Our operating results could be adversely affected by an increase in our effective tax rate as a result of tax law changes, outcomes of current or future tax examinations, or by material differences between our forecasted and actual effective tax rates.

changes in tax laws or the interpretation of such tax laws in the United States, Ireland, Hungary, the United Kingdom, China, Republic of Korea, India or other international locations where we have operations;

~~earnings being lower than anticipated in countries where we are taxed at lower rates as compared to the United States federal and state statutory tax rates;~~

~~an increase in expenses not deductible for tax purposes;~~

~~changes in tax benefits from stock-based compensation;~~

~~changes in the valuation allowance against our deferred tax assets;~~

~~changes in judgment from the evaluation of new information that results in a recognition, derecognition or change in measurement of a tax position taken in a prior period;~~

~~increases to interest or penalty expenses classified in the financial statements as income taxes;~~

~~new accounting standards or interpretations of such standards;~~

~~a change in our decision to indefinitely reinvest foreign earnings outside the United States; or~~

~~results of examinations by the Internal Revenue Service, or IRS, state, and foreign tax or other governmental authorities.~~

The IRS and other tax authorities regularly examine our income tax returns and other non-income tax returns, such as payroll, sales, use, value-added, net worth or franchise, property, goods and services, consumption, import, stamp, and excise taxes, in both the United States and foreign jurisdictions. The calculation of our provision for income taxes and our accruals for other taxes requires us to use significant judgment and involves dealing with uncertainties in the application of complex tax laws and regulations. In determining the adequacy of our provision for income taxes, we regularly assess the potential settlement outcomes resulting from income tax examinations. However, the final outcome of tax examinations, including the total amount payable or the timing of any such payments upon resolution of these issues, cannot be estimated with certainty. In addition, we cannot be certain that such amount will not be materially different from the amount that is reflected in our historical income tax provisions and accruals for other taxes. Should the IRS or other tax authorities assess additional taxes, penalties or interest as a result of a current or a future examination, we may be required to record charges to operations in future periods that could have a material impact on our results of operations, financial position or cash flows in the applicable period or periods.

Forecasts of our annual effective tax rate are complex and subject to uncertainty because our income tax position for each year combines the effects of estimating our annual income or loss, the mix of profits and losses earned by us and our subsidiaries in tax jurisdictions with a broad range of income tax rates, as well as benefits from available deferred tax assets, the impact of various accounting rules and results of tax audits. Forecasts of our annual effective tax rate do not include the anticipation of future tax law changes. In addition, we account for certain tax benefits from stock-based compensation in the period the stock compensation is settled, which may cause increased variability in our quarterly effective tax rates. If there were a material difference between forecasted and actual tax rates, then it could have a material impact on our results of operations.

~~Tax laws, regulations, and enforcement practices are evolving and may have a material adverse effect on our results of operations, cash flows and financial position.~~

Tax laws, regulations, and administrative practices in various jurisdictions are evolving and may be subject to significant changes due to economic, political, and other conditions. There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes. Governments are increasingly focused on ways to increase tax revenues, particularly from multinational corporations, which may lead to an increase in audit activity and harsher positions taken by tax authorities. We are currently subject to tax audits in various jurisdictions, including Germany, India, Israel and the Republic of Korea, and these jurisdictions may assess additional tax liabilities against us.

The current U.S. administration and certain members of Congress have made public statements indicating that corporate tax reform is a priority. Changes to U.S. tax laws could materially affect the tax treatment of our domestic and foreign earnings. The Organisation for Economic Co-operation and Development, an international association of 34 countries, including the United States, released the final reports from its Base Erosion and Profit Shifting, or BEPS, Action Plans, which aim to standardize and modernize global tax policies. The BEPS Action Plans propose revisions to numerous tax rules, including country-by-country reporting, permanent establishment, hybrid entities and instruments, transfer pricing, and tax treaties. The BEPS Action Plans have been or are being enacted by countries where we have operations. The European Commission has conducted investigations in multiple countries focusing on whether local country tax rulings provide preferential tax treatment that violates European Union state aid rules and concluded that certain countries, including Ireland, have provided illegal state aid in certain cases.

Developments in relevant tax laws, regulations, administrative practices and enforcement practices could have a material adverse effect on our operating results, financial position and cash flows, including the need to obtain additional financing.

~~Our stock price has been subject to fluctuations and may continue to be subject to fluctuations.~~

The market price of our common stock has experienced fluctuations and may fluctuate or decline in the future, and as a result you could lose the value of your investment. The market price of our common stock may be affected by a number of factors, including:

~~quarterly or annual operating or financial results or forecasts that fail to meet or are inconsistent with earlier projections or the expectations of our securities analysts or investors;~~

~~changes in our forecasted bookings, revenue, earnings or operating cash flow estimates;~~

~~an increase in our debt or other liabilities;~~

~~market conditions in the IC, electronics systems and semiconductor industries;~~

~~announcements of a restructuring plan;~~

~~changes in management;~~

~~repurchases of shares of our common stock or changes to plans to repurchase shares of our common stock;~~

~~a gain or loss of a significant customer or market segment share;~~

~~litigation; and~~

~~announcements of new products or acquisitions of new technologies by us, our competitors or our customers.~~

In addition, equity markets in general, and the equities of technology companies in particular, have experienced and may experience in the future, extreme price and volume fluctuations due to, among other factors, the actions of market participants or other actions outside of our control. Such price and volume fluctuations may adversely affect the market price of our common stock for reasons unrelated to our business or operating results.

~~Our future revenue is dependent in part upon our installed customer base continuing to license or buy products and purchase services.~~

Our installed customer base has traditionally generated additional new license, service and maintenance revenues. In future periods, customers may not necessarily license or buy additional products or contract for additional services or maintenance. Our customers, many of which are large semiconductor and systems companies, often have significant bargaining power in negotiations with us. Customer consolidation can reduce the total level of purchases of our software, hardware, IP and services, and in some cases, increase customers’ bargaining power in negotiations with their suppliers, including us.

We could suffer serious harm to our business because of the infringement of our intellectual property rights by third parties or because of our infringement of the intellectual property rights of third ~~parties.~~parties, as well as any associated efforts to enforce such rights, including through intellectual property litigation.

There are numerous patents relating to our business and ecosystem. New patents are being issued at a rapid rate and are owned by ~~EDA~~computational software companies as well as entities and individuals outside the ~~EDA industry,~~computational software field, including parties whose income is primarily derived from infringement-related licensing and litigation. It is not always practicable or possible to determine in advance whether a product or any of its components infringes the patent rights of others. As a result, from time to time, we may be compelled to respond to or prosecute intellectual property infringement claims to protect our rights or defend a customer’s rights.

Intellectual property infringement claims, including contractual defense reimbursement obligations related to third-party claims against our customers, regardless of merit, could consume valuable management time, result in costly litigation or cause product shipment delays, all of which could seriously harm our business, operating results or financial condition. The risk of infringement and related indemnification claims associated with design IP products that are incorporated into a customer product broadly used by consumers may be higher than the risk associated with our software products. In settling these claims, we may be required to enter into royalty or licensing agreements with the third parties claiming infringement. These royalty or licensing agreements, if available, may not have terms favorable to us. Being compelled to enter into a license agreement with unfavorable terms could seriously harm our business, operating results or financial condition.

Any potential intellectual property litigation could compel us to do one or more of the following:

•pay damages (including the potential for treble damages), license fees or royalties (including royalties for past periods) ~~to the party claiming infringement;~~;

•stop licensing products or providing services that use the challenged intellectual property;

•obtain a license ~~from the owner of the infringed intellectual property~~ to sell or use the relevant technology, which license may not be available on reasonable terms, or at all; or

•redesign the challenged technology, which could be time consuming and costly, or impossible.

If we were compelled to take any of these actions, our business, reputation or operating results ~~may~~might suffer.

If our security measures are breached or vulnerabilities are discovered in our products and services, and an unauthorized party obtains access to customer data, financial data or assets or our proprietary business information, our information systems and products and services may be perceived as being unsecure, ~~which~~we could experience business or financial harm, and our business and ~~reputation.~~reputation could be harmed.

Our products and services involve ~~the~~storage, including cloud-based storage, and transmission of our proprietary information and that of our customers. ~~We have offices throughout the world, including key research and development facilities outside of the United States.~~ Our operations are dependent upon the connectivity of our operations throughout the world. Despite our security measures, our information technology and infrastructure, as well as our products and services, may be vulnerable to cyber attacks by unauthorized third parties (which may include nation-states and individuals sponsored by them) or ~~breached,~~breaches due to employee error, malfeasance or other vulnerabilities or disruptions, which could result in unauthorized disclosure of sensitive information and could significantly interfere with our business ~~operations.~~operations or those of our customers. Third parties attempt to gain unauthorized access through a variety of methods (such as the use of viruses, malware, ransomware, phishing, denial of service attacks and other cyber attacks) and corrupt the processes of the products and services that we provide. We may also be a target of malicious attacks in an attempt to gain access to our network, including our Cadence Cloud portfolio, which includes both our managed and customer-managed environments, or data centers or those of our customers or end users; steal proprietary information related to our business, products, services or infrastructure; steal financial data or assets or interrupt our systems and services or those of our customers or others. Breaches of our security measures or vulnerabilities in our products or services could expose us to a risk of loss or misuse of this information, loss of financial assets, business interruption, litigation and potential liability. Because techniques used to obtain unauthorized access or to sabotage information systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventive measures. Furthermore, we have and may continue to acquire companies with less sophisticated security measures and that have had or may experience in the future cybersecurity incidents causing business or financial harm. In addition, if we select a vendor that uses ~~cyber~~cloud storage of information as part of their service or product offerings or are selected as a vendor for our Cadence Cloud portfolio, despite our attempts to validate the security of such services, our proprietary information may be misappropriated by third parties. In the event of an actual or perceived breach of our security, or the security of one of our vendors, the market perception of the effectiveness of our security measures could be harmed, legal or regulatory actions could be initiated against us and we could suffer damage to our reputation or our business, or lose existing customers and our ability to obtain new ~~customers.~~customers (including government customers), or suffer harm to our financial condition.

Risks associated with our international operations could adversely impact our financial condition.

