-020000813672country:JP2022-01-022022-10-010000813672country:JP2021-01-032021-10-020000813672country:US2022-10-010000813672country:US2022-01-010000813672cdns:OtherAmericaMember2022-10-010000813672cdns:OtherAmericaMember2022-01-010000813672srt:AmericasMember2022-10-010000813672srt:AmericasMember2022-01-010000813672country:CN2022-10-010000813672country:CN2022-01-010000813672cdns:OtherAsiaMember2022-10-010000813672cdns:OtherAsiaMember2022-01-010000813672srt:AsiaMember2022-10-010000813672srt:AsiaMember2022-01-010000813672us-gaap:EMEAMember2022-10-010000813672us-gaap:EMEAMember2022-01-010000813672country:JP2022-10-010000813672country:JP2022-01-01

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________ 
FORM 10-Q
_____________________________________  
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission file number 000-15867
_____________________________________ 
cdns-20221001_g1.jpg
CADENCE DESIGN SYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
_____________________________________ 
Delaware 00-0000000
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
2655 Seely Avenue, Building 5, San Jose,California 95134
(Address of Principal Executive Offices) (Zip Code)
(408) 943-1234
Registrant’s Telephone Number, including Area Code
_____________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareCDNSNasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated FilerSmaller Reporting Company
Non-accelerated FilerEmerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
On October 1, 2022, approximately 274,316,000 shares of the registrant’s common stock, $0.01 par value, were outstanding.




CADENCE DESIGN SYSTEMS, INC.
INDEX
 
  Page
PART I.FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II.OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.











PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
As of
October 1,
2022
January 1,
2022
ASSETS
Current assets:
Cash and cash equivalents$1,026,051 $1,088,940 
Receivables, net391,181 337,596 
Inventories114,283 115,721 
Prepaid expenses and other138,968 173,512 
Total current assets1,670,483 1,715,769 
Property, plant and equipment, net348,238 305,911 
Goodwill1,348,494 928,358 
Acquired intangibles, net353,912 233,265 
Deferred taxes783,315 763,770 
Other assets463,645 439,226 
Total assets$4,968,087 $4,386,299 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Revolving credit facility$150,000 $ 
Accounts payable and accrued liabilities454,688 417,283 
Current portion of deferred revenue652,306 553,942 
Total current liabilities1,256,994 971,225 
Long-term liabilities:
Long-term portion of deferred revenue102,167 101,148 
Long-term debt647,799 347,588 
Other long-term liabilities252,999 225,663 
Total long-term liabilities1,002,965 674,399 
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock and capital in excess of par value2,697,632 2,467,701 
Treasury stock, at cost(3,522,219)(2,740,003)
Retained earnings3,654,848 3,046,288 
Accumulated other comprehensive loss(122,133)(33,311)
Total stockholders’ equity2,708,128 2,740,675 
Total liabilities and stockholders’ equity$4,968,087 $4,386,299 




See notes to condensed consolidated financial statements.



CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended Nine Months Ended
 October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
Revenue:
Product and maintenance$845,788 $706,160 $2,494,317 $2,093,098 
Services56,766 44,735 167,524 122,110 
Total revenue902,554 750,895 2,661,841 2,215,208 
Costs and expenses:
Cost of product and maintenance62,351 54,185 203,863 174,933 
Cost of services25,249 22,402 74,245 62,380 
Marketing and sales152,925 143,401 432,407 412,194 
Research and development323,629 289,105 901,121 845,324 
General and administrative73,688 42,990 174,051 123,275 
Amortization of acquired intangibles3,946 5,000 13,543 14,661 
Restructuring14 (222)42 (968)
Total costs and expenses641,802 556,861 1,799,272 1,631,799 
Income from operations260,752 194,034 862,569 583,409 
Interest expense(5,463)(4,196)(13,852)(12,729)
Other income (expenses), net(3,017)(1,143)(13,879)3,701 
Income before provision for income taxes252,272 188,695 834,838 574,381 
Provision for income taxes65,967 12,388 226,278 55,005 
Net income$186,305 $176,307 $608,560 $519,376 
Net income per share – basic$0.69 $0.65 $2.24 $1.90 
Net income per share – diluted$0.68 $0.63 $2.21 $1.86 
Weighted average common shares outstanding – basic271,131 273,194 271,694 273,636 
Weighted average common shares outstanding – diluted274,957 278,311 275,683 279,046 










See notes to condensed consolidated financial statements.



CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 
 Three Months Ended Nine Months Ended
 October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
Net income$186,305 $176,307 $608,560 $519,376 
Other comprehensive income (loss), net of tax effects:
Foreign currency translation adjustments(40,768)(5,483)(90,764)(9,618)
Changes in defined benefit plan liabilities15 (288)1,942 (520)
Total other comprehensive loss, net of tax effects(40,753)(5,771)(88,822)(10,138)
Comprehensive income$145,552 $170,536 $519,738 $509,238 






































See notes to condensed consolidated financial statements.



CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
Three Months Ended October 1, 2022
Common Stock
Par ValueAccumulated
and CapitalOther
in ExcessTreasuryRetainedComprehensive
Sharesof ParStockEarningsLossTotal
Balance, July 2, 2022273,870 $2,590,893 $(3,352,827)$3,468,543 $(81,380)$2,625,229 
Net income
— — — 186,305 — $186,305 
Other comprehensive loss, net of taxes — — — — (40,753)$(40,753)
Purchase of treasury stock
(959)— (150,013)— — $(150,013)
Equity forward contract— 17,965 (17,965)$ 
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures
1,574 23,095 30,363 — — $53,458 
Stock received for payment of employee taxes on vesting of restricted stock
(169)(7,772)(31,777)— — $(39,549)
Stock-based compensation expense
— 73,451 — — — $73,451 
Balance, October 1, 2022274,316 $2,697,632 $(3,522,219)$3,654,848 $(122,133)$2,708,128 
Three Months Ended October 2, 2021
Common Stock
Par ValueAccumulated
and CapitalOther
in ExcessTreasuryRetainedComprehensive
Sharesof ParStockEarningsLossTotal
Balance, July 3, 2021276,780 $2,354,801 $(2,509,668)$2,693,402 $(21,792)$2,516,743 
Net income
— — — 176,307 — $176,307 
Other comprehensive loss, net of taxes — — — — (5,771)$(5,771)
Purchase of treasury stock
(723)— (110,011)— — $(110,011)
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures
1,249 9,319 22,061 — — $31,380 
Stock received for payment of employee taxes on vesting of restricted stock
(165)(5,075)(25,057)— — $(30,132)
Stock-based compensation expense
— 52,746 — — — $52,746 
Balance, October 2, 2021277,141 $2,411,791 $(2,622,675)$2,869,709 $(27,563)$2,631,262 



Nine Months Ended October 1, 2022
Common Stock
Par ValueAccumulated
and CapitalOther
in ExcessTreasuryRetainedComprehensive
Sharesof ParStockEarningsLossTotal
Balance, January 1, 2022276,796 $2,467,701 $(2,740,003)$3,046,288 $(33,311)$2,740,675 
Net income
— — — 608,560 — $608,560 
Other comprehensive loss, net of taxes — — — — (88,822)$(88,822)
Purchase of treasury stock
(4,664)— (720,062)— — $(720,062)
Equity forward contract— (12,035)(17,965)— — $(30,000)
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures
2,738 60,327 43,353 — — $103,680 
Stock received for payment of employee taxes on vesting of restricted stock
(554)(15,551)(87,542)— — $(103,093)
Stock-based compensation expense
— 197,190 — — — $197,190 
Balance, October 1, 2022274,316 $2,697,632 $(3,522,219)$3,654,848 $(122,133)$2,708,128 
Nine Months Ended October 2, 2021
Common Stock
Par ValueAccumulated
and CapitalOther
in ExcessTreasuryRetainedComprehensive
Sharesof ParStockEarningsLossTotal
Balance, January 2, 2021278,941 $2,217,939 $(2,057,829)$2,350,333 $(17,425)$2,493,018 
Net income
— — — 519,376 — $519,376 
Other comprehensive loss, net of taxes — — — — (10,138)$(10,138)
Purchase of treasury stock
(3,766)— (502,301)— — $(502,301)
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures
2,640 52,236 31,396 — — $83,632 
Stock received for payment of employee taxes on vesting of restricted stock
(674)(14,244)(93,941)— — $(108,185)
Stock-based compensation expense
— 155,860 — — — $155,860 
Balance, October 2, 2021277,141 $2,411,791 $(2,622,675)$2,869,709 $(27,563)$2,631,262 










See notes to condensed consolidated financial statements.



CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months Ended
 October 1,
2022
October 2,
2021
Cash and cash equivalents at beginning of period$1,088,940 $928,432 
Cash flows from operating activities:
Net income608,560 519,376 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization98,178 106,962 
Amortization of debt discount and fees810 952 
Stock-based compensation197,190 155,860 
(Gain) loss on investments, net4,777 (330)
Deferred income taxes(49,834)(34,566)
Provisions for losses on receivables471 234 
ROU asset amortization and change in operating lease liabilities(883)(2,917)
Other non-cash items158 146 
Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables(57,309)15,132 
Inventories(8,020)(25,608)
Prepaid expenses and other30,596 36,632 
Other assets17,644 8,127 
Accounts payable and accrued liabilities24,514 10,501 
Deferred revenue113,712 84,183 
Other long-term liabilities(2,305)10,417 
Net cash provided by operating activities978,259 885,101 
Cash flows from investing activities:
Purchases of non-marketable investments(1,000) 
Proceeds from the sale of non-marketable investments 128 
Purchases of property, plant and equipment(86,295)(49,977)
Purchases of intangible assets(1,000) 
Cash paid in business combinations, net of cash acquired(586,163)(220,026)
Net cash used for investing activities(674,458)(269,875)
Cash flows from financing activities:
Proceeds from term loan300,000  
Proceeds from revolving credit facility450,000  
Payment on revolving credit facility(300,000) 
Payment of debt issuance costs(425)(1,285)
Proceeds from issuance of common stock103,682 83,632 
Stock received for payment of employee taxes on vesting of restricted stock(103,093)(108,185)
Payments for repurchases of common stock(750,062)(502,301)
Net cash used for financing activities(299,898)(528,139)
Effect of exchange rate changes on cash and cash equivalents(66,792)(1,700)
Increase (decrease) in cash and cash equivalents(62,889)85,387 
Cash and cash equivalents at end of period$1,026,051 $1,013,819 
Supplemental cash flow information:
Cash paid for interest$8,508 $8,117 
Cash paid for taxes, net148,151 47,687 



See notes to condensed consolidated financial statements.



CADENCE DESIGN SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by Cadence Design Systems, Inc. (“Cadence”) without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, Cadence believes that the disclosures contained in this Quarterly Report on Form 10-Q comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These condensed consolidated financial statements are meant to be, and should be, read in conjunction with the consolidated financial statements and the Notes thereto included in Cadence’s Annual Report on Form 10-K for the fiscal year ended January 1, 2022.
The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q reflect all adjustments (which include only normal, recurring adjustments and those items discussed in these Notes) that are, in the opinion of management, necessary to state fairly the results of operations, cash flows and financial position for the periods and dates presented. The results for such periods are not necessarily indicative of the results to be expected for the full fiscal year. Certain prior period balances have been reclassified to conform to the current period presentation. Management has evaluated subsequent events through the issuance date of the unaudited condensed consolidated financial statements.
Fiscal Year End
On September 7, 2022, Cadence’s Board of Directors approved a change in its fiscal year end from the Saturday closest to December 31 of each year to December 31 of each year. Cadence’s fiscal quarters will end on March 31, June 30, and September 30. The fiscal year change is effective beginning with Cadence’s 2023 fiscal year, which will begin on January 1, 2023.
Cadence’s fiscal year end date for fiscal 2022 will remain December 31, 2022 as previously disclosed. Consistent with SEC guidance, no transition report is required in connection with the change in Cadence’s fiscal year end. Accordingly, Cadence intends to file an Annual Report on Form 10-K for the year ended December 31, 2022, and the new fiscal year will take effect from January 1, 2023 to December 31, 2023.
Use of Estimates
Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.
Despite continued uncertainty and disruption in the global economy and financial markets, Cadence is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of October 24, 2022, the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events or developments occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Recently Adopted Accounting Standards
Lessors - Certain Leases with Variable Lease Payments
In July 2021, the Financial Accounting Standards Board (“FASB”), issued ASU 2021-05, “Lessors - Certain Leases with Variable Lease Payments,” which allows lessors to classify and account for a lease with variable payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: (1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria as defined in ASC Topic 842 and (2) the lessor would have otherwise recognized a day-one loss on the lease arrangement. This standard better aligns the accounting with the underlying economics of these arrangements as lessors are not permitted to include most variable payments which do not depend on a reference index or a rate in the lease receivable while assets are derecognized at lease commencement. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Cadence adopted this standard on January 2, 2022, the first day of fiscal 2022, on a prospective basis. The adoption of this standard did not have a material impact on Cadence’s condensed consolidated financial statements and related disclosures.
6


