Cadence Design Systems (CDNS) 10-K risk factor changes: FY2021 vs FY2020

*Our operations and financial results are subject to various risks and uncertainties, including those described in the sections below, that could adversely affect our business, financial condition, results of operations, cash flows, [added: liquidity, revenue, growth, prospects, demand, reputation,] and the trading price of our common [removed: stock.*][added: stock, and make an investment in us speculative or risky.]

[removed: While we are unable to accurately predict the full impact that the COVID-19 pandemic will have on our results of operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures, our] [added: Our] compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as that of our key customers, suppliers (including contract manufacturers) and other counterparties, for an indefinite period of time.

To support the health and well-being of our employees, customers, partners and communities, a vast majority of our employees are still working remotely as of February 22, [removed: 2021.][added: 2022.]

The disruptions to our operations caused by COVID-19 may result in inefficiencies, delays and additional costs in our product development, sales, [removed: marketing,] [added: marketing] and customer service efforts that we cannot fully mitigate through remote or other alternative work arrangements.

More generally, the [added: impact of the] pandemic [removed: raises] [added: may increase] the possibility of an extended global economic downturn and [added: extended periods of high inflation, and] has caused volatility in financial markets, which could affect demand for our products and services and impact our results and financial condition even after the pandemic is [removed: contained, shelter-in-place orders are lifted] [added: contained] and local conditions improve.

For example, we may be unable to collect receivables from those customers significantly impacted by COVID-19 and, in fact, have received [removed: numerous] [added: and may continue to receive,] requests from our customers to delay their payments to us, while we continue to provide services to these customers.

Therefore, changes in hardware and IP bookings or deliveries [removed: (including disruptions caused by COVID-19)] relative to expectations will have a more immediate impact on our revenue than changes in software or services bookings, for which revenue is generally recognized over time.

We plan our operating expenses based on forecasted revenue, expected business needs and other [removed: factors.][added: factors such as changes in inflation.]

[removed: Spending on our products and services has grown in recent years, but the] [added: The] current outlook for the global economy is uncertain and may result in a decrease in spending on our products and [removed: services.][added: services despite recent growth.]

Our future business and financial results, including demand for our products and services, are subject to considerable [removed: uncertainty] [added: uncertainties] that could impact our stock price.

If economic conditions or international trade relationships between countries in which we do business deteriorate in the future, or, in particular, if semiconductor or electronics systems industry revenues do not grow, [added: including as a result of] the [added: current global semiconductor shortage extending or intensifying, the] ability to export or import products or services by the semiconductor or electronics systems industry is adversely restricted, or our supplies of hardware components and products are subject to problems or delays, [removed: our future revenues and financial results could] [added: we may] be adversely affected.

[removed: In] [added: For example, in] fiscal [removed: 2019 and 2020, the Bureau of Industry and Security (“BIS”) of] [added: 2019,] the [removed: U.S. Department of Commerce] [added: DOC] placed certain entities who are our customers on the “Entity List,” limiting our ability to deliver products and services to these entities.

When certain customers are on the Entity List or are subject to new or expanded trade restrictions, such as the expansion [removed: of the] [added: in] scope [added: by the DOC] of [added: the] military [removed: end-users] [added: end-user] and military end-use [removed: by BIS] [added: regulations] in April 2020 and the foreign-produced direct product rules in August 2020, [removed: and in the absence of a license from the BIS,] it will have a negative effect on our ability to sell products and provide services to these [removed: customers.][added: customers without first obtaining a license from the BIS.]

In addition, new or expanded trade restrictions, such as the [added: continued] expansion of the military [removed: end-user,] [added: end-user and] military end-use [removed: rule and] [added: rule,] the foreign-produced direct product rules, [added: or any future rule that] will [added: prevent a class of technology from export to any specific country or countries without a license, will] increase our costs or expenses.

Entity List restrictions and other trade restrictions [removed: will] [added: may] also encourage customers to seek substitute products from our [added: competitors, including a growing class of foreign] competitors [added: and open source alternatives,] that are not subject to these restrictions or to develop their own solutions, thereby decreasing our long-term competitiveness.

In addition, although customers are not prohibited from paying (and we are not restricted from collecting) for products we previously delivered to them, the credit risks associated with outstanding receivables from customers on the Entity List [added: – including receivables from anti-piracy enforcement efforts] and [added: litigation settlements – and] other trade restrictions could increase as a result of these limitations.

Additionally, other companies may be added to the Entity List and/or be subject to new or expanded trade [removed: restrictions.][added: restrictions and restrictions may be imposed against specific countries.]

[removed: In addition, there may be indirect impacts to our business which we cannot reasonably quantify, including that] [added: Additionally] our business may also be impacted by other trade restrictions that may be imposed by the U.S., China, or other countries.

- the failure to [removed: integrate and] [added: integrate, combine or] manage acquired products, [added: infrastructure,] technologies and businesses effectively;

- [removed: the discovery of] unanticipated [removed: liabilities] [added: costs or] assumed [removed: from] [added: liabilities, including those incurred to remediate issues of] an acquired [removed: company, business] [added: company discovered during due diligence] or [removed: assets,] [added: thereafter,] such that we cannot realize the anticipated value of the acquisition; [added: or]

- unwillingness of customers of an acquired business to continue licensing or buying products from [removed: us following the acquisition.][added: us.]