A significant amount of our revenue is derived from our international operations, and we have offices throughout the world, including key research and development facilities outside of the United States. Our international operations may be subject to a number of risks, including:

shifts in political, trade or other policies resulting from the results of certain elections or votes, such as changes in policies pursued by the United States, and the United Kingdom’s withdrawal from the European Union;

~~the adoption or expansion of~~ •government trade restrictions, including tariffs, ~~and~~export or import regulations, sanctions or other trade ~~barriers;~~barriers, including licensing requirements for exports, which may lengthen the sales cycle or restrict or prohibit the sale or licensing of certain products;

•limitations on repatriation of ~~earnings;~~

~~limitations~~earnings and on the conversion of foreign currencies;

•reduced protection of intellectual property rights ~~in some countries;~~and heightened exposure to intellectual property theft;

~~performance of national economies;~~

•longer collection periods for receivables and greater difficulty in collecting accounts receivable;

•difficulties in managing foreign operations;

•political and economic instability;

•unexpected changes in regulatory requirements;

•inability to continue to offer competitive compensation in certain growing regions;

•differing employment practices and labor issues;

•United States’ and other governments’ licensing requirements for exports, which may lengthen the sales cycle or restrict or prohibit the sale or licensing of certain products; ~~and~~

•variations in costs or expenses associated with our international operations, including as a result of changes in foreign tax laws or devaluation of the U.S. dollar relative to other foreign ~~currencies.~~currencies; and

•public health emergencies, such as the recent COVID-19 pandemic and the subsequent public health measures, including restrictions on travel between jurisdictions in which we and our customers and suppliers operate.

Some of our international research and development and other facilities are in parts of the world where there may be a greater risk of business interruption as a result of political instability, terrorist acts or military conflicts than businesses located domestically. Furthermore, this potential harm is exacerbated because damage to or disruptions at our international research and development facilities could have a more significant adverse effect on our ability to develop new or improve existing products than other businesses that may only have sales offices or other less critical operations abroad. We are not insured for losses or interruptions caused by acts of war. Furthermore, our operations are dependent upon the connectivity of our operations throughout the world. Activities that interfere with our international connectivity or operations, such as cyber hacking, the introduction of a virus into our computer systems, natural disasters, public health emergencies, civil unrest or terrorism, could significantly interfere with our business operations.

In addition, internal controls, policies and procedures and employee training and compliance programs that we have implemented to deter prohibited practices may not prevent our employees, contractors or agents from violating or circumventing our policies and the laws and regulations applicable to our worldwide operations.

We depend upon our management team and key employees, and our failure to attract, train, motivate and retain management and key employees may make us less competitive and therefore harm our results of operations.

Our business depends upon the continued services, efforts and abilities of our senior management and other key employees. Competition for highly skilled executive officers and employees can be intense, particularly in geographic areas recognized as high technology centers ~~such as the Silicon Valley area, where our principal offices are located, and in other locations~~ where we maintain facilities. In addition, competition for qualified personnel, including software engineers, in the EDA, commercial electronics engineering services and IP industries has intensified. Further, increased uncertainty regarding social, political and immigration policies in the United States and abroad may make it difficult to recruit employees with adequate experience; and governmental policies resulting in increased funding of domestic technology companies, such as China’s stated national policy to be a global leader in all segments of the semiconductor industry by 2030, has caused and may continue to cause difficulty in retaining and attracting local talent. We may also experience increased compensation costs that are not offset by either improved productivity or higher sales. We may not be successful in recruiting new personnel and in training, retaining and motivating existing personnel. Our ability to do so also depends on how well we maintain a strong workplace culture that is attractive to employees, particularly as we transition employees back to the office, and hiring and training of new employees may be adversely impacted by global economic uncertainty and office closures. From time to time, there may be changes in our management team resulting from the hiring and departure of executive officers, and as a result, we may experience disruption to our business that may harm our operating results and our relationships with our employees, customers and suppliers may be adversely affected.

To attract, retain and motivate individuals with the requisite expertise, we may be required to grant large numbers of stock options or other stock-based incentive awards, which may be dilutive to existing stockholders and increase compensation expense, and pay significant base salaries and cash bonuses, which could harm our operating results. The high cost of training new employees, not fully utilizing these employees, or losing trained employees to competing employers could also reduce our operating margins and harm our business or operating results.

In addition, applicable rules and regulations require stockholder approval for new equity compensation plans and significant amendments to existing equity compensation plans (including increases in shares available for issuance under such plans), and prohibit publicly-traded companies from giving a proxy to vote on equity compensation plans unless the beneficial owner of the shares has given voting instructions. These rules and regulations could make it more difficult for us to grant equity compensation to employees in the future. To the extent that these regulations make it more difficult or expensive to grant equity compensation to employees, we may incur increased compensation costs or find it difficult to attract, retain and motivate employees, which could materially and adversely affect our business.

We rely on our proprietary technology, as well as software and other intellectual property rights licensed to us by third parties, and we cannot assure ~~you~~ that the precautions taken to protect our rights will be adequate or that we will continue to be able to adequately secure such intellectual property rights from third parties.

Our success depends, in part, upon our proprietary technology. We generally rely on patents, copyrights, trademarks, trade secrets, licenses and restrictive agreements to establish and protect our proprietary rights in technology and products. Despite the precautions we may take to protect our intellectual property, third parties have tried in the past, and may try in the future, to challenge, invalidate or circumvent these safeguards. Our patents and other intellectual property rights may not provide us with sufficient competitive advantages. Patents may not be issued on any of our pending applications and our issued patents may not be sufficiently broad to protect our technology. Furthermore, the laws of foreign countries may not protect our proprietary rights in those countries to the same extent as applicable law protects these rights in the United ~~States.~~States, and we may encounter difficulties in our attempts to protect our intellectual property in foreign jurisdictions, including as a result of impacts from changes in international trade relationships. The protection of our intellectual property may require the expenditure of significant financial and managerial resources. Moreover, the steps we take to protect our intellectual property may not adequately protect our rights, or deter or prevent third parties from infringing or misappropriating our proprietary rights.

Many of our products include software or other intellectual property licensed from third parties. We may have to seek new or renew existing licenses for such software and other intellectual property in the future. Our engineering services business holds licenses to certain software and other intellectual property owned by third parties, including that of our competitors. Our failure to obtain software, other intellectual property licenses or other intellectual property rights that are necessary or helpful for our business on favorable terms, or our need to engage in litigation over these licenses or rights, could seriously harm our business, operating results or financial condition.

We have substantial cash requirements in the United States, but a significant portion of our cash is held and generated outside of the United States, and if our cash available in the United States ~~and the cash available under our revolving credit facility are~~is insufficient to meet our operating expenses and debt repayment obligations in the United States, then we may be required to raise cash in ways that could negatively affect our financial condition, results of operations and the market price of our common stock.

We have significant operations outside the United States. As of ~~September 30, 2017,~~July 3, 2021, approximately ~~73%~~61% of our cash and cash equivalents ~~and short-term investments~~ balance was held by subsidiaries outside the United States, with the remainder of the balance held by us or our subsidiaries in the United States. WeWhile we believe that the combination of our current U.S. cash and cash equivalents, future U.S. operating cash flows ~~cash available under our revolving credit facility~~ and other cash that may be accessible to us on attractive terms are sufficient to meet our ongoing U.S. operating expenses and debt repayment ~~obligations. However,~~obligations, we cannot accurately predict the full impact that COVID-19 may have on our cash flows. In addition, although the U.S. Tax Cuts and Jobs Act (the “Tax Act”) may have reduced the tax impact of repatriation of foreign earnings, there are still administrative processes associated with repatriation of foreign earnings that could affect the timing of returning cash to the U.S. from non-U.S. jurisdictions. Accordingly, if ~~these sources of~~our U.S. cash were insufficient to meet our future funding obligations in the United States, we could be required to seek funding sources on less attractive terms, which could negatively impact our results of operations, financial position and the market price of our common stock.

The long sales cycle of our products and services may cause our operating results to fluctuate unexpectedly.

Generally, we have a long sales cycle that can extend up to six months or longer. The complexity and expense associated with our products and services generally require a lengthy customer education, evaluation and approval process. Consequently, we may incur substantial expenses and devote significant management effort and expense to develop potential relationships that do not result in agreements or revenue and may prevent us from pursuing other opportunities.

In addition, sales of our products and services have been and may in the future be delayed if customers delay approval or commencement of projects because of:

•the timing of customers’ competitive evaluation processes; or

•customers’ budgetary constraints and budget cycles.

Long sales cycles for hardware products subject us to a number of significant risks over which we have limited control, including insufficient, excess or obsolete inventory, variations in inventory valuation and fluctuations in quarterly operating results.

Our restructuring plans incur substantial costs and may not result in the benefits we have anticipated, possibly having a negative effect on our future operating results.

In recent fiscal years, we have initiated restructuring plans in an effort to better align our resources with our business strategy. We incur substantial costs to implement restructuring plans, and our restructuring activities may subject us to reputational risks and litigation risks and expenses. Our past restructuring plans do not provide any assurance that we will realize anticipated cost savings and other benefits or that additional restructuring plans will not be required or implemented in the future. In addition, our restructuring plans may have other consequences, such as attrition beyond our planned reduction in workforce, a negative effect on employee morale and productivity or our ability to attract highly skilled employees. Our competitors may also use our restructuring plans to seek to gain a competitive advantage over us. As a result, our restructuring plans may affect our revenue and other operating results in the future.

The investment of our cash is subject to risks that may cause losses and affect the liquidity of these investments.

Our marketable investments include various money market funds and may include other investments as well. Weakened financial markets have at times adversely impacted the general credit, liquidity, market prices and interest rates for these and other types of investments. Additionally, changes in monetary policy by the Federal Open Market Committee or other relevant regulators and concerns about the rising U.S. government debt level may cause a decrease in the purchasing power of the U.S. dollar and adversely affect our investment portfolio. The financial market and monetary risks associated with our investment portfolio may have a material adverse effect on our financial condition, liquidity, results of operations or cash flows.

Our business is subject to the risk of natural disasters.

Our corporate headquarters, including certain of our research and development operations and certain of our distribution facilities, is located in the Silicon Valley area of Northern California, a region known to experience seismic activity and wildfires. If significant seismic activity or wildfires were to occur or reoccur, our operations may be interrupted, which could adversely impact our business and results of operations.