Business Combinations
In October 2021, the FASB issued ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with “Revenue from Contracts with Customers (Topic 606)” as if the acquiring entity had originated the contracts. This approach differs from the previous requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. Cadence adopted this standard on January 2, 2022, the first day of fiscal 2022. The adoption of this standard did not impact acquired contract assets or liabilities from business combinations that occurred prior to the date of adoption, and the impact in current and future periods will depend on the contract assets and contract liabilities acquired. For business combinations completed during the third quarter of fiscal 2022, Cadence recognized deferred revenue of $11.8 million from the acquired businesses as if Cadence had originated the contracts in accordance with Topic 606 rather than at fair value. For additional information relating to Cadence’s acquisitions, see Note 5 in the notes to condensed consolidated financial statements.
NOTE 2. REVENUE
Cadence groups its products and services into five categories related to major design activities. The following table shows the percentage of revenue contributed by each of Cadence’s five product categories for the three and nine months ended October 1, 2022 and October 2, 2021:
 Three Months Ended Nine Months Ended
 October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
Custom Integrated Circuit (“IC”) Design and Simulation22 %23 %22 %23 %
Digital IC Design and Signoff29 %29 %28 %28 %
Functional Verification, including Emulation and Prototyping Hardware*25 %23 %26 %25 %
Intellectual Property (“IP”)12 %14 %13 %13 %
System Design and Analysis12 %11 %11 %11 %
Total100 %100 %100 %100 %
_____________
* Includes immaterial amount of revenue accounted for under leasing arrangements.
Cadence generates revenue from contracts with customers and applies judgment in identifying and evaluating any terms and conditions in contracts which may impact revenue recognition. Certain of Cadence’s licensing arrangements allow customers the ability to remix among software products. Cadence also has arrangements with customers that include a combination of products, with the actual product selection and number of licensed users to be determined at a later date. For these arrangements, Cadence estimates the allocation of the revenue to product categories based upon the expected usage of products. Revenue by product category fluctuates from period to period based on demand for products and services, and Cadence’s available resources to deliver them. No single customer accounted for 10% or more of total revenue during the three and nine months ended October 1, 2022 or the three and nine months ended October 2, 2021.
Generally, between 85% and 90% of Cadence’s annual revenue is characterized as recurring revenue. Recurring revenue includes revenue recognized over time from our software arrangements, services, royalties, maintenance on IP licenses and hardware, and operating leases of hardware. Recurring revenue also includes revenue recognized at varying points in time over the term of other arrangements with non-cancelable commitments, whereby the customer commits to a fixed dollar amount over a specified period of time that can be used to purchase from a list of products or services. These arrangements do not meet the definition of a revenue contract until the customer executes a separate selection form to identify the products and services that they are purchasing. Each separate selection form under the arrangement is treated as an individual contract and accounted for based on the respective performance obligations.
The remainder of Cadence’s revenue is recognized at a point in time and is characterized as up-front revenue. Up-front revenue is primarily generated by sales of emulation and prototyping hardware and individual IP licenses. The percentage of Cadence’s recurring and up-front revenue may be impacted by delivery of hardware and IP products to its customers in any single fiscal period. 
7


The following table shows the percentage of Cadence’s revenue that is classified as recurring or up-front for the three and nine months ended October 1, 2022 and October 2, 2021:
 Three Months Ended Nine Months Ended
 October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
Revenue recognized over time81 %86 %82 %84 %
Revenue from arrangements with non-cancelable commitments3 %3 %2 %3 %
Recurring revenue84 %89 %84 %87 %
Up-front revenue16 %11 %16 %13 %
Total100 %100 %100 %100 %
Significant Judgments
Cadence’s contracts with customers often include promises to transfer to a customer multiple software and/or IP licenses and services, including professional services, technical support services, and rights to unspecified updates. Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or not distinct and thus accounted for together, requires significant judgment. In some arrangements, such as most of Cadence’s IP license arrangements, Cadence has concluded that the licenses and associated services are distinct from each other. In others, like Cadence’s time-based software arrangements, the licenses and certain services are not distinct from each other. Cadence’s time-based software arrangements include multiple software licenses and updates to the licensed software products, as well as technical support, and Cadence has concluded that these promised goods and services are a single, combined performance obligation.
The accounting for contracts with multiple performance obligations requires the contract’s transaction price to be allocated to each distinct performance obligation based on relative standalone selling price (“SSP”). Judgment is required to determine the SSP for each distinct performance obligation because Cadence rarely licenses or sells products on a standalone basis. In instances where the SSP is not directly observable because Cadence does not sell the license, product or service separately, Cadence determines the SSP using information that maximizes the use of observable inputs and may include market conditions. Cadence typically has more than one SSP for individual performance obligations due to the stratification of those items by classes of customers and circumstances. In these instances, Cadence may use information such as the size of the customer and geographic region of the customer in determining the SSP.
Revenue is recognized over time for Cadence’s combined performance obligations that include software licenses, updates, technical support and maintenance that are separate performance obligations with the same term. For Cadence’s professional services, revenue is recognized over time, generally using costs incurred or hours expended to measure progress. Judgment is required in estimating project status and the costs necessary to complete projects. A number of internal and external factors can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes. For Cadence’s other performance obligations recognized over time, revenue is generally recognized using a time-based measure of progress reflecting generally consistent efforts to satisfy those performance obligations throughout the arrangement term.
If a group of agreements are so closely related that they are, in effect, part of a single arrangement, such agreements are deemed to be one arrangement for revenue recognition purposes. Cadence exercises significant judgment to evaluate the relevant facts and circumstances in determining whether the separate agreements should be accounted for separately or as, in substance, a single arrangement. Cadence’s judgments about whether a group of contracts comprise a single arrangement can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved.
Cadence is required to estimate the total consideration expected to be received from contracts with customers. In limited circumstances, the consideration expected to be received is variable based on the specific terms of the contract or based on Cadence’s expectations of the term of the contract. Generally, Cadence has not experienced significant returns or refunds to customers. These estimates require significant judgment and a change in these estimates could have an effect on its results of operations during the periods involved.
8