We may [removed: continue to] use contingent payments in connection with acquisitions in the [removed: future] [added: future,] and [removed: while] we [removed: expect to derive value from an acquisition in excess of such contingent payment obligations, we] may be required to make certain contingent payments without deriving the [removed: anticipated value.][added: value we expect to derive from an acquisition in excess of such payments.]

[removed: Failure] [added: Failure] to obtain export licenses or restrictions on trade imposed by the United States or other countries could harm our business by rendering us unable to sell or ship products and transfer our technology outside of the United [removed: States.][added: States or across borders.]

We must comply with regulations of the United States and of certain other countries in selling or shipping our products and transferring our technology outside the United [removed: States and] [added: States,] to foreign [removed: nationals.][added: nationals or across borders.]

[removed: We] [added: Our revenue from international operations as a percentage of total revenue has historically exceeded 50%, and we] expect that revenue from our international operations will continue to account for a significant portion of our total revenue.

Fluctuations in the [removed: rate of] exchange [added: rate] between the U.S. dollar and the currencies of other countries where we conduct business could seriously affect our business, operating results or financial [removed: condition.][added: condition, including due to inflation, devaluations and currency controls.]

Approximately [removed: 30%] [added: 34%] of our total costs and expenses are transacted in foreign currencies.

It is not always practicable [added: or possible] to determine in advance whether a product or any of its components infringes the patent rights of others.

These royalty or licensing [removed: agreements, if available,] [added: agreements] may not [removed: have] [added: be available on] terms favorable to [removed: us.][added: us or at all.]

- unexpected changes in [added: legal and] regulatory requirements;

- [added: differing employment practices and labor issues or] inability to continue to offer competitive compensation in certain growing regions;

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

Competition for highly skilled executive officers and employees can be intense, particularly in geographic areas recognized as high technology [removed: centers where we maintain facilities.][added: centers.]

Our ability to do so also depends on how well we maintain a strong workplace culture that is attractive to employees, [added: 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.

As of January [removed: 2, 2021,] [added: 1, 2022,] approximately [removed: 61%] [added: 55%] of our cash and cash equivalents 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.

While we believe that the combination of our current U.S. cash and cash equivalents, future U.S. operating cash flows 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, we cannot accurately predict the full impact that COVID-19 may have on our cash [removed: flows, including our ability to borrow under our revolving credit facility.][added: flows.]

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 [removed: of:][added: of the timing of customers’ competitive evaluation processes or customers’ budgetary constraints and budget cycles.]

Our business is subject to the risk of [removed: earthquakes] [added: natural disasters] and [removed: other catastrophic events.][added: global climate change.]

Our [removed: offices in the United States] [added: offices,] and [removed: in other countries around the world may also] [added: those of our customers and suppliers, can] be [removed: adversely impacted] [added: disrupted] by [removed: natural disasters, including] [added: droughts, extreme temperatures,] fires, [removed: earthquakes,] flooding and other climate change-related risks, [removed: or] [added: as well as earthquakes,] actions by utility providers, [removed: as well as] [added: and] other catastrophic events such as an actual or threatened public health emergency.

Part of this strategy involves addressing the needs [removed: of new categories] [added: across a variety] of [removed: electronic systems,] [added: vertical markets] including [added: consumer,] hyperscale [removed: computing and infrastructure, edge] computing, [removed: machine learning,] [added: mobile,] 5G [removed: networks, AR/VR, IoT,] [added: communications, automotive,] aerospace and defense, [added: industrial] and [removed: autonomous vehicle subsystems,] [added: healthcare,] where increased investment is expected by our customers.

The following does not summarize all of the risks that we face, and there may be additional risks or uncertainties that are currently unknown or not believed to be material that occur or become material.*

We are unable to accurately predict the full impact that the COVID-19 pandemic will have on our results of operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic, the impact of COVID-19 variants, and the distribution, acceptance and effectiveness of vaccines and containment measures.

However, we have begun a limited pilot program for employees to begin voluntarily returning to work in certain jurisdictions with lower rates of new COVID-19 cases and higher vaccination rates.

Volatile surges in demand and in infection rates may also result in the unavailability, delay, or congestion of, and increased costs for, transportation and the raw materials, inputs, and other matters used in our business and by our customers.

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Our operating expenses are also impacted by economic conditions, such as inflation.

Unexpected increases in inflation could cause our expenses to increase at a rate faster than our product pricing to recover such increases.

We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in global markets as well as a variety of other laws and regulations.

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In addition, there may be indirect impacts to our business which we cannot reasonably quantify, including that a country-specific export control may limit or prevent our employees who are nationals of the restricted country from performing their duties unless a license can be obtained.

Although we have implemented policies and procedures to help us comply with all applicable trade restrictions, we and governmental authorities have had and may in the future have reason to inquire into particular sales.

For example, in February 2021, we received an administrative subpoena from BIS requesting the production of records in connection with certain sales to China.

We are cooperating with BIS and are in the process of responding to the subpoena as well as conducting an internal review.

Such inquiries are subject to uncertainties and the outcomes of this and other proceedings that may occur are difficult to predict.

The laws and policies of the United States and other countries in this area are evolving and changing, and we have experienced and may continue to experience challenges in complying with new rules as they become effective.

Any failure or alleged failure to comply with these laws and policies could have negative consequences, including significant legal costs, government investigations, penalties, denial of export privileges and debarment from participation in U.S. government contracts, any of which could have a material adverse effect on our operations, reputation and financial condition.

In addition to export control laws, our global operations are subject to numerous U.S. and foreign laws and regulations, including those related to anti-corruption, tax, corporate governance, financial and other disclosures, competition, data privacy and employment.