Our offices in the United States and in other countries around the world may also be adversely impacted by natural disasters, including fires, earthquakes, extreme temperatures, droughts, flooding and other climate change-related risks, or actions by utility providers, as well as other catastrophic events such as an actual or threatened public health emergency. If a catastrophic event occurs at or near any of our offices, or utility providers or public health officials take certain actions (e.g., shut off power to our facilities or impose travel restrictions), our operations may be interrupted, which could adversely impact our business and results of operations. If a catastrophic event impacts a significant number of our customers, resulting in decreased demand for their and our products, or our ability to provide services and maintenance to our customers, our business and results of operations could be adversely impacted.

Risks Related to Customers, Suppliers and Industry Competition

Customer consolidation could affect our operating results.

There has been a trend toward customer consolidation in the semiconductor industry through business combinations, including mergers, asset acquisitions and strategic partnerships. If this trend continues, it could make us more dependent on fewer customers who may be able to exert increased pressure on our prices and other contract terms and could increase the portion of our total sales concentration for any single customer. Customer consolidation activity could also reduce the demand for our products and services if such customers streamline research and development or operations, reduce purchases or delay purchasing decisions. These outcomes could negatively impact our operating results and financial condition.

Our failure to respond quickly to technological developments or customers’ increasing technological requirements and to continue to develop or acquire technological capabilities could make our products uncompetitive and obsolete and impede our ability to address the requirements in technology segments that are expected to contribute to our growth.

Our strategy is designed to increase our business among electronic systems companies, which are now developing their own ICs and other electronic subsystems. Our strategy is also intended to increase our business among semiconductor companies, which are increasing their contribution to the end products into which their ICs and other electronic subsystems are incorporated. Part of this strategy involves addressing the needs across a variety of vertical markets including consumer, hyperscale computing, mobile, 5G communications, automotive, aerospace and defense, industrial and healthcare, where increased investment is expected by our customers. Each of these markets require technologies, expertise, and marketing and operations infrastructure that are application-specific. Our inability to develop or acquire these application-specific capabilities, it could impede our ability to expand our business in these categories and ultimately affect our future growth. Currently, the industries we serve are experiencing the following trends:

•changes in the design and manufacturing of ICs, including migration to advanced-process nodes and three-dimensional transistors, such as FinFETs, present major challenges to the semiconductor industry, particularly in IC design, design automation, design of manufacturing equipment, and the manufacturing process itself. With migration to advanced-process nodes, the industry must adapt to more complex physics and manufacturing challenges, such as the need to draw features on silicon that are many times smaller than the wavelength of light used to draw the features via lithography. Models of each component’s electrical properties and behavior also become more complex as do requisite analysis, design, verification and manufacturing capabilities. Novel design tools and methodologies must be invented and enhanced quickly to remain competitive in the design of electronics in the smallest nanometer ranges;

•the ability to design SoCs increases the complexity of managing a design that, at the lowest level, is represented by billions of shapes on fabrication masks. In addition, SoCs typically incorporate microprocessors and DSPs that are programmed with software, requiring simultaneous design of the IC and the related software embedded on the IC;

•with the availability of seemingly endless gate capacity, there is an increase in design reuse, or the combining of off-the-shelf design IP with custom logic to create ICs or SoCs. The unavailability of a broad range of high-quality design IP (including our own) that can be reliably incorporated into a customer’s design with our software products and services could lead to reduced demand for our products and services;

•increased technological capability of the FPGA logic chip, which creates an alternative to IC implementation for some companies and could reduce demand for our IC implementation products and services;

•a growing number of low-cost engineering service businesses could reduce the need for some IC companies to invest in EDA products;

•adoption of cloud computing technologies with accompanying new engagement models for an increasing number of software categories may impact our business;

•integration and optimization of solutions for system design with core EDA technologies could result in reduced demand for our broad portfolio;

•with Moore's Law slowing, the trend towards on-chip integration could change the required product mix and impact the need for system-on-chip integration; and

•changing end-user dynamics in our eight target technology verticals - consumer, hyperscale computing, mobile, 5G communications, automotive, aerospace and defense, industrial and healthcare - could advance the need from simple ICs to ~~repatriate dividends~~full-system design and analysis capabilities that require increasingly complex computational software-based solutions.

If we are unable to respond quickly and successfully to these trends, we may lose our competitive position, and our products or technologies may become obsolete. To compete successfully, we must develop, acquire or license new products and improve our existing products and processes on a schedule that keeps pace with technological developments and the requirements for products addressing a broad spectrum of designers and designer expertise in our industries. We must provide frequent and relevant updates to our software products in order to provide substantial benefit to the customer throughout the license periods because of the rapid changes in our customers’ industries. The market must also accept our new and improved products. Our hardware platforms must be enhanced periodically to reduce the likelihood that a competitor surpasses the capabilities we offer. Our introduction of new products could reduce the demand and revenue of our older products or affect their pricing. We must also be able to support a range of changing computer software, hardware platforms and customer preferences. A transition by our customers to different business models associated with cloud computing technologies could result in reduced revenue. We cannot guarantee that we will be successful in keeping pace with all, or any, of the customer trends.

We have invested and expect to continue to invest in research and development efforts for new and existing products and technologies and technical sales support. Such investments may affect our operating results, and, if the return on these investments is lower or develops more slowly than we expect, our revenue and operating results may suffer.

We have invested and expect to continue to invest in research and development for new and existing products, technologies and services in response to our customers’ increasing technological requirements. Such investments may be in related areas, such as technical sales support, and may include increases in employee headcount. These investments may involve significant time, risks and uncertainties, including the risk that the expenses associated with these investments may affect our margins and operating results and that such investments may not generate sufficient revenues to offset liabilities assumed and expenses associated with these new investments. We believe that we must continue to invest a significant amount of time and resources in our research and development efforts and technical sales support to maintain and improve our competitive position. If we do not achieve the benefits anticipated from ~~foreign operations,~~these investments, if the achievement of these benefits is delayed, or if customers reduce or slow the need to upgrade or enhance their computational software products and design flows, our revenue and operating results may be adversely affected.

Our operating results and revenue could be adversely affected by customer payment delays, customer bankruptcies and defaults or modifications of licenses.

Our customers have and may continue to face challenging financial or operating conditions, including due to macroeconomic conditions or catastrophic events such as the COVID-19 pandemic, and delay or default on their payment commitments to us, request to modify contract terms, or modify or cancel plans to license our products. Our customers’ inability to fulfill payment commitments, in turn, could adversely affect our revenue, operating expenses and cash flow. Additionally, our customers have, in the past, sought, and may, in the future, seek, to renegotiate pre-existing contractual commitments. Payment defaults by our customers or significant reductions in existing contractual commitments could have a material adverse effect on our financial condition and operating results.

Competitive pressures may require us to reduce our pricing, which could have an adverse effect on our results of operations.

The highly competitive markets in which we do business can put pressure on us to reduce the prices of our software, emulation and prototyping hardware and IP. If our competitors offer significant discounts on certain products in an effort to recapture or gain market share or to sell other software or hardware products, we may then need to lower our prices or offer other favorable terms to compete successfully. Any such changes would be likely to reduce our profit margins and could adversely affect our operating results. Any substantial changes to our prices and pricing policies could cause revenues to decline or be delayed as our sales force implements and our customers adjust to the new pricing policies. Some of our competitors bundle products for promotional purposes or as a long-term pricing strategy or provide guarantees of prices and product implementations. These practices could, over time, significantly constrain the prices that we can charge for our products.

The competition in our industries is substantial, and we may not be able to continue to compete successfully in our industries.

The industries in which we do business, including software, hardware, IP and services for enabling the design of electronic products, are highly competitive and require us to identify and develop or acquire innovative and cost-competitive products, integrate them into platforms and market them in a timely manner. We may not be able to compete successfully in these industries, which could seriously harm our business, operating results or financial condition. Factors that could affect our ability to compete successfully include:

•the development by others of competitive products or platforms and engineering services, possibly resulting in a shift of customer preferences away from our products and services and significantly decreased revenue;

•aggressive pricing competition by some of our competitors may cause us to lose our competitive position, which could result in lower revenues or profitability and could adversely impact our ability to realize the revenue and profitability forecasts for our software or emulation and prototyping hardware systems products;

•the challenges of advanced-node design may lead some customers to work with more mature, less risky manufacturing processes that may reduce their need to upgrade or enhance their EDA products and design flows;

•the challenges of developing (or acquiring externally developed) technology solutions that are adequate and competitive in meeting the rapidly evolving requirements of next-generation design challenges;

•intense competition to attract acquisition targets, possibly making it more difficult for us to acquire companies or technologies at an acceptable price, or at all;

•new entrants, including larger electronic systems companies, in our industry;

•the combination of our competitors or collaboration among many companies to deliver more comprehensive offerings than they could individually;

•decisions by electronics manufacturers to perform engineering services or IP development internally, rather than purchase these services from outside vendors due to budget constraints or excess engineering capacity; and

•actions by regulators to limit the contractual terms that either we or our customers can apply to product and service offerings.

We compete most frequently with Synopsys, Inc., Siemens EDA, and ANSYS, Inc., and also with numerous other tools providers, electronics device manufacturers with their own EDA capabilities, technical or computational software companies, electronics design and consulting companies, and other IP companies. These include U.S. based companies such as Keysight Technologies, Inc. and CEVA, Inc., and foreign companies such as Altium Limited (Australia), Zuken Ltd. (Japan), and emerging competitors in China like Huada Empyrean, Xpeedic, X-EPIC, Primarius and Giga-DA.

Our future revenue is dependent in part upon our installed customer base continuing to license or buy products and purchase services.

Our installed customer base has traditionally generated additional new license, services and maintenance revenues. In future periods, customers may not necessarily license or buy additional products or contract for additional services or maintenance. Our customers, many of which are large semiconductor and systems companies, often have significant bargaining power in negotiations with us. Customer consolidation can reduce the total level of purchases of our software, hardware, IP and services, and in some cases, increase customers’ bargaining power in negotiations with their suppliers, including us.

We depend on a single supplier or a limited number of suppliers for certain hardware components and contract manufacturers for production of our emulation and prototyping hardware products, making us vulnerable to supply disruption and price fluctuation.