Contract Balances
The timing of revenue recognition may differ from the timing of invoicing to customers, and these timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) on Cadence’s condensed consolidated balance sheets. For certain software, hardware and IP agreements with payment plans, Cadence records an unbilled receivable related to revenue recognized upon transfer of control because it has an unconditional right to invoice and receive payment in the future related to those transferred products or services. Cadence records a contract asset when revenue is recognized prior to invoicing and Cadence does not have the unconditional right to invoice or retains performance risk with respect to that performance obligation. Cadence records deferred revenue when revenue is recognized subsequent to invoicing. For Cadence’s time-based software agreements, customers are generally invoiced in equal, quarterly amounts, although some customers prefer to be invoiced in single or annual amounts.
The contract assets indicated below are included in prepaid expenses and other in the condensed consolidated balance sheets and primarily relate to Cadence’s rights to consideration for work completed but not billed as of the balance sheet date on services and customized IP contracts. The contract assets are transferred to receivables when the rights become unconditional, usually upon completion of a milestone.
Cadence’s contract balances as of October 1, 2022 and January 1, 2022 were as follows:
 As of
 October 1,
2022
January 1,
2022
 (In thousands)
Contract assets$38,442 $6,811 
Deferred revenue754,473 655,090 
Cadence recognized revenue of $63.9 million and $488.9 million during the three and nine months ended October 1, 2022, and $59.8 million and $389.8 million during the three and nine months ended October 2, 2021, that was included in the deferred revenue balance at the beginning of each respective fiscal year. All other activity in deferred revenue, with the exception of deferred revenue assumed from acquisitions, is due to the timing of invoices in relation to the timing of revenue as described above.
Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, Cadence has determined that its contracts generally do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing Cadence’s products and services, and not to facilitate financing arrangements.
Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. Cadence has elected to exclude the potential future royalty receipts from the remaining performance obligations. Contracted but unsatisfied performance obligations were approximately $5.5 billion as of October 1, 2022, which included $433.5 million of non-cancelable commitments from customers where actual product selection and quantities of specific products or services are to be determined by customers at a later date. As of October 1, 2022, Cadence expected to recognize 54% of the contracted but unsatisfied performance obligations, excluding non-cancelable commitments, as revenue over the next 12 months and the remainder thereafter.
Cadence recognized revenue of $12.1 million and $35.2 million during the three and nine months ended October 1, 2022, and $13.3 million and $35.0 million during the three and nine months ended October 2, 2021, from performance obligations satisfied in previous periods. These amounts represent royalties earned during the period and exclude contracts with nonrefundable prepaid royalties. Nonrefundable prepaid royalties are recognized upon delivery of the IP because Cadence’s right to the consideration is not contingent upon customers’ future shipments.
9