These laws and regulations are complex and may have differing or conflicting legal standards, making compliance difficult and costly, and changes to these laws may require us to make significant changes to our business operations that may adversely affect our business overall.

The policies and procedures we have implemented to assist our compliance with these laws and regulations do not provide complete assurance that our employees, contractors, agents or partners will not violate such laws and regulations.

Any violation individually or in the aggregate could have a material adverse effect on our operations, reputation and financial condition.

- the failure to complete transactions on a timely basis or at all, including as a result of governmental antitrust approval dynamics;

- difficulties in integrating or retaining employees;

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In recent years, we have observed, and expect to continue to see, far reaching vulnerabilities, such as the remote code execution vulnerability in Log4j, an open source component of the Apache Software Foundation, that was widely reported in December 2021 as impacting many systems globally.

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- country-specific export controls could impact our employees who are nationals of the restricted country, preventing these foreign nationals from performing their technology-focused roles which may slow our pace of innovation and/or impact our ability to service customers unless an export license is granted;

In October 2021, we expanded our vaccine policy to require that U.S. employees be fully vaccinated against COVID-19, or obtain an accommodation, by December 2021, and the implementation of this policy may result in difficulty attracting or retaining employees.

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In recent fiscal years, we have initiated restructuring plans in an effort to better align our resources with our business strategy.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

Our offices around the world may also be adversely impacted by natural disasters, including those intensified by climate change.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

- with Moore's Law slowing, the trend towards more on-chip integration and advanced system level 3D package design may change the requirements for the design, multi-physics analysis, and verification of complex homogeneous and heterogeneous systems; and

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- our entry into new product categories or technology verticals, including those in which success depends on absolute or relative scale;

- events or circumstances that damage the reputation of our company, leadership, products, services or technologies.

For more information about our specific competitors, see “Competition” under Item 1 of Part I of this Annual Report on Form 10-K.

For example, the global semiconductor shortage in 2021 has negatively impacted and may continue to negatively impact multiple segments of the semiconductor industry, including our customers.

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Although we expect that current cash and cash equivalent balances, cash flows that are generated from operations and cash borrowings available under our revolving credit facility will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements for at least the next 12 months, if our access to capital is restricted or our borrowing costs increase due to the pandemic, our operations and financial condition could be adversely impacted.

In recent years, we made significant investments to expand our IP offerings through, among other things, research and development and acquisitions.

If our revenue, operating results or business outlook for future periods fall short of the levels expected by us, securities analysts or investors, the trading price of our common stock could decline.

- difficulties in integrating employees of an acquired company or business and the failure to retain key employees;

- difficulties in combining previously separate companies or businesses into a single unit;

- difficulties related to integrating the products and infrastructure of an acquired company or business in, for example, distribution, engineering, licensing models or customer support areas;

- incurring costs to remediate issues of an acquired company discovered during due diligence or thereafter;

- unanticipated costs; or

Our revenue from international operations as a percentage of total revenue was approximately 59% during fiscal 2020, 58% during fiscal 2019 and 57% during fiscal 2018.

Our operations are dependent upon the connectivity of our operations throughout the world.

- 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;

- the timing of customers’ competitive evaluation processes; or

- customers’ budgetary constraints and budget cycles.

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.

- 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

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.

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.

The Organisation for Economic Co-operation and Development (“OECD”) released the final reports from its Base Erosion and Profit Shifting (“BEPS”) Action Plans which proposed revisions to numerous long standing tax principles.

The European Commission (“EC”) and OECD have also been evaluating new rules on the taxation of the digital economy to provide greater taxing rights to jurisdictions where customers or users are located and to address additional base erosion and profits shifting issues.

Forecasts of our annual effective tax rate do not include the anticipation of future tax law changes.

- damage to our reputation and loss of customers and market share;

As of January 2, 2021, we had total outstanding indebtedness of $346.8 million.

We also have the ability to borrow an additional $350.0 million under our revolving credit facility, with the right to request increased capacity up to an additional $250.0 million, subject to the receipt of lender commitments.

- 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;

- pay dividends or make other distributions or repurchase or redeem capital stock or enter into agreements restricting our subsidiaries’ ability to pay dividends;

- prepay, redeem or repurchase certain debt;

- issue certain preferred stock or similar equity securities;

- make certain investments;

- enter into sale and leaseback transactions;

While the agreement governing our revolving credit facility limits 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.

Assuming all loans were fully drawn and we were to fully exercise our right to increase borrowing capacity under our revolving credit facility, each quarter point change in interest rates would result in a $1.5 million change in annual interest expense on our indebtedness under our revolving credit facility.

Our revolving credit facility utilizes LIBOR or various alternative methods to calculate the amount of accrued interest on any borrowings.

Our strategy, which we call Intelligent System [removed: Design™,] [added: Design,] is to provide the technology necessary for our customers to develop electronic products across a variety of vertical markets including consumer, hyperscale computing, [added: mobile,] 5G communications, automotive, aerospace and defense, industrial and healthcare.

These acquisitions increased expenses, including amortization of acquired intangible assets, more than revenue during fiscal [removed: 2020.][added: 2021.]

The addition of [removed: NUMECA’s] [added: these] technologies and talent [removed: supports] [added: broadens] our [removed: Intelligent] System [removed: Design™ strategy.][added: Design and Analysis portfolio and expertise.]