Our reliance on single or a limited number of suppliers and contract manufacturers for certain hardware components and contract manufacturers for production of our emulation and prototyping hardware products could result in product delivery problems and delays and reduced control over product pricing and quality. Though we prefer to have multiple sources to procure certain key components, in some cases it is not practical or feasible to do so. We may suffer a disruption in the supply of certain hardware components if we are unable to purchase sufficient components on a timely basis or at all for any reason. Any supply or manufacturing disruption, including delay in delivery of components by our suppliers or products by our manufacturers, or the bankruptcy, shutdown or upstream supply chain issues of our suppliers or manufacturers, could delay our production process and prevent us from delivering completed hardware products to customers or from supplying new evaluation units to customers, which could have a negative impact on our revenue and operating results. For example, the global semiconductor shortage in 2021 has and may continue to negatively ~~affect~~impact multiple segments of the semiconductor industry, including our customers.

Tax, Regulatory and Litigation Risks

Our results could be adversely affected by an increase in our effective tax rate as a result of U.S. and foreign tax law changes, outcomes of current or future tax examinations, or by material differences between our forecasted and actual effective tax rates.

Tax laws, regulations, and administrative practices in various jurisdictions are evolving and may be subject to significant changes due to economic, political and other conditions including the fiscal impacts caused by the COVID-19 pandemic. Governments, including the United States, are increasingly focused on ways to increase tax revenues, particularly from multinational corporations, which may lead to changes in tax laws, an increase in audit activity and harsher positions taken by tax authorities. We are currently subject to tax audits in various jurisdictions and these jurisdictions may assess additional tax liabilities against us.

Our operations are subject to income and transaction taxes in the United States and in multiple foreign jurisdictions, with a significant amount of our foreign earnings generated by our subsidiaries organized in Ireland and Hungary. Any significant change in our future effective tax rates could adversely impact our results of operations, cash flows and financial position. Our future effective tax rates could be adversely affected by factors that include, but are not limited to, mandatory capitalization of research and development expenses beginning in fiscal 2022, changes in tax laws or the interpretation of such tax laws in jurisdictions in which we have business activity, earnings being lower than anticipated in jurisdictions with low statutory tax rates, changes in tax benefits from stock-based compensation, changes in the valuation of our deferred tax assets and liabilities, changes in our recognition or measurement of a tax position taken in a prior period, increases to interest or penalty expenses, new accounting standards or interpretations of such standards, or results of examinations by the Internal Revenue Service (“IRS”), state, and foreign tax or other governmental authorities.

The IRS and other tax authorities regularly examine our income tax returns and other non-income tax returns, such as payroll, sales, use, value-added, net worth or franchise, property, goods and services, consumption, import, stamp, and excise taxes, in both the United States and foreign jurisdictions. The calculation of our provision for income taxes and our accruals for other taxes requires us to use significant judgment and involves dealing with uncertainties in the application of complex tax laws and regulations. In determining the adequacy of our provision for income taxes, we regularly assess the potential settlement outcomes resulting from income tax examinations. However, the final outcome of tax examinations cannot be estimated with certainty and could be materially different from the amount that is reflected in our historical income tax provisions and accruals for other taxes. Should the IRS or other tax authorities assess additional taxes, penalties or interest as a result of a current or a future examination, we may be required to record charges to operations in future periods that could have a material impact on our results of operations, financial position or cash flows in the applicable period or periods.

The current U.S. presidential administration has proposed several corporate tax increases, including raising the U.S. corporate income tax rate and greater taxation of international income, that, if enacted, would increase our tax liability. In addition, the Organisation for Economic Co-operation and Development (“OECD”) has been evaluating new rules to provide greater taxing rights to jurisdictions where customers or users are located and the introduction of a corporate global minimum tax. Furthermore, many countries have enacted or proposed new laws to tax digital transactions. These developments in tax laws and regulations, and compliance with these rules, could have a material adverse effect on our operating results, financial position and cash flows.

Forecasts of our annual effective tax rate are complex and subject to uncertainty because our income tax position for each year combines the effects of estimating the amount and composition of our annual income or loss in jurisdictions with varying income tax rates, as well as benefits from available deferred tax assets, the impact of various accounting rules, our interpretations of changes in tax laws and results of tax audits. Forecasts of our annual effective tax rate do not include the anticipation of future tax law changes. In addition, we account for certain tax benefits from stock-based compensation in the period the stock compensation vests or is settled, which may cause increased variability in our quarterly effective tax rates. If there were a material difference between forecasted and actual tax rates, it could have a material impact on our results of operations.

Litigation, government investigations or regulatory proceedings could adversely affect our financial condition or operations.

We currently are, and in the future may be, involved in various disputes and litigation that arise in the ordinary course of business. These include disputes and lawsuits related to intellectual property, including customer indemnification, mergers and acquisitions, licensing, contracts, distribution arrangements and employee relations matters. Governments and regulatory agencies in the jurisdictions in which we operate may also open or initiate investigations or regulatory proceedings. For information regarding the litigation matters in which we are currently engaged, please refer to the discussion under Item 1, “Legal Proceedings” and Note 1112 in the notes to condensed consolidated financial statements. We cannot provide any assurances that the final outcome of these lawsuits or any other proceedings that may arise in the future will not have a material adverse effect on our business, reputation, operating results, financial condition or cash flows. Litigation and similar proceedings can be time consuming and expensive and could divert management’s time and attention from our business, which could have a material adverse effect on our revenues and operating results.

Errors or defects in our products and services could expose us to liability and harm our business.

Our customers use our products and services in designing and developing products that involve a high degree of technological complexity, each of which has its own specifications. Because of the complexity of the systems and products with which we work, some of our products and designs can be adequately tested only when put to full use in the marketplace. As a result, our customers or their end users may discover errors or defects in our software or the systems we design, or the products or systems incorporating our design and intellectual property may not operate as expected. Errors or defects could result in:

~~loss of customers;~~

~~loss of market share;~~

•damage to our ~~reputation;~~reputation and loss of customers and market share;

•failure to attract new customers or achieve market acceptance;

•diversion of development resources to resolve the problem;

•loss of or delay in ~~revenue;~~

revenue or payments and increased service costs; and

•liability for damages.

~~Our operating results and revenue could be adversely affected by customer payment delays, customer bankruptcies and defaults or modifications of licenses.~~

Occasionally, our customers file for bankruptcy or request to modify license terms. If our customers experience adversity in their business, they may delay or default on their payment obligations to us, file for bankruptcy or modify or cancel plans to license our products. For instance, if our customers are not successful in generating sufficient cash or are precluded from securing financing, they may not be able to pay, or may delay payment of, accounts receivable that are owed to us, although these obligations are generally not cancelable. Our customers’ inability to fulfill payment obligations, in turn, may adversely affect our revenue and cash flow. Additionally, our customers have, in the past, sought, and may, in the future, seek, to renegotiate pre-existing contractual commitments. Payment defaults by our customers or significant reductions in existing contractual commitments could have a material adverse effect on our financial condition and operating results.

~~The long sales cycle of our products and services may cause our operating results to fluctuate unexpectedly.~~

~~In addition, sales of our products and services have been and may in the future be delayed if customers delay approval or commencement of projects because of:~~

~~the timing of customers’ competitive evaluation processes; or~~

~~customers’ budgetary constraints and budget cycles.~~

Our reported financial results may be adversely affected by changes in United States generally accepted accounting principles, and we may incur significant costs to adjust our accounting systems and processes to comply with significant changes.

United States generally accepted accounting principles or (“U.S. ~~GAAP,~~GAAP”) are subject to interpretation by the Financial Accounting Standards Board ~~or FASB,~~(“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. We are also subject to evolving rules and regulations of the countries in which we do business. ~~The FASB is currently working together with the International Accounting Standards Board,~~Changes to accounting standards or IASB, on several projects to further align accounting principles and facilitate more comparable financial reporting between companies that are required to follow U.S. GAAP under SEC regulations and those that are required to follow IFRS outside of the United States. These efforts by the FASB and IASBinterpretations thereof may result in different accounting principles under U.S. GAAP that could have a significant effect on our reported financial results for us in areas including, but not limited to, principles for recognizing revenue and accounting for leases. For information regarding new accounting standards, please refer to Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “New Accounting Standards.”results.

In addition, we have in the past and may in the future need to significantly change our customer contracts, accounting systems and processes when we adopt future or proposed changes in accounting ~~principles noted above.~~principles. The cost and effect of these changes may negatively impact our results of operations during the periods of transition.

~~Our restructuring plans may not result in the benefits we have anticipated, possibly having a negative effect on our future operating results.~~

In recent fiscal years, we have initiated restructuring plans in an effort to reallocate or decrease costs by reducing our workforce and by consolidating facilities. We incur substantial costs to implement restructuring plans, and our restructuring activities may subject us to litigation risks and expenses. Our past restructuring plans do not provide any assurance that additional restructuring plans will not be required or implemented in the future. In addition, our restructuring plans may have other consequences, such as attrition beyond our planned reduction in workforce, a negative effect on employee morale and productivity or our ability to attract highly skilled employees. Our competitors may also use our restructuring plans to seek to gain a competitive advantage over us. As a result, our restructuring plans may affect our revenue and other operating results in the future.

~~Failure to obtain export licenses could harm our business by rendering us unable to ship products and transfer our technology outside of the United States.~~

We must comply with regulations of the United States and of certain other countries in shipping our products and transferring our technology outside the United States and to foreign nationals. Any significant future difficulty in complying with these regulations could harm our business, operating results or financial condition.

If we become subject to unfair hiring claims, we could be prevented from hiring needed employees, incur liability for damages and incur substantial costs in defending ourselves.

When companies in our industry lose employees to competitors, they frequently claim that these competitors have engaged in unfair hiring practices or that the employment of these persons would involve the disclosure or use of trade secrets. These claims could prevent us from hiring employees or cause us to incur liability for damages. We could also incur substantial costs in defending ourselves or our employees against these claims, regardless of their merits. Defending ourselves from these claims could also divert the attention of our management away from our operations.

We are subject to evolving corporate governance and public disclosure expectations and regulations that impact compliance costs and risks of noncompliance.

We are subject to changing rules and regulations promulgated by a number of governmental and self-regulatory organizations, including the SEC, Nasdaq, and the FASB, as well as evolving investor expectations around corporate governance, executive compensation and environmental and social practices and disclosures. These rules and regulations continue to evolve in scope and complexity, and many new requirements have been created in response to laws enacted by the U.S. and foreign governments, making compliance more difficult and uncertain. The increase in costs to comply with such evolving expectations, rules and regulations, as well as any risk of noncompliance, could adversely impact us.