NOTE 3. RECEIVABLES, NET
Cadence’s current and long-term receivables balances as of October 1, 2022 and January 1, 2022 were as follows:
 As of
 October 1,
2022
January 1,
2022
 (In thousands)
Accounts receivable$240,369 $185,599 
Unbilled accounts receivable153,376 155,689 
Long-term receivables9,473 5,098 
Total receivables403,218 346,386 
Less allowance for doubtful accounts(2,564)(3,692)
Total receivables, net$400,654 $342,694 
Cadence’s customers are primarily concentrated within the semiconductor and electronics systems industries. As of October 1, 2022 and January 1, 2022, no single customer accounted for 10% or more of Cadence’s total receivables.
NOTE 4. DEBT
Cadence’s outstanding debt as of October 1, 2022 and January 1, 2022 was as follows:
 October 1, 2022January 1, 2022
 (In thousands)
PrincipalUnamortized DiscountCarrying ValuePrincipalUnamortized DiscountCarrying Value
Revolving Credit Facility$150,000 $— $150,000 $ $— $ 
2024 Notes350,000 (1,794)348,206 350,000 (2,412)347,588 
2025 Term Loan300,000 (407)299,593    
Total outstanding debt$800,000 $(2,201)$797,799 $350,000 $(2,412)$347,588 
Revolving Credit Facility
In June 2021, Cadence entered into a five-year senior unsecured revolving credit facility with a group of lenders led by Bank of America, N.A., as administrative agent (the “2021 Credit Facility”). In September 2022, Cadence amended the 2021 Credit Facility to, among other things, allow Cadence to change its fiscal year to match the calendar year commencing in 2023 and change the interest rate benchmark for loans under the 2021 Credit Facility from LIBOR to Term SOFR. The material terms of the 2021 Credit Facility otherwise remain unchanged.
The 2021 Credit Facility provides for borrowings up to $700 million, with the right to request increased capacity up to an additional $350 million upon the receipt of lender commitments, for total maximum borrowings of $1.05 billion. The 2021 Credit Facility expires on June 30, 2026. Any outstanding loans drawn under the 2021 Credit Facility are due at maturity on June 30, 2026, subject to an option to extend the maturity date. Outstanding borrowings may be repaid at any time prior to maturity. Debt issuance costs of $1.3 million were recorded to other assets in Cadence’s condensed consolidated balance sheet at the inception of the agreement and are being amortized to interest expense over the term of the 2021 Credit Facility.
Interest accrues on borrowings under the 2021 Credit Facility at a rate equal to, at Cadence’s option, either (1) SOFR plus a margin between 0.750% and 1.250% per annum, determined by reference to the credit rating of Cadence’s unsecured debt, plus a SOFR adjustment of 0.10% or (2) the base rate plus a margin between 0.000% and 0.250% per annum, determined by reference to the credit rating of Cadence’s unsecured debt. As of October 1, 2022, the interest rate on the 2021 Credit Facility was 3.82%. Interest is payable quarterly. A commitment fee ranging from 0.070% to 0.175% is assessed on the daily average undrawn portion of revolving commitments.
The 2021 Credit Facility contains customary negative covenants that, among other things, restrict Cadence’s ability to incur additional indebtedness and grant liens. In addition, the 2021 Credit Facility contains financial covenants that require Cadence to maintain a funded debt to EBITDA ratio not greater than 3.25 to 1, with a step up to 3.75 to 1 for one year following an acquisition by Cadence of at least $250.0 million that results in a pro forma leverage ratio between 3.00 to 1 and 3.50 to 1. As of October 1, 2022, Cadence was in compliance with all financial covenants associated with the 2021 Credit Facility.
10


2024 Notes
In October 2014, Cadence issued $350.0 million aggregate principal amount of 4.375% Senior Notes due October 15, 2024 (the “2024 Notes”). Cadence received net proceeds of $342.4 million from the issuance of the 2024 Notes, net of a discount of $1.4 million and issuance costs of $6.2 million. Both the discount and issuance costs are being amortized to interest expense over the term of the 2024 Notes using the effective interest method. Interest is payable in cash semi-annually in April and October. The 2024 Notes are unsecured and rank equal in right of payment to all of Cadence’s existing and future senior indebtedness. The carrying value of the 2024 Notes was $348.2 million and $347.6 million as of October 1, 2022 and January 1, 2022, respectively. The fair value of the 2024 Notes was approximately $345.8 million as of October 1, 2022.
Cadence may redeem the 2024 Notes, in whole or in part, at a redemption price equal to the greater of (a) 100% of the principal amount of the notes to be redeemed, and (b) the sum of the present values of the remaining scheduled payments of principal and interest, plus any accrued and unpaid interest, as more particularly described in the indenture governing the 2024 Notes.
The indenture governing the 2024 Notes includes customary representations, warranties and restrictive covenants, including, but not limited to, restrictions on Cadence’s ability to grant liens on assets, enter into sale and lease-back transactions, or merge, consolidate or sell assets, and also includes customary events of default.
2025 Term Loan
In September 2022, Cadence entered into a $300.0 million three-year senior non-amortizing term loan facility due on September 7, 2025 with a group of lenders led by Bank of America, N.A., as administrative agent (the “2025 Term Loan”). The 2025 Term Loan is unsecured and ranks equal in right of payment to all of Cadence’s unsecured indebtedness. Proceeds from the loan were used to fund Cadence’s acquisition of OpenEye Scientific Software, Inc. (“OpenEye”).
Amounts outstanding under the 2025 Term Loan accrue interest at a rate equal to, at Cadence’s option, either (1) Term SOFR plus a margin between 0.625% per annum and 1.125% per annum, determined by reference to the credit rating of Cadence’s unsecured debt, plus a SOFR adjustment of 0.10% or (2) base rate plus a margin between 0.000% per annum and 0.125% per annum, determined by reference to the credit rating of Cadence’s unsecured debt. As of October 1, 2022, the interest rate on the 2025 Term Loan was 4.08%. Interest is payable quarterly. Borrowings bear interest at what is estimated to be current market rates of interest. Accordingly, the carrying value of the 2025 Term Loan approximates fair value.
The 2025 Term Loan contains customary negative covenants that, among other things, restrict Cadence’s ability to incur additional indebtedness, grant liens and make certain asset dispositions. In addition, the 2025 Term Loan contains a financial covenant that requires Cadence to maintain a funded debt to EBITDA ratio not greater than 3.25 to 1, with a step-up to 3.75 to 1 for one year following an acquisition by Cadence of at least $250.0 million that results in a pro forma leverage ratio between 3.00 to 1 and 3.50 to 1. As of October 1, 2022, Cadence was in compliance with all financial covenants associated with the 2025 Term Loan.