[removed: In March 2020, the World Health Organization declared the outbreak] [added: The effects] of [removed: COVID-19 a pandemic, which continues to spread throughout] the [removed: U.S. and the world] [added: ongoing global pandemic have been widespread] and [removed: has] [added: have] resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place [removed: orders,] [added: orders] and business limitations and shutdowns.

We are unable to accurately predict the full impact that COVID-19 will have on our results of operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment [removed: measures.][added: measures and the distribution, acceptance and effectiveness of vaccines.]

Our [removed: compliance] [added: efforts to comply] with these containment measures [removed: has] [added: have] impacted our day-to-day operations and could disrupt our business and operations, as well as that of our key customers, suppliers (including contract manufacturers) and other counterparties, for an indefinite period of time.

To support the health and well-being of our employees, customers, partners and communities, a vast majority of our employees are still working remotely as of [removed: February 22, 2021.][added: January 1, 2022.]

[removed: The] [added: Since its inception, the] COVID-19 pandemic has caused some volatility in our [removed: usual] delivery timing for our hardware and IP products to certain customers.

Despite the challenges the COVID-19 pandemic has posed to our operations, it did not have [removed: material] [added: a material,] adverse impact on our results of operations, financial condition, liquidity or cash flows during fiscal [removed: 2020.][added: 2021.]

See Part I, Item 1A, “Risk Factors” for additional information on the impact of [removed: COVID-19.][added: COVID-19 on our business.]

The discussion of our fiscal [removed: 2020] [added: 2021] consolidated results of operations include year-over-year comparisons to fiscal [removed: 2019] [added: 2020] for revenue, cost of revenue, operating expenses, operating margin, other non-operating expenses, income taxes and cash flows.

For a discussion of the fiscal [removed: 2019] [added: 2020] changes compared to fiscal [removed: 2018,] [added: 2019,] see the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended [removed: December 28, 2019,] [added: January 2, 2021,] filed on February [removed: 24, 2020.][added: 22, 2021.]

Fiscal [removed: 2020] [added: 2021] was a [removed: 53-week] [added: 52-week fiscal] year, compared to [removed: 2019 and 2018,] [added: 2020,] which [removed: were each 52-week] [added: was a 53-week] fiscal [removed: years.][added: year.]

Results of operations for fiscal [removed: 2020,] [added: 2021,] as compared to fiscal [removed: 2019,] [added: 2020,] reflect the following:

- increased product and maintenance revenue, [removed: resulting] [added: primarily] from growth in [removed: software, IP and hardware, particularly in China] [added: our software] and [removed: the United States;][added: hardware product offerings;]

- higher selling costs, including additional investment in technical sales support in response to our customers’ increasing technological [removed: requirements;][added: requirements.]

- continued investment in research and development activities focused on expanding and enhancing our product portfolio; [added: and]

Revenue characterized as recurring includes revenue recognized over time from our software arrangements, services, royalties, maintenance on IP licenses and hardware, and operating leases of hardware and revenue recognized at varying points in time over the term of our IP Access [removed: Agreements.][added: Agreements that include non-cancellable commitments from customers.]

The remainder of our revenue is [added: recognized at a point in time and is] characterized as up-front revenue.

The percentage of our recurring and up-front revenue [removed: may be] [added: and fluctuations in revenue within our geographies are] impacted by delivery of hardware and IP products to our customers in any single fiscal period.

The following table shows our revenue for fiscal [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] and the change in revenue between years:

| | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | | | | | | | [removed: 2020] [added: 2021] vs. [removed: 2019] [added: 2020] | | | | | | | | | | | | | | | | | | | | |

| Product and maintenance | | | $ | [removed: 2,536.6] [added: 2,812.9] | | | | | $ | [removed: 2,204.6] [added: 2,536.6] | | | | | | | | | | | $ | [removed: 332.0] [added: 276.3] | | | | | [removed: 15] [added: 11] | | % | | | | | | | | | | | | |

| Total revenue | | | $ | [removed: 2,682.9] [added: 2,988.2] | | | | | $ | [removed: 2,336.3] [added: 2,682.9] | | | | | | | | | | | $ | [removed: 346.6] [added: 305.3] | | | | | [removed: 15] [added: 11] | | % | | | | | | | | | | | | |

[removed: Product and maintenance revenue increased during fiscal 2020, as compared to fiscal 2019, primarily because of increased investments] [added: This growth is driven] by our customers [added: investing] in new, complex designs for their products [removed: that include the design of] [added: including] electronic systems for consumer, hyperscale computing, 5G communications, automotive, aerospace and defense, industrial and healthcare.

No one customer accounted for 10% or more of total revenue during fiscal [removed: 2020] [added: 2021] or [removed: 2019.][added: 2020.]