Risks Related to Our Securities and Indebtedness

Our stock price has been and may continue to be subject to fluctuations.

Our stock price is subject to changes in recommendations or earnings estimates by financial analysts, changes in investors’ or analysts’ valuation measures for our stock, our credit ratings and market trends unrelated to our performance. Furthermore, speculation in the press or investment community about our strategic position, financial condition, results of operations, business or security of our products, can cause changes in our stock price. In addition to these factors and industry and general economic and political conditions, our stock price may be adversely impacted by announcements related to financial results or forecasts that fail to meet or are inconsistent with earlier projections or the expectations of our securities analysts or investors, announcements of new products or acquisitions of new technologies by us, our competitors or our customers, or announcements by us of acquisitions, major transaction or litigation developments, or management changes. A significant drop in our stock price could expose us to the risk of securities class actions lawsuits, which may result in substantial costs and divert management’s attention and resources, which may adversely affect our business.

Anti-takeover defenses in our certificate of incorporation and bylaws and certain provisions under Delaware law could prevent an acquisition of our company or limit the price that investors might be willing to pay for our common stock.

Our certificate of incorporation and bylaws and certain provisions of the Delaware General Corporation Law that apply to us could make it difficult for another company to acquire control of our company. For ~~example:~~

~~Our~~example, our certificate of incorporation allows our Board of Directors to designate and issue, at any time and without stockholder approval up to 400,000 shares of preferred stock ~~with such terms as it may determine. No~~in one or more series. All 400,000 shares of preferred stock are currently ~~outstanding. However,~~designated as Series A Preferred, but because no such shares are outstanding or reserved for issuance, our Board of Directors may reduce the number of shares of preferred stock designated as Series A Preferred to zero. Subject to the Delaware General Corporation Law, our Board of Directors may, as to any shares of preferred stock the terms of which have not then been designated, fix the rights, preferences, privileges and restrictions on these shares, fix the number of ~~holders~~shares and designation of any series, and increase or decrease the number of ~~our preferred stock that may be issued in~~shares of any series if not below the ~~future may be~~number of outstanding shares plus the number of shares reserved for issuance. Our Board of Directors has the power to issue shares of Series A Preferred with dividend, voting and liquidation rights superior to ~~the rights of holders of~~ our common ~~stock.~~stock at a rate of 1,000-to-1 without further vote or action by the common stockholders.

In addition, Section 203 of the Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in any business combination with a person owning 15% or more of its voting stock, or who is affiliated with the corporation and owned 15% or more of its voting stock at any time within three years prior to the proposed business combination, for a period of three years from the date the person became a 15% owner, unless specified conditions are met.

All or any one of these factors could limit the price that certain investors would be willing to pay for shares of our common stock and could allow our Board of Directors to resist, delay or prevent an acquisition of our company, even if a proposed transaction were favored by a majority of our independent stockholders.

~~The investment of our cash in money market funds is subject to risks that may cause losses and affect the liquidity of these investments.~~

Our investments include various money market funds. Weakened financial markets have at times adversely impacted the general credit, liquidity, market prices and interest rates for these and other types of investments. Additionally, changes in monetary policy by the Federal Open Market Committee and concerns about the rising U.S. government debt level may cause a decrease in the purchasing power of the U.S. dollar and adversely affect our investment portfolio. The financial market and monetary risks associated with our investment portfolio may have a material adverse effect on our financial condition, liquidity, results of operations or cash flows.

We depend on sole suppliers for certain hardware components and contract manufacturers for production of our emulation and prototyping hardware products, making us vulnerable to supply disruption and price fluctuation.

We depend on sole suppliers for certain hardware components and contract manufacturers for production of our emulation and prototyping hardware products. Our reliance on sole suppliers and contract manufacturers could result in product delivery problems and delays and reduced control over product pricing and quality. Though we prefer to have multiple sources to procure certain key components, in some cases it is not practical or feasible to do so. We may suffer a disruption in the supply of certain hardware components if we are unable to purchase sufficient components on a timely basis or at all for any reason. Any supply or manufacturing disruption, including delay in delivery of components by our suppliers or products by our manufacturers, or the bankruptcy or shutdown of our suppliers or manufacturers, could delay our production process and prevent us from delivering completed hardware products to customers or from supplying new evaluation units to customers, which could have a negative impact on our revenue and operating results.

~~We are subject to evolving corporate governance and public disclosure regulations that impact compliance costs and risks of noncompliance.~~

We are subject to changing rules and regulations promulgated by a number of governmental and self-regulatory organizations, including the SEC, NASDAQ, and the FASB. These rules and regulations continue to evolve in scope and complexity, and many new requirements have been created in response to laws enacted by Congress and foreign governments, making compliance more difficult and uncertain. The increase in costs to comply with such evolving rules and regulations, as well as any risk of noncompliance, could adversely impact us.

~~Conflict minerals regulations may cause us to continue to incur additional expenses and may adversely impact our ability to conduct our business.~~

In August 2012, the SEC adopted new rules establishing disclosure and reporting requirements regarding the use of certain minerals referred to as “conflict minerals” in products. These rules require us to determine, disclose and report whether or not such minerals in our products originate from the Democratic Republic of the Congo or adjoining countries. We have incurred, and expect to continue to incur, costs to comply with these rules, including costs associated with conducting due diligence on our supply chain and fulfilling our reporting requirements, and we may incur costs related to changes to our products, processes or sources of supply. In addition, these rules could affect the availability of certain minerals used in the manufacture of our emulation and prototyping hardware products and IP boards, or the Covered Products, and thus impact our ability to source, at competitive prices, certain materials that are used in the Covered Products. Finally, our customers may prefer to purchase products from vendors who claim that all minerals in their products are conflict-free, and our revenues may be harmed or we may face reputational challenges if we are unable to verify that our Covered Products are conflict-free.

~~Our business is subject to the risk of earthquakes and other natural disasters.~~

Our corporate headquarters, including certain of our research and development operations and certain of our distribution facilities, is located in the Silicon Valley area of Northern California, a region known to experience seismic activity. If significant seismic activity were to occur, our operations may be interrupted, which could adversely impact our business and results of operations.

Our other offices in the United States and in other countries around the world may be adversely impacted by natural disasters. If a natural disaster occurs at or near any of our offices, our operations may be interrupted, which could adversely impact our business and results of operations. If a natural disaster impacts a significant number of our customers, our business and results of operations could be adversely impacted.

~~Risks Related to Our Securities and Indebtedness~~

Our debt obligations expose us to risks that could adversely affect our business, operating results or financial condition, and could prevent us from fulfilling our obligations under such indebtedness.

~~We have a substantial level of debt.~~ As of ~~September 30, 2017,~~July 3, 2021, we had total outstanding indebtedness of ~~$644.1~~$347.2 million. We also ~~had~~have the ability to borrow an additional ~~$350.0~~$700.0 million under our revolving credit facility, with the right to request increased capacity up to an additional ~~$250.0~~$350.0 million, ~~upon~~subject to the receipt of lender commitments, for a total ~~maximum borrowings of $600.0 million under our revolving credit facility.~~up to $1.05 billion. Subject to the limits contained in the credit agreement governing our revolving credit facility, the indenture that governs the 4.375% Senior Notes due October 15, 2024 ~~or the 2024 Notes,~~(the “2024 Notes”) and our other debt instruments, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, share repurchases or for other purposes. If we do so, the risks related to our ~~high~~ level of debt could intensify. Specifically, our ~~high~~ level of debt could have important consequences, including the following:

•making it more difficult for us to satisfy our obligations to service our debt as described above;

•limiting our ability to obtain additional financing to fund future working capital, capital expenditures,

acquisitions or other general corporate requirements;

•requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other

purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures,

acquisitions and other general corporate purposes;

•utilizing large portions of our U.S. cash to service our debt obligations because those payments are made in the United States, which may require us to repatriate cash from outside the United ~~States and incur unanticipated or unfavorable tax expenses;~~States;

•increasing our vulnerability to ~~general~~ adverse economic and industry conditions;

•exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under

our revolving credit facility, are at variable rates of interest;

•limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

•placing us at a disadvantage compared to other, less leveraged competitors and competitors that have greater access to capital resources;

•limiting our interest deductions for U.S. income tax purposes; and

•increasing our cost of borrowing.

At the option of the holders of our outstanding notes, we may, under certain circumstances, be required to repurchase such notes.

Under the terms of our 2024 Notes, we may be required to repurchase for cash such notes prior to their maturity in connection with the occurrence of certain significant corporate events. Specifically, we are required to offer to repurchase such notes upon a “change of control triggering event” (as defined in the indenture related to such notes), such as a change of control accompanied by certain downgrades in the credit ratings of such notes. The repayment obligations under such notes may have the effect of discouraging, delaying or preventing a takeover of our company. If we were required to pay the 2024 Notes prior to their scheduled maturity, it could have a significant negative impact on our cash and liquidity and could impact our ability to invest financial resources in other strategic initiatives.

The terms of the ~~agreements~~agreement governing our revolving credit facility ~~and 2019 Term Loan~~ and the indenture governing our 2024 Notes restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

The ~~agreements~~agreement governing our revolving credit facility ~~and 2019 Term Loan contain~~contains a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability to:

~~pay dividends~~•incur liens or ~~make other distributions or repurchase or redeem capital stock;~~

~~prepay, redeem or repurchase certain debt;~~

~~issue certain preferred stock or similar equity securities;~~

~~make certain investments;~~

~~incur liens;~~

~~incur~~ additional indebtedness and guarantee indebtedness;

~~enter into sale and leaseback transactions;~~

•enter into transactions with affiliates;

•alter the businesses we conduct; and

~~enter into agreements restricting our subsidiaries’ ability to pay dividends; and~~

•consolidate, merge or sell all or substantially all of our ~~assets.~~assets.

In addition, the restrictive covenants in the ~~agreements~~agreement governing our revolving credit facility ~~and 2019 Term Loan~~ require us to maintain specified financial ~~ratios and satisfy other financial condition tests.~~ratios. Our ability to meet those financial ratios ~~and tests~~ can be affected by events beyond our control, and we may be unable to meet them.