NOTE 5. ACQUISITIONS
Acquisition of OpenEye Scientific Software, Inc.
On August 31, 2022, Cadence acquired all of the outstanding equity of OpenEye, a leading provider of computational molecular modeling and simulation software used by pharmaceutical and biotechnology companies for drug discovery. The addition of OpenEye’s technologies and experienced team with its deep scientific expertise is expected to accelerate Cadence’s Intelligent System Design™ strategy and broadens Cadence’s System Design and Analysis technology portfolio. The acquisition expands Cadence’s total addressable market, bringing Cadence’s computational software expertise to apply proven algorithmic, simulation and solver advances to life sciences. The aggregate cash consideration for Cadence’s acquisition of OpenEye, net of cash acquired of $13.2 million, was $461.1 million. Subject to service and other conditions, Cadence expects to recognize expense for consideration paid to certain former OpenEye shareholders, now employed by Cadence, through the first quarter of fiscal 2026.
11


The total purchase consideration was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date as follows:
 Fair Value
 (In thousands)
Current assets$24,890 
Goodwill368,148 
Acquired intangibles117,400 
Other long-term assets6,542 
Total assets acquired516,980 
Current liabilities15,489 
Long-term liabilities27,225 
Total liabilities assumed42,714 
Total purchase consideration$474,266 
The allocation of purchase consideration to certain assets and liabilities has not been finalized. Cadence will continue to evaluate certain estimates and assumptions, primarily related to taxes and assumed liabilities, during the measurement period (up to one year from the acquisition date). The recorded goodwill is attributed to intangible assets that do not qualify for separate recognition, including the acquired assembled workforce, and will not be deductible for tax purposes.
Acquired Intangibles
 Fair ValueWeighted-Average Amortization Period
 (In thousands) (in years)
Existing technology$53,900 7.0 years
Agreements and relationships61,400 12.3 years
Tradenames, trademarks and patents2,100 7.0 years
Total acquired intangibles with definite lives$117,400 9.8 years
Acquisition of FFG Holdings Limited
On July 14, 2022, Cadence acquired all of the outstanding equity of FFG Holdings Limited (“Future Facilities”), a provider of electronics cooling analysis and energy performance optimization solutions for data center design and operations using physics-based 3D digital twins. The addition of Future Facilities’ technologies and expertise supports Cadence’s Intelligent System Design strategy and broadens its System Design and Analysis technology portfolio with the addition of solutions that enable companies to make informed business decisions about data center design, operations and lifecycle management that reduce their carbon footprint. The aggregate cash consideration for Cadence’s acquisition of Future Facilities, net of cash acquired of $2.8 million, was $100.1 million. Subject to service and other conditions, Cadence expects to recognize expense for consideration paid to certain former Future Facilities shareholders, now employed by Cadence, subject to service and other conditions, through the third quarter of fiscal 2025.
The total purchase consideration was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date as follows:
 Fair Value
 (In thousands)
Current assets$7,992 
Goodwill67,868 
Acquired intangibles38,100 
Other long-term assets3,102 
Total assets acquired117,062 
Current liabilities4,952 
Long-term liabilities9,210 
Total liabilities assumed14,162 
Total purchase consideration$102,900 
12