The following table shows the percentage of product and related maintenance revenue contributed by each of our five product categories and services during fiscal [removed: 2020] [added: 2021] and [removed: 2019:][added: 2020:]

| Custom IC Design and Simulation | | | [removed: 25] [added: 23] | | % | | | | 25 | | % | | | | | | |

| Digital IC Design and Signoff | | | 29 | | % | | | | [removed: 30] [added: 29] | | % | | | | | | |

| Functional Verification, including Emulation and Prototyping Hardware | | | [removed: 22] [added: 24] | | % | | | | [removed: 23] [added: 22] | | % | | | | | | |

| System Design and Analysis | | | [removed: 10] [added: 11] | | % | | | | [removed: 9] [added: 10] | | % | | | | | | |

| United States | | | $ | [removed: 1,096.3] [added: 1,293.0] | | | | | $ | [removed: 982.4] [added: 1,096.3] | | | | | | | | | | | $ | [removed: 113.9] [added: 196.7] | | | | | [removed: 12] [added: 18] | | % | | | | | | | | | | | | |

| Other Americas | | | [removed: 43.6] [added: 42.1] | | | | | | [removed: 43.5] [added: 43.6] | | | | | | | | | | | | [removed: 0.1] [added: (1.5)] | | | | | | [removed: —] [added: (3)] | | % | | | | | | | | | | | | |

| Other Asia | | | [removed: 487.4] [added: 566.8] | | | | | | [removed: 459.0] [added: 487.4] | | | | | | | | | | | | [removed: 28.4] [added: 79.4] | | | | | | [removed: 6] [added: 16] | | % | | | | | | | | | | | | |

| Europe, Middle East and Africa | | | [removed: 469.8 | | | | | | 433.3 | | | | | | | | | | | | 36.5 | | | | | | 8] [added: 17] | | % | | | | [added: 18] | | [added: %] | | | | | | |

[removed: We] [added: During fiscal 2020, we] experienced an increase in demand [added: for our emulation and prototyping hardware and IP product offerings from our customers] in [removed: the first half of fiscal 2020] [added: China] that resulted in [removed: approximately 13%] [added: a larger percentage] of [removed: our] total revenue [removed: being generated] [added: coming] from [removed: customers in China, as compared to approximately 11% during the first half of fiscal 2019.][added: that geography.]

| United States | | | [removed: 41] [added: 43] | | % | | | | [removed: 42] [added: 41] | | % | | | | | | |

| Other Americas | | | [removed: 1] [added: 2] | | % | | | | [removed: 2] [added: 1] | | % | | | | | | |

| China | | | [removed: 15] [added: 13] | | % | | | | [removed: 10] [added: 15] | | % | | | | | | |

| Other Asia | | | [removed: 18] [added: 19] | | % | | | | [removed: 20] [added: 18] | | % | | | | | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

During fiscal 2021, we continued to execute our Intelligent System Design strategy with our announcement of the next generation of hardware-software products in our Functional Verification product category, which consists of the integrated Palladium Z2 emulation and Protium X2 prototyping systems, to accelerate hardware debug and software validation.

We also completed our acquisitions of Belgium-based NUMECA, a leader in computational fluid dynamics (“CFD”), and Pointwise Inc, a leading provider of CFD Meshing technology.

During the second quarter of fiscal 2021, we offered a voluntary retirement program to eligible employees in the United States.

This program resulted in a one-time charge for voluntary termination and post-employment benefits of $26.8 million.

As of January 1, 2022, liabilities related to the voluntary retirement program were $17.5 million and were included in accounts payable and accrued liabilities and other long-term liabilities on our consolidated balance sheet.

We expect to make cash payments to settle these liabilities through fiscal 2023, including $17.0 million that is expected to be paid in the next twelve months.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic.

However, we have begun a limited pilot program for employees to begin voluntarily returning to work in certain jurisdictions with lower rates of new COVID-19 cases and higher vaccination rates.

- revenue growth that exceeded the growth of our costs and expenses;

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

| Services | | | 175.3 | | | | | | 146.3 | | | | | | | | | | | | 29.0 | | | | | | 20 | | % | | | | | | | | | | | | |

Product and maintenance revenue increased during fiscal 2021, as compared to fiscal 2020, primarily because of increased revenue from each of our five product categories.

Services revenue increased during fiscal 2021, as compared to fiscal 2020, primarily due to the timing of performance obligations being fulfilled for certain customer contracts during fiscal 2021.

| | | | 2021 | | | | | | 2020 | | | | | | | | |

| IP | | | 13 | | % | | | | 14 | | % | | | | | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

| China | | | 378.1 | | | | | | 406.6 | | | | | | | | | | | | (28.5) | | | | | | (7) | | % | | | | | | | | | | | | |

| Japan | | | 184.8 | | | | | | 179.2 | | | | | | | | | | | | 5.6 | | | | | | 3 | | % | | | | | | | | | | | | |

| Total revenue | | | $ | 2,988.2 | | | | | $ | 2,682.9 | | | | | | | | | | | $ | 305.3 | | | | | 11 | | % | | | | | | | | | | | | |

The increase in revenue in the United States and Other Asia during fiscal 2021, as compared to fiscal 2020, was attributable to growth in revenue from each of our five product categories.

The decrease in revenue in China during fiscal 2021, as compared to fiscal 2020, was due to higher-than-typical volume in China during fiscal 2020.

The increase in revenue in Europe, Middle East and Africa during fiscal 2021, as compared to fiscal 2020, was attributable to growth in revenue from System Design and Analysis, Digital IC Design and Custom IC Design product offerings.

| | | | 2021 | | | | | | 2020 | | | | | | | | |

| | | | 2021 | | | | | | 2020 | | | | | | | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

| | | | 2021 | | | | | | 2020 | | | | | | | | | | | | 2021 vs. 2020 | | | | | | | | | | | | | | | | | | | | |

| | | | 2021 vs. 2020 | | | | | | | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

| | | | 2021 | | | | | | 2020 | | | | | | | | | | | | 2021 vs. 2020 | | | | | | | | | | | | | | | | | | | | |

| | | | 2021 | | | | | | 2020 | | | | | | | | |

| | | | 2021 vs. 2020 | | | | | | | | |

| Voluntary retirement program | | | 6.7 | | | | | | | | |

This increase was partially offset by reduced home office-related expenses associated with the transition to a remote work environment during fiscal 2020 due to the COVID-19 pandemic.

| | | | 2021 vs. 2020 | | | | | | | | |

| Voluntary retirement program | | | 14.7 | | | | | | | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

This increase was partially offset by reduced home office-related expenses associated with the transition to a remote work environment during fiscal 2020 due to the COVID-19 pandemic.

| | | | 2021 vs. 2020 | | | | | | | | |

| Contributions to non-profit organizations | | | $ | 15.0 | | | | | | | |

During the first quarter of fiscal 2020, we completed our acquisitions of AWR and Integrand.