A breach of the covenants or restrictions under the ~~agreements~~agreement governing our revolving credit facility ~~and 2019 Term Loan~~ could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the credit agreement governing our revolving credit facility would permit the lenders under our revolving credit facility to terminate all commitments to extend further credit under that facility. In the event our lenders or note holders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. As a result of these restrictions, we may be:

•limited in how we conduct our business;

•unable to raise additional debt or equity financing to operate during general economic or business downturns; or

•unable to compete effectively or to take advantage of new business opportunities.

The indenture governing our 2024 Notes also contains certain restrictive covenants that impose operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability to incur liens and to enter into sale and leaseback transactions.

These restrictions may affect our ability to grow in accordance with our strategy. In addition, our financial results, our substantial indebtedness and our credit ratings could adversely affect the availability and terms of our financing.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our debt obligations.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The ~~agreements~~agreement governing our revolving credit facility ~~and 2019 Term Loan restrict~~restricts our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

In addition, we conduct a substantial portion of our operations through our subsidiaries, none of which are currently guarantors of our indebtedness. Accordingly, repayment of our indebtedness is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. ~~Unless they become guarantors of our indebtedness, our~~Our subsidiaries do not have any obligation to pay amounts due on our indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. While the agreements governing our revolving credit facility and 2019 Term Loan limit the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our debt obligations.

If we cannot make scheduled payments on our debt, we will be in default and holders of our debt could declare all outstanding principal and interest to be due and payable, the lenders under our revolving credit facility could terminate their commitments to loan money and we could be forced into bankruptcy or liquidation. In addition, a material default on our indebtedness could suspend our eligibility to register securities using certain registration statement forms under SEC guidelines that permit incorporation by reference of substantial information regarding us, potentially hindering our ability to raise capital through the issuance of our securities and increasing our costs of registration.

Despite our current level of indebtedness, we and our subsidiaries may incur substantially more debt. This could further exacerbate the risks to our financial condition described above.

We and our subsidiaries may incur significant additional indebtedness in the future. Although the ~~agreements~~agreement governing our revolving credit facility ~~and 2019 Term Loan contain~~contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. If we incur any additional indebtedness that ranks equally with the 2024 Notes, then subject to any collateral arrangements we may enter into, the holders of that debt will be entitled to share ratably in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of our company.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase ~~significantly.~~significantly.

Borrowings under our revolving credit facility ~~and 2019 Term Loan~~ are at variable rates of interest and expose us to interest rate risk. If interest rates were to increase, our debt service obligations on our variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. Assuming all loans were fully drawn and we were to fully exercise our right to increase borrowing capacity under our revolving credit facility, ~~and we made no prepayments on our 2019 Term Loan,~~ each quarter point change in interest rates would result in ~~an approximately $2.3~~a $2.6 million change in annual interest expense on our indebtedness under our revolving credit ~~facility and 2019 Term Loan.~~facility. In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.

Our revolving credit facility utilizes, at our option, either (1) LIBOR, plus a margin of between 0.750% and 1.250%, determined by reference to the credit rating of our unsecured debt, or (2) base rate plus a margin of 0.000% to 0.250%, determined by reference to the credit rating of our unsecured debt, to calculate the amount of accrued interest on any borrowings. Regulators in certain jurisdictions including the United Kingdom and the United States have announced the desire to phase out the use of LIBOR by the end of 2021, though the ICE Benchmark Administration, the administrator of LIBOR, announced plans to consult to extend the timeline for ceasing publication for certain tenors of U.S. dollar LIBOR to June 30, 2023. Our revolving credit facility contains provisions that contemplate the transition from LIBOR under specified events; however, the transition from LIBOR to a new replacement benchmark is uncertain at this time and the consequences of such developments cannot be entirely predicted, but could result in an increase in the cost of our borrowings under our existing credit facility and any future borrowings.

In addition, our revolving credit facility uses a pricing grid based on our credit ratings. If our credit ratings are downgraded or other negative action is taken, the interest rate payable by us under our revolving credit facility could increase. Downgrades in our credit ratings could also restrict our ability to obtain additional financing in the future and affect the terms of any such financing.

Various factors could increase our future borrowing costs or reduce our access to capital, including a lowering or withdrawal of the ratings assigned to us and our 2024 Notes by credit rating agencies.

We may in the future seek additional financing for a variety of reasons, and our future borrowing costs, terms and access to capital could be affected by factors including the condition of the debt and equity markets, the condition of the economy generally, prevailing interest rates, our level of indebtedness, our credit rating and our business and financial condition. In addition, the 2024 Notes currently have an investment grade credit rating, and any credit rating assigned could be lowered or withdrawn entirely by a credit rating agency if, in that credit rating agency’s judgment, future circumstances relating to the basis of the credit rating, such as adverse changes, so warrant. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the 2024 Notes. Any future lowering of the credit ratings of the 2024 Notes likely would make it more difficult or more expensive for us to obtain additional debt financing.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In ~~January 2017, Cadence’s~~July 2020, our Board of Directors authorized $750 million for the repurchase of shares of ~~Cadence’s~~our common ~~stock with a value of up to $525.0 million in the aggregate.~~stock. The actual timing and amount of repurchases are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. As of ~~September 30, 2017, $475.0~~July 3, 2021, $346 million remained available to repurchase shares of our common stock under this authorization.

The following table presents repurchases made under our current authorization and shares surrendered by employees to satisfy income tax withholding obligations during the three months ended ~~September 30, 2017~~:July 3, 2021:

Period
Total Number
of Shares
Purchased ⁽¹⁾

Average
Price Paid
Per Share ⁽²⁾

Total Number of
Shares Purchased
as Part of
Publicly Announced Plan or Program

Maximum Dollar
Value of Shares that
May Yet
Be Purchased Under
Publicly Announced
Plan or Program ⁽¹⁾
(In millions)
July 2, 2017 – August 5, 2017 151,441
$ 36.57
122,700
$ 520
August 6, 2017 – September 2, 2017 1,141,684
$ 37.10
614,900
$ 498
September 3, 2017 – September 30, 2017 691,194
$ 38.34
593,703
$ 475
Total 1,984,319
$ 37.49
1,331,303


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plan or Program (1) (In millions)
April 4, 2021 - May 8, 2021	440,398	$	128.78	423,726	$	512
May 9, 2021 - June 5, 2021	1,010,034	$	126.75	904,205	$	398
June 6, 2021 - July 3, 2021	401,058	$	131.08	391,756	$	346
Total	1,851,490	$	128.17	1,719,687

______________________________


~~(1)~~	Shares purchased that were not part of our publicly announced repurchase programs represent employee surrender of shares of restricted stock to satisfy employee income tax withholding obligations due upon vesting, and do not reduce the dollar value that may yet be purchased under our publicly announced repurchase programs.


~~(2)~~	~~The weighted average price paid per share of common stock does not include the cost of commissions.~~

(1)Shares purchased that were not part of our publicly announced repurchase programs represent employee surrender of shares of restricted stock to satisfy employee income tax withholding obligations due upon vesting, and do not reduce the dollar value that may yet be purchased under our publicly announced repurchase programs.

(2)The weighted average price paid per share of common stock does not include the cost of commissions.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Incorporated by Reference

Exhibit

Number

Exhibit Title

Form

File No.

Exhibit
No.

Filing Date

Provided
Herewith

10.01

Credit Agreement, dated as of June 30, 2021, by and among Cadence Design Systems, Inc., Bank of America, N.A. and other lenders party thereto.

8-K

000-15867

10.01

07/01/2021

31.01

Certification of the Registrant’s Chief Executive Officer, Lip-Bu Tan, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.

31.02

Certification of the Registrant’s Chief Financial Officer, John M. Wall, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.

32.01

†

Certification of the Registrant’s Chief Executive Officer, Lip-Bu Tan, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.02

†

Certification of the Registrant’s Chief Financial Officer, John M. Wall, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File - The cover page from this Quarterly Report on Form 10-Q is formatted in Inline XBRL (included as Exhibit 101).

___________________


~~(a)~~	~~The following exhibits are filed herewith:~~

~~Incorporated by Reference~~Filed herewith.

~~Exhibit~~

~~Number~~

†

~~Exhibit Title~~

~~Form~~

~~File No.~~

~~Exhibit~~

~~No.~~

~~Filing Date~~

~~Provided~~

~~Herewith~~

~~31.01~~

~~Certification of the Registrant’s Chief Executive Officer, Lip-Bu Tan, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.~~

~~31.02~~

~~Certification of the Registrant’s Chief Financial Officer, John M. Wall, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.~~

~~32.01~~

~~Certification of the Registrant’s Chief Executive Officer, Lip-Bu Tan, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.02~~

~~Certification of the Registrant’s Chief Financial Officer, John M. Wall, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101.INS~~

~~XBRL Instance Document.~~

~~101.SCH~~

~~XBRL Taxonomy Extension Schema Document.~~

~~101.CAL~~

~~XBRL Taxonomy Extension Calculation Linkbase Document.~~

~~101.DEF~~

~~XBRL Definition Linkbase Document.~~

~~101.LAB~~

~~XBRL Taxonomy Extension Label Linkbase Document.~~

~~101.PRE~~

~~XBRL Taxonomy Extension Presentation Linkbase Document.~~

XFurnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		~~CADENCE DESIGN SYSTEMS, INC.~~ ~~(Registrant)~~

~~DATE:~~	~~October 26, 2017~~	~~By:~~	~~/s/ Lip-Bu Tan~~
			~~Lip-Bu Tan~~
			~~President, Chief Executive Officer and Director~~

~~DATE:~~	~~October 26, 2017~~	~~By:~~	~~/s/ John M. Wall~~
			~~John M. Wall~~
			~~Senior Vice President and Chief Financial Officer~~

~~EXHIBIT INDEX~~

~~Incorporated by Reference~~CADENCE DESIGN SYSTEMS, INC.
(Registrant)

~~Exhibit~~

~~Number~~

~~Exhibit Title~~

~~Form~~

~~File No.~~

~~Exhibit~~

~~No.~~

~~Filing Date~~

~~Provided~~

~~Herewith~~

DATE:

July 26, 2021

By:

/s/ Lip-Bu Tan

~~31.01~~

~~Certification of the Registrant’s~~

Lip-Bu Tan

Chief Executive Officer ~~Lip-Bu Tan, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.~~