The allocation of purchase consideration to certain assets and liabilities has not been finalized. Cadence will continue to evaluate certain estimates and assumptions, primarily related to taxes and assumed liabilities, during the measurement period (up to one year from the acquisition date). The recorded goodwill is attributed to intangible assets that do not qualify for separate recognition, including the acquired assembled workforce and expected synergies from combining operations of Future Facilities with Cadence. The goodwill will not be deductible for tax purposes.
Acquired Intangibles
 Fair ValueWeighted-Average Amortization Period
 (In thousands) (in years)
Existing technology$20,900 6.0 years
Agreements and relationships15,600 9.0 years
Tradenames, trademarks and patents1,600 8.0 years
Total acquired intangibles with definite lives$38,100 7.3 years
Other Acquisitions
During the second quarter of fiscal 2022, Cadence completed one business combination for aggregate cash consideration of $25.0 million. The total purchase consideration was allocated to assets acquired based on their respective estimated fair values on the acquisition date. Cadence recorded $15.0 million of acquired intangible assets, which consisted of $8.2 million of existing technology and $6.8 million of in-process technology. Cadence also recognized $10.0 million of goodwill, which is primarily attributed to an assembled workforce. The goodwill recognized is expected to be deductible for tax purposes.
Pro Forma Financial Information
Cadence has not presented pro forma financial information for acquisitions completed during the first three quarters of fiscal 2022 because the results of operations from the acquired businesses are not material to Cadence’s condensed consolidated financial statements.
Transaction Costs
Transaction costs associated with acquisitions are included in general and administrative expense in Cadence’s condensed consolidated income statement. During the three and nine months ended October 1, 2022, transaction costs associated with acquisitions were $3.6 million and $10.1 million, respectively. During the three and nine months ended October 2, 2021, transaction costs associated with acquisitions were $0.1 million and $2.0 million, respectively.
NOTE 6. GOODWILL AND ACQUIRED INTANGIBLES
Goodwill
The changes in the carrying amount of goodwill during the nine months ended October 1, 2022 were as follows:
 Gross Carrying
Amount
 (In thousands)
Balance as of January 1, 2022$928,358 
Goodwill resulting from acquisitions446,000 
Effect of foreign currency translation(25,864)
Balance as of October 1, 2022$1,348,494 
13


Acquired Intangibles, Net
Acquired intangibles as of October 1, 2022 were as follows, excluding intangibles that were fully amortized as of January 1, 2022:
Gross Carrying
Amount
Accumulated
Amortization
Acquired
Intangibles, Net
 (In thousands)
Existing technology$468,489 $(267,918)$200,571 
Agreements and relationships269,597 (133,089)136,508 
Tradenames, trademarks and patents12,545 (2,512)10,033 
Total acquired intangibles with definite lives750,631 (403,519)347,112 
In-process technology6,800 — 6,800 
Total acquired intangibles$757,431 $(403,519)$353,912 
In-process technology as of October 1, 2022 consisted of acquired projects that, if completed, will contribute to Cadence’s existing product offerings. As of October 1, 2022, these projects were expected to be completed during the fourth quarter of fiscal 2023. During the three and nine months ended October 1, 2022, there were no transfers from in-process technology to existing technology.
Acquired intangibles as of January 1, 2022 were as follows, excluding intangibles that were fully amortized as of January 2, 2021:
Gross Carrying
Amount
Accumulated
Amortization
Acquired
Intangibles, Net
 (In thousands)
Existing technology$405,481 $(254,599)$150,882 
Agreements and relationships205,057 (130,187)74,870 
Tradenames, trademarks and patents10,666 (3,153)7,513 
Total acquired intangibles$621,204 $(387,939)$233,265 
Amortization expense from existing technology and maintenance agreements is included in cost of product and maintenance. Amortization expense for the three and nine months ended October 1, 2022 and October 2, 2021 by condensed consolidated income statement caption was as follows:
 Three Months Ended Nine Months Ended
 October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
 (In thousands)
Cost of product and maintenance$8,867 $11,774 $30,906 $35,774 
Amortization of acquired intangibles3,946 5,000 13,543 14,661 
Total amortization of acquired intangibles$12,813 $16,774 $44,449 $50,435 
As of October 1, 2022, the estimated amortization expense for intangible assets with definite lives was as follows for the following five fiscal years and thereafter:
 (In thousands)
2022 - remaining period$14,870 
202356,040 
202454,280 
202542,213 
202636,298 
202734,056 
Thereafter109,355 
Total estimated amortization expense$347,112 
14


NOTE 7. STOCK-BASED COMPENSATION
Stock-based compensation expense is reflected in Cadence’s condensed consolidated income statements for the three and nine months ended October 1, 2022 and October 2, 2021 as follows:
Three Months Ended Nine Months Ended
October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
(In thousands)
Cost of product and maintenance$1,046