The aggregate cash consideration for these acquisitions of approximately $196 million was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the respective acquisition dates.

These acquisitions enhance our technology portfolio to address growing radio frequency design activity, driven by expanding use of 5G communications.

During the first quarter of fiscal 2021, we entered into a definitive agreement to acquire all of the outstanding equity of Belgium-based NUMECA, a leader in CFD, mesh generation, multi-physics simulation and optimization.

The acquisition is expected to close in the first quarter of fiscal 2021, subject to customary closing conditions.

We have also received numerous COVID-19 pandemic-related requests from our customers to allow them to delay their payments to us, while we continue to provide services to these customers.

- decreased operating expenses for travel, meetings and events due to various measures implemented to contain COVID-19;

- a 3 percentage point increase in operating margin driven primarily by revenue growth and temporary decreases in certain operating expenses due to the COVID-19 pandemic; and

- changes in our provision (benefit) for income taxes due to a non-cash tax benefit resulting from intercompany transfers of certain intangible property rights to our Irish subsidiary during fiscal 2019.

| Services | | | 146.3 | | | | | | 131.7 | | | | | | | | | | | | 14.6 | | | | | | 11 | | % | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | 2020 | | | | | | 2019 | | | | | | | | |

| IP | | | 14 | | % | | | | 13 | | % | | | | | | |

| China | | | 406.6 | | | | | | 241.5 | | | | | | | | | | | | 165.1 | | | | | | 68 | | % | | | | | | | | | | | | |

| Japan | | | 179.2 | | | | | | 176.6 | | | | | | | | | | | | 2.6 | | | | | | 1 | | % | | | | | | | | | | | | |

Revenue in the United States increased during fiscal 2020, as compared to fiscal 2019, primarily due to an increase in revenue for software and IP offerings.

Revenue in China increased during fiscal 2020, as compared to fiscal 2019,due to increased demand from many of our customers in China.

This was followed by an additional increase in demand in the second half of fiscal 2020 that resulted in approximately 17% of our revenue being generated from customers in China, as compared to approximately 10% during the second half of fiscal 2019.

During fiscal 2021, we expect revenue from our customers in China to be consistent, as a percentage of total revenue, with the first half of fiscal 2020.

Beginning in the second quarter of fiscal 2019, we have not been able to deliver maintenance or support for certain customers in China due to the U.S. Department of Commerce’s designation of these customers to the “Entity List.” We expect these restrictions and new or expanded trade restrictions to continue to impact revenue from certain customers in China.

For the primary factors contributing to the change in revenue for other geographies during fiscal 2020, as compared to fiscal 2019, see the general description under “Revenue by Year” and “Revenue by Product Category” above.

Despite an increase in services revenue, cost of services decreased during fiscal 2020, as compared to fiscal 2019, due to a higher margin on the mix of services arrangements in fiscal 2020, compared to fiscal 2019, and temporary savings due to the COVID pandemic.

During fiscal 2020 we experienced decreased operating expenses for travel, meetings and events due to various measures implemented to contain COVID-19.

| Travel and sales meetings | | | (13.0) | | | | | | | | |

This increase was partially offset by reduced costs for marketing events and travel due to COVID-19.

| Product development costs | | | 3.7 | | | | | | | | |

| Travel | | | (11.8) | | | | | | | | |

This increase was partially offset by reduced costs for travel due to COVID-19.

| Facilities and other infrastructure costs | | | 2.6 | | | | | | | | |

| University endowment | | | 2.0 | | | | | | | | |

| Stock-based compensation | | | 2.0 | | | | | | | | |

This increase was partially offset by certain intangible assets becoming fully amortized during fiscal 2020 and 2019.

Restructuring and Other Charges

The following table presents restructuring and other charges, net for our restructuring plans:

| Severance and benefits | | | $ | 7.5 | | | | | $ | 8.6 | | | | | | | |

| Excess facilities | | | 1.7 | | | | | | — | | | | | | | | |

| Total | | | $ | 9.2 | | | | | $ | 8.6 | | | | | | | |

During fiscal 2021, we expect growth in operating margin will be more moderate due to an increase in costs and expenses associated with acquisitions, including increased amortization of intangibles.

We also expect an increase in expenses related to travel, meetings and events if measures implemented to contain COVID-19 are lifted.

The following table provides information about our foreign currency forward exchange contracts as of January [removed: 2, 2021.][added: 1, 2022.]

All of these forward contracts matured during [removed: February 2021.][added: February, 2022.]

| European Union euro | | | $ | [removed: 133.0] [added: 140.8] | | | | | [removed: 0.84] [added: 0.88] | | |

| Estimated fair value | | | $ | [removed: 8.9] [added: (0.3)] | | | | | | | |

The carrying value of our interest-bearing instruments approximated fair value as of January [removed: 2, 2021.][added: 1, 2022.]

As of January [removed: 2, 2021,] [added: 1, 2022,] there were no borrowings outstanding under our revolving credit facility.

| British pound | | | 104.3 | | | | | | 0.74 | | |

| Israeli shekel | | | 84.1 | | | | | | 3.10 | | |

| Japanese yen | | | 57.5 | | | | | | 114.50 | | |

| Indian rupee | | | 29.4 | | | | | | 75.23 | | |

| Swedish krona | | | 22.3 | | | | | | 9.01 | | |

| Canadian dollar | | | 11.7 | | | | | | 1.26 | | |

| Chinese renminbi | | | 7.3 | | | | | | 6.43 | | |

| Taiwan dollar | | | 5.6 | | | | | | 27.62 | | |

| Other | | | 6.4 | | | | | | N/A | | |

| Total | | | $ | 469.4 | | | | | | | |

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Assuming all loans were fully drawn and we were to fully exercise our right to increase borrowing capacity under our revolving credit facility, each quarter point change in interest rates would result in a $2.6 million change in annual interest expense on our indebtedness under our revolving credit facility.

| British pound | | | 103.2 | | | | | | 0.75 | | |

| Israeli shekel | | | 68.4 | | | | | | 3.34 | | |

| Japanese yen | | | 31.0 | | | | | | 103.96 | | |

| Swedish krona | | | 29.9 | | | | | | 8.49 | | |

| Chinese renminbi | | | 24.4 | | | | | | 6.59 | | |

| Indian rupee | | | 27.4 | | | | | | 74.57 | | |

| Taiwan dollar | | | 14.8 | | | | | | 28.02 | | |

| Canadian dollar | | | 7.9 | | | | | | 1.3 | | |

| Other | | | 6.6 | | | | | | N/A | | |

| Total | | | $ | 446.6 | | | | | | | |

Statements including, but not limited to, statements regarding the extent and timing of future revenues and expenses and customer demand, statements regarding the deployment of our products and services, statements regarding our reliance on third parties, [added: statements regarding the impact on our business of the COVID-19 pandemic] and [added: related public health measures or mandates, and other and] statements using words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “intends,” “may,” “plans,” “projects,” “should,” “targets,” “will” and “would,” and words of similar import and the negatives thereof, constitute forward-looking statements.

Important risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements include, but are not limited to, those identified in “Proprietary Technology,” “Competition,” “Risk Factors,” “Critical Accounting Estimates,” “Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and “Liquidity and Capital Resources” [added: sections] contained in this Annual Report on Form 10-K and the risks discussed in our other Securities and Exchange Commission (“SEC”) filings.*

Cadence is a leader in electronic [added: system] design, building upon more than 30 years of computational software expertise.

We apply our underlying Intelligent System Design™ strategy to deliver [added: computational] software, hardware and IP that turn design concepts into reality.

Our customers include some of the world’s most innovative companies that deliver extraordinary electronic products from chips to boards to systems for dynamic market [removed: applications including consumer, hyperscale computing, 5G communications, mobile automotive, aerospace and defense, industrial and healthcare.][added: applications.]

Our semiconductor customers deliver ICs, which include subcategories such as [removed: memory chips,] [added: processors,] SoCs, [added: AI, memory,] analog [removed: chips, processors] and other types of chips.

Systems customers use our offerings to [removed: develop] [added: design, simulate,] and [removed: integrate software that is key to] [added: verify] the [removed: functionality] [added: electro-thermal] and [removed: analysis] [added: physical functionality] of their [removed: products, as well as to design their ICs] [added: ICs, PCBs,] and [removed: PCBs.][added: systems products.]

Additionally, [removed: some] customers license our IP, which accelerates their product development processes by providing pre-designed and verified circuit blocks for their ICs.

[removed: With our Intelligent System Design™] [added: Our] strategy, [added: which] we [added: call Intelligent System Design, is to] provide the computational software technologies necessary for our electronic system and semiconductor customers to develop [removed: electronic] products across a variety of vertical markets including consumer, hyperscale computing, mobile, 5G communications, automotive, aerospace and defense, industrial and healthcare.

Today, our offerings include and extend beyond [removed: core] EDA to enable computational software for Intelligent System Design across three layers as illustrated below—starting with IC and SoC design excellence, followed by system innovation, and then pervasive intelligence.

[removed: ][added: ]

The most promising new opportunities for us involve enabling the design of electronic systems for [removed: consumer (including] [added: consumers, including] augmented reality (“AR”), virtual reality (“VR”), and [added: industrial] internet of things [removed: (“IoT”),] [added: (“IIoT”),] hyperscale computing (including data center infrastructure), AI, edge computing, mobile, communications (including 5G networks), automotive, aerospace and defense, and industrial and healthcare subsystems.

In general, these attributes can be grouped into broader categories such as quality of results (“QoR”) (in terms of power consumption, performance and chip area), engineering productivity, tool performance, [added: manufacturing, reliability,] and faster time to market.

We are applying machine learning or computational software techniques within our products to enhance QoR, productivity, [removed: performance] [added: performance, manufacturing, reliability] and methodology.

We [removed: combine] [added: group] our products [removed: and technologies] into categories related to major design activities, including Custom IC Design and Simulation, Digital IC Design and Signoff, Functional Verification, IP, and System Design and Analysis.

[removed: Digital] [added: Our digital] IC design and signoff [removed: offerings] [added: solutions] are used to create logical representations of a digital circuit or an IC that can be verified for correctness prior to implementation (please refer to the discussion under “Functional Verification” below).

Our digital IC design and signoff technology suite provides a full flow to achieve power, [removed: performance,] [added: performance] and area (“PPA”) design targets, and includes three major categories: logic design, physical implementation and signoff.

We also offer the Modus software solution, which reduces SoC design-for-test [removed: (“DFT”)] time.

Our design-for-manufacturing [removed: (“DFM”)] products are also included in our signoff offering and are used by customers to address manufacturing and yield issues as early in the product development process as possible.

Once the design is more mature, with early formal and simulation verification tasks performed, verification engineers deploy our Palladium® Enterprise Emulation Platform and Protium™ FPGA-Based Prototyping Platforms for more comprehensive chip verification, often running low-level embedded software on top of a model of the chip, to [removed: ensure] [added: provide for] proper functionality before silicon manufacturing.

[removed: The] [added: Our] Palladium [removed: Z1] platform provides high throughput, capacity, data center reliability and workgroup productivity to enable global design teams to develop advanced hardware-software systems.

These engines are also supported by other verification tools that provide an environment that allows for effective verification throughput and management, including verification planning and metric tracking, testbench automation, debugging and software-driven tests, enabling our customers to coordinate verification activities across multiple verification engines, [removed: and] teams and locations for effective verification closure.

[removed: We have significantly expanded our] [added: Our] design IP portfolio [removed: in recent years through acquisitions and internal development, providing] [added: also includes] solutions for high speed SerDes, PCI, USB and many other standards.

[added: Our] VIP and accelerated VIP [removed: (“AVIP”), which is used in emulation,] are used [removed: across the] [added: with our full] suite of functional verification engines to [removed: verify] [added: emulate and model] the [removed: correct] [added: expected behavior and] interaction [removed: with dozens] of [removed: design IP] [added: standard industry system] interface protocols [removed: such as] [added: including] DDR, [removed: USB] [added: USB,] and PCI [removed: Express®.][added: Express® in silicon.]

Our system design and analysis offerings are used by our customers to develop PCBs and [added: advanced] IC packages and to analyze electromagnetic, electro-thermal and other multi-physics effects.

The capabilities in the Allegro® System Design Platform include PCB authoring and implementation, IC package and system-in-package [removed: (“SiP”)] design, signal and power integrity [removed: (“SI/PI”)] analysis, and PCB library design management and collaboration.

Careful analysis is required [removed: to assure] [added: for] these systems [removed: will] [added: to] work as designed under a wide range of operating conditions and within compliance of standards and laws.

In addition, certain time-based license arrangements include the right for the customer to remix among the products delivered at the outset of the arrangement and use [removed: of] unspecified additional products that become commercially available during the term of the arrangement.

Payment terms for time-based licenses generally provide for payments to be made over the license [removed: period] [added: period,] and payment terms for perpetual licenses generally are net 30 days.

The Cadence Cloud portfolio, consisting of Cadence-managed and customer-managed environments for electronic product developers using the scalability of the cloud, continues to [removed: expand and now includes a broader] [added: expand, with additional] cloud-ready [removed: set of products.][added: products added or under development in fiscal 2021.]

Contractual arrangements with customers for both environments are time-based, similar to the on-premises software license arrangements described [removed: above.][added: above, and may also include usage-based terms.]

[removed: In addition, we made] [added: Our Learning and Support System gives customers easy access to extensive] online training [removed: free of cost] and [removed: expanded our] webinar offerings to support the increase in the number of our [removed: customers] [added: customers’ employees] working from [removed: home this year.][added: home.]

The customers for these services primarily consist of semiconductor and systems companies developing products for the consumer, hyperscale computing, 5G communications, mobile automotive, aerospace and defense, industrial and [removed: healthcare.][added: healthcare verticals.]

We also have a strategic partnership with Green Hills [removed: Software to provide] [added: Software, an industry leader in] embedded [removed: systems solutions focused on] safety and security [removed: for critical applications such as aerospace and defense, automotive, industrial and medical devices.][added: software solutions.]

| | | | [removed: 2020] [added: 2021] | | | | | | | | | | | | [removed: 2019] [added: 2020] | | | | | | | | | | | | [removed: 2018] [added: 2019] | | | | | | | | |

| Product and maintenance | | | $ | [removed: 2,537] [added: 2,813] | | | | | [removed: 95] [added: 94] | | % | | | | $ | [removed: 2,204] [added: 2,537] | | | | | [removed: 94] [added: 95] | | % | | | | $ | [removed: 1,998] [added: 2,204] | | | | | [removed: 93] [added: 94] | | % |

| Services | | | [removed: 146] [added: 175] | | | | | | [removed: 5] [added: 6] | | % | | | | [removed: 132] [added: 146] | | | | | | [removed: 6] [added: 5] | | % | | | | [removed: 140] [added: 132] | | | | | | [removed: 7] [added: 6] | | % |

| Total revenue | | | $ | [removed: 2,683] [added: 2,988] | | | | | | | | | | | $ | [removed: 2,336] [added: 2,683] | | | | | | | | | | | $ | [removed: 2,138] [added: 2,336] | | | | | | | |

[removed: Between] [added: In any fiscal year, we expect between] 85% and 90% of our [added: annual] revenue [removed: is] [added: to be] characterized as recurring revenue.

Revenue characterized as recurring includes revenue recognized over time from our software arrangements, services, [removed: royalties from certain IP arrangements,] [added: royalties,