Xand Director

~~31.02~~

DATE:

July 26, 2021

~~Certification of the Registrant’s~~

By:

/s/ John M. Wall

John M. Wall

Senior Vice President and Chief Financial Officer ~~John M. Wall, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.~~

~~32.01~~

~~Certification of the Registrant’s Chief Executive Officer, Lip-Bu Tan, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.02~~

~~Certification of the Registrant’s Chief Financial Officer, John M. Wall, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101.INS~~

~~XBRL Instance Document.~~

~~101.SCH~~

~~XBRL Taxonomy Extension Schema Document.~~

~~101.CAL~~

~~XBRL Taxonomy Extension Calculation Linkbase Document.~~

~~101.DEF~~

~~XBRL Definition Linkbase Document.~~

~~101.LAB~~

~~XBRL Taxonomy Extension Label Linkbase Document.~~

~~101.PRE~~

~~XBRL Taxonomy Extension Presentation Linkbase Document.~~


				Page
PART I.		FINANCIAL INFORMATION

			~~Page~~
~~PART I.~~	~~FINANCIAL INFORMATION~~

Item 1.	Financial Statements:

		Condensed Consolidated Balance ~~Sheets:~~ ~~September 30, 2017~~Sheets as of July 3, 2021 and ~~December 31, 2016~~January 2, 2021		1

		Condensed Consolidated Income ~~Statements:~~ ~~Three~~Statements for the three and ~~Nine Months Ended September 30, 2017~~six months ended July 3, 2021 and ~~October 1, 2016~~June 27, 2020		2

		Condensed Consolidated Statements of Comprehensive ~~Income:~~ ~~Three~~Income for the three and ~~Nine Months Ended September 30, 2017~~six months ended July 3, 2021 and ~~October 1, 2016~~June 27, 2020		3

		Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended July 3, 2021 and June 27, 2020		4

		Condensed Consolidated Statements of Cash ~~Flows:~~ ~~Nine Months Ended September 30, 2017~~Flows for the six months ended July 3, 2021 and ~~October 1, 2016~~June 27, 2020		46

		Notes to Condensed Consolidated Financial Statements		56

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		1518

Item 3.		Quantitative and Qualitative Disclosures About Market Risk		2829

Item 4.		Controls and Procedures		2931

PART II.		OTHER INFORMATION

Item 1.		Legal Proceedings		3132

Item 1A.		Risk Factors		3132

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		46

Item 3.		Defaults Upon Senior Securities		4647

Item 4.		Mine Safety Disclosures		4647

Item 5.		Other Information		4647

Item 6.		Exhibits		4748

		Signatures		4849


	As of
	July 3, 2021		January 2, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	847,160	$	928,432
Receivables, net	389,986		338,487
Inventories	90,479		75,956
Prepaid expenses and other	129,442		135,712
Total current assets	1,457,067		1,478,587
Property, plant and equipment, net	301,979		311,125
Goodwill	929,525		782,087
Acquired intangibles, net	264,789		210,590
Deferred taxes	729,790		732,290
Other assets	439,398		436,106
Total assets	$	4,122,548	$	3,950,785
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable and accrued liabilities	$	340,607	$	349,951
Current portion of deferred revenue	586,109		446,857
Total current liabilities	926,716		796,808
Long-term liabilities:
Long-term portion of deferred revenue	98,408		107,064
Long-term debt	347,186		346,793
Other long-term liabilities	233,495		207,102
Total long-term liabilities	679,089		660,959
Commitments and contingencies (Note 12)	0		0
Stockholders’ equity:
Common stock and capital in excess of par value	2,354,801		2,217,939
Treasury stock, at cost	(2,509,668)		(2,057,829)
Retained earnings	2,693,402		2,350,333
Accumulated other comprehensive loss	(21,792)		(17,425)
Total stockholders’ equity	2,516,743		2,493,018
Total liabilities and stockholders’ equity	$	4,122,548	$	3,950,785



	As of
	September 30, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	678,284		$	465,232
Short-term investments	4,135			3,057
Receivables, net	170,312			157,171
Inventories	36,000			39,475
Prepaid expenses and other	42,374			37,099
Total current assets	931,105			702,034
Property, plant and equipment, net of accumulated depreciation of $648,298 and $612,961, respectively	244,620			238,607
Goodwill	574,912			572,764
Acquired intangibles, net of accumulated amortization of $283,632 and $267,723, respectively	216,177			258,814
Long-term receivables	11,590			12,949
Other assets	326,823			311,740
Total assets	$	2,305,227		$	2,096,908
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Revolving credit facility	$	—		$	50,000
Accounts payable and accrued liabilities	199,672			239,496
Current portion of deferred revenue	320,462			296,066
Total current liabilities	520,134			585,562
Long-term liabilities:
Long-term portion of deferred revenue	57,865			66,769
Long-term debt	644,146			643,493
Other long-term liabilities	72,342			59,314
Total long-term liabilities	774,353			769,576
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock and capital in excess of par value	1,807,839			1,820,081
Treasury stock, at cost	(1,142,524		)	(1,190,053		)
Retained earnings	355,445			136,902
Accumulated other comprehensive loss	(10,020		)	(25,160		)
Total stockholders’ equity	1,010,740			741,770
Total liabilities and stockholders’ equity	$	2,305,227		$	2,096,908


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Revenue:
Product and maintenance	$	687,884	$	601,356	$	1,386,938	$	1,183,055
Services	40,401		37,062		77,375		73,320
Total revenue	728,285		638,418		1,464,313		1,256,375
Costs and expenses:
Cost of product and maintenance	55,842		55,669		120,748		111,115
Cost of services	20,917		19,546		39,978		38,563
Marketing and sales	135,967		120,476		268,793		246,220
Research and development	285,227		250,821		556,219		492,489
General and administrative	40,333		35,641		80,285		69,233
Amortization of acquired intangibles	5,030		4,590		9,661		8,796
Restructuring and other credits	(469)		(275)		(746)		(1,342)
Total costs and expenses	542,847		486,468		1,074,938		965,074
Income from operations	185,438		151,950		389,375		291,301
Interest expense	(4,316)		(5,914)		(8,533)		(10,551)
Other income, net	2,143		4,630		4,844		96
Income before provision for income taxes	183,265		150,666		385,686		280,846
Provision for income taxes	27,365		19,378		42,617		25,570
Net income	$	155,900	$	131,288	$	343,069	$	255,276
Net income per share – basic	$	0.57	$	0.48	$	1.25	$	0.93
Net income per share – diluted	$	0.56	$	0.47	$	1.23	$	0.91
Weighted average common shares outstanding – basic	273,565		273,432		273,843		273,488
Weighted average common shares outstanding – diluted	278,558		279,080		279,399		279,207



	Three Months Ended						Nine Months Ended
	September 30, 2017			October 1, 2016			September 30, 2017			October 1, 2016
Revenue:
Product and maintenance	$	451,229		$	415,370		$	1,346,483		$	1,247,077
Services	34,169			30,850			94,827			100,026
Total revenue	485,398			446,220			1,441,310			1,347,103
Costs and expenses:
Cost of product and maintenance	34,825			38,740			117,371			125,881
Cost of services	19,657			17,867			59,735			54,563
Marketing and sales	104,263			96,793			311,507			297,103
Research and development	206,568			191,547			600,755			553,824
General and administrative	36,302			30,441			100,892			95,129
Amortization of acquired intangibles	3,453			3,889			11,145			14,206
Restructuring and other charges (credits)	(55		)	101			(2,772		)	14,613
Total costs and expenses	405,013			379,378			1,198,633			1,155,319
Income from operations	80,385			66,842			242,677			191,784
Interest expense	(6,225		)	(6,053		)	(18,952		)	(17,306		)
Other income, net	12,387			2,836			14,370			10,441
Income before provision (benefit) for income taxes	86,547			63,625			238,095			184,919
Provision (benefit) for income taxes	5,390			(1,087		)	19,552			20,310
Net income	$	81,157		$	64,712		$	218,543		$	164,609
Net income per share - basic	$	0.30		$	0.23		0.80			0.57
Net income per share - diluted	$	0.29		$	0.23		0.78			0.56
Weighted average common shares outstanding – basic	273,156			280,622			271,739			288,476
Weighted average common shares outstanding – diluted	281,400			287,473			279,554			295,369



			x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



			¨☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended July 3, 2021
	Common Stock
		Par Value						Accumulated
		and Capital						Other
		in Excess		Treasury		Retained		Comprehensive
	Shares	of Par		Stock		Earnings		Loss		Total
Balance, April 3, 2021	278,265	$	2,307,965	$	(2,275,998)	$	2,537,502	$	(27,037)	$	2,542,432
Net income	—	—		—		155,900		—		$	155,900
Other comprehensive income, net of taxes	—	—		—		—		5,245		$	5,245
Purchase of treasury stock	(1,720)	—		(220,023)		—		—		$	(220,023)
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures	367	791		3,548		—		—		$	4,339
Stock received for payment of employee taxes on vesting of restricted stock	(132)	(4,473)		(17,195)		—		—		$	(21,668)
Stock-based compensation expense	—	50,518		—		—		—		$	50,518
Balance, July 3, 2021	276,780	$	2,354,801	$	(2,509,668)	$	2,693,402	$	(21,792)	$	2,516,743

	Three Months Ended June 27, 2020
	Common Stock
		Par Value						Accumulated
		and Capital						Other
		in Excess		Treasury		Retained		Comprehensive
	Shares	of Par		Stock		Earnings		Loss		Total
Balance, March 28, 2020	279,187	$	2,099,425	$	(1,778,533)	$	1,883,677	$	(46,575)	$	2,157,994
Net income	—	—		—		131,288		—		$	131,288
Other comprehensive income, net of taxes	—	—		—		—		1,558		$	1,558
Purchase of treasury stock	(920)	—		(75,014)		—		—		$	(75,014)
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures	673	(119)		10,146		—		—		$	10,027
Stock received for payment of employee taxes on vesting of restricted stock	(146)	(3,197)		(12,932)		—		—		$	(16,129)
Stock-based compensation expense	—	46,907		—		—		—		$	46,907
Balance, June 27, 2020	278,794	$	2,143,016	$	(1,856,333)	$	2,014,965	$	(45,017)	$	2,256,631


	Six Months Ended July 3, 2021
	Common Stock
		Par Value						Accumulated
		and Capital						Other
		in Excess		Treasury		Retained		Comprehensive
	Shares	of Par		Stock		Earnings		Loss		Total
Balance, January 2, 2021	278,941	$	2,217,939	$	(2,057,829)	$	2,350,333	$	(17,425)	$	2,493,018
Net income	—	—		—		343,069		—		$	343,069
Other comprehensive loss, net of taxes	—	—		—		—		(4,367)		$	(4,367)
Purchase of treasury stock	(3,043)	—		(392,290)		—		—		$	(392,290)
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures	1,391	42,917		9,335		—		—		$	52,252
Stock received for payment of employee taxes on vesting of restricted stock	(509)	(9,169)		(68,884)		—		—		$	(78,053)
Stock-based compensation expense	—	103,114		—		—		—		$	103,114
Balance, July 3, 2021	276,780	$	2,354,801	$	(2,509,668)	$	2,693,402	$	(21,792)	$	2,516,743

	Six Months Ended June 27, 2020
	Common Stock
		Par Value						Accumulated
		and Capital						Other
		in Excess		Treasury		Retained		Comprehensive
	Shares	of Par		Stock		Earnings		Loss		Total
Balance, December 28, 2019	279,855	$	2,046,237	$	(1,668,105)	$	1,761,688	$	(36,926)	$	2,102,894
Cumulative effect adjustment	—	—		—		(1,999)		—		$	(1,999)
Net income	—	—		—		255,276		—		$	255,276
Other comprehensive loss, net of taxes	—	—		—		—		(8,091)		$	(8,091)
Purchase of treasury stock	(2,408)	—		(175,036)		—		—		$	(175,036)
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures	1,957	10,758		33,097		—		—		$	43,855
Stock received for payment of employee taxes on vesting of restricted stock	(610)	(7,368)		(46,289)		—		—		$	(53,657)
Stock-based compensation expense	—	93,389		—		—		—		$	93,389
Balance, June 27, 2020	278,794	$	2,143,016	$	(1,856,333)	$	2,014,965	$	(45,017)	$	2,256,631


	July 3, 2021						January 2, 2021
	(In thousands)
	Principal		Unamortized Discount		Carrying Value		Principal		Unamortized Discount		Carrying Value
Revolving Credit Facility	$	0	$	—	$	0	$	0	$	—	$	0
2024 Notes	350,000		(2,814)		347,186		350,000		(3,207)		346,793
Total outstanding debt	$	350,000	$	(2,814)	$	347,186	$	350,000	$	(3,207)	$	346,793



	September 30, 2017							December 31, 2016
	(In thousands)
	Principal		Unamortized Discount			Carrying Value		Principal		Unamortized Discount			Carrying Value
Revolving Credit Facility	$	—	$	—		$	—	$	50,000	$	—		$	50,000
2019 Term Loan	300,000		(278		)	299,722		300,000		(434		)	299,566
2024 Notes	350,000		(5,576		)	344,424		350,000		(6,073		)	343,927
Total outstanding debt	$	650,000	$	(5,854	)	$	644,146	$	700,000	$	(6,507	)	$	693,493



	As of September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Marketable equity securities	$	1,961	$	2,174	$	—	$	4,135



	As of December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Marketable equity securities	$	2,131	$	926	$	—	$	3,057


	Acquisition Date Fair Value
	(In thousands)
Current assets	$	16,423
Goodwill	133,326
Acquired intangibles	72,200
Other long-term assets	6,928
Total assets acquired	228,877
Current liabilities	9,951
Long-term liabilities	20,091
Total liabilities assumed	30,042
Total purchase consideration	$	198,835


	Acquisition Date Fair Value		Weighted-Average Amortization Period
	(In thousands)		(in years)
Existing technology	$	55,400	14.2 years
Agreements and relationships	28,900		13.7 years
Tradenames, trademarks and patents	4,600		14.3 years
Total acquired intangibles with definite lives	$	88,900	14.1 years


	(In thousands)
2021 - remaining period	$	33,316
2022	49,716
2023	34,186
2024	32,723
2025	22,204
Thereafter	92,644
Total estimated amortization expense	$	264,789



	Gross Carrying Amount
	(In thousands)
Balance as of December 31, 2016	$	572,764
Effect of foreign currency translation	2,148
Balance as of September 30, 2017	$	574,912


	Gross Carrying Amount
	(In thousands)
Balance as of January 2, 2021	$	782,087
Goodwill resulting from acquisitions	150,021

Effect of foreign currency translation	(2,583)
Balance as of July 3, 2021	$	929,525


	Gross Carrying Amount		Accumulated Amortization		Acquired Intangibles, Net
	(In thousands)
Existing technology	$	402,440	$	(231,006)	$	171,434
Agreements and relationships	205,928		(120,674)		85,254
Tradenames, trademarks and patents	10,830		(2,729)		8,101
Total acquired intangibles	$	619,198	$	(354,409)	$	264,789



	(In thousands)
2017 – remaining period	$	13,619
2018	52,193
2019	45,183
2020	39,975
2021	35,484
Thereafter	29,723
Total estimated amortization expense	$	216,177



	Severance and Benefits			Excess Facilities			Total
	(In thousands)
Balance, December 31, 2016	$	24,402		$	58		$	24,460
Restructuring and other charges (credits):
2016 Restructuring Plans	(2,905		)	79			(2,826		)
Prior restructuring plans	2			52			54
Cash payments	(18,111		)	(162		)	(18,273		)
Effect of foreign currency translation	242			(3		)	239
Balance, September 30, 2017	$	3,630		$	24		$	3,654


	Severance and Benefits		Facilities		Total
	(In thousands)
Balance, January 2, 2021	$	7,321	$	1,372	$	8,693
Restructuring and other credits	(1,135)		389		(746)
Cash payments	(5,340)		(1,314)		(6,654)
Effect of foreign currency translation	(67)		(1)		(68)
Balance, July 3, 2021	$	779	$	446	$	1,225



	Fair Value Measurements as of September 30, 2017
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	489,487	$	489,487	$	—	$	—
Short-term investments:
Marketable equity securities	4,135		4,135		—		—
Trading securities held in Non-Qualified Deferred Compensation, or NQDC, trust	29,498		29,498		—		—
Total Assets	$	523,120	$	523,120	$	—	$	—

	Total		Level 1		Level 2		Level 3
	(In thousands)
Liabilities
Foreign currency exchange contracts	$	1,971	$	—	$	1,971	$	—


	Fair Value Measurements as of December 31, 2016
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	237,724	$	237,724	$	—	$	—
Short-term investments:
Marketable equity securities	3,057		3,057		—		—
Trading securities held in NQDC trust	26,622		26,622		—		—
Total Assets	$	267,403	$	267,403	$	—	$	—

	Total		Level 1		Level 2		Level 3
	(In thousands)
Liabilities
Foreign currency exchange contracts	$	2,653	$	—	$	2,653	$	—


	Fair Value Measurements as of July 3, 2021
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	396,096	$	396,096	$	0	$	0
Marketable equity securities	5,576		5,576		0		0
Securities held in Non-Qualified Deferred Compensation (“NQDC”) trust	48,341		48,341		0		0

Total Assets	$	450,013	$	450,013	$	0	$	0

	Total		Level 1		Level 2		Level 3
	(In thousands)
Liabilities
Foreign currency exchange contracts	$	7,099	$	0	$	7,099	$	0
Total Liabilities	$	7,099	$	0	$	7,099	$	0

	Fair Value Measurements as of January 2, 2021
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	541,386	$	541,386	$	0	$	0
Marketable equity securities	4,452		4,452		0		0
Securities held in NQDC trust	42,769		42,769		0		0
Foreign currency exchange contracts	8,868		0		8,868		0
Total Assets	$	597,475	$	588,607	$	8,868	$	0

As of January 2, 2021, Cadence did not have any financial liabilities requiring a recurring fair value measurement.



	Three Months Ended				Change
	September 30, 2017		October 1, 2016		Amount		Percentage
	(In millions, except percentages)
Product and maintenance	$	451.2	$	415.4	$	35.8	9	%
Services	34.2		30.8		3.4		11	%
Total revenue	$	485.4	$	446.2	$	39.2	9	%


	Three Months Ended
	July 3, 2021		April 3, 2021		January 2, 2021*		September 26, 2020		June 27, 2020
Custom IC Design and Simulation	23	%	23	%	26	%	24	%	24	%
Digital IC Design and Signoff	28	%	27	%	31	%	27	%	28	%
Functional Verification, including Emulation and Prototyping Hardware	25	%	26	%	19	%	23	%	24	%
IP	13	%	14	%	13	%	15	%	14	%
System Design and Analysis	11	%	10	%	11	%	11	%	10	%
Total	100	%	100	%	100	%	100	%	100	%


	Notional Principal			Weighted Average Contract Rate		Notional Principal		Weighted-Average Contract Rate
	(In millions)					(In millions)
Forward Contracts:					Forward Contracts:
European Union euro	$	59.8		0.84	European Union euro	$	160.5	0.82
Japanese yen	48.9			110.75
British pound	21.7			0.75	British pound	133.6		0.71
Israeli shekel	21.3			3.53	Israeli shekel	71.7		3.26
Japanese yen					Japanese yen	56.7		109.87
Indian rupee	14.7			64.25	Indian rupee	17.8		74.13
South Korean won	12.2			1,130.90
Swedish krona					Swedish krona	13.6		8.51
Taiwan dollar					Taiwan dollar	10.7		27.62
Canadian dollar					Canadian dollar	9.5		1.21
Chinese renminbi	7.9			6.56	Chinese renminbi	6.0		6.47
Taiwan dollar	5.1			29.98
Other	6.2			N/A	Other	4.8		N/A
Total	$	197.8			Total	$	484.9
Estimated fair value	$	(2.0	)		Estimated fair value	$	(7.1)



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share ⁽²⁾		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program	Maximum Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plan or Program ⁽¹⁾ (In millions)
July 2, 2017 – August 5, 2017	151,441	$	36.57	122,700	$	520
August 6, 2017 – September 2, 2017	1,141,684	$	37.10	614,900	$	498
September 3, 2017 – September 30, 2017	691,194	$	38.34	593,703	$	475
Total	1,984,319	$	37.49	1,331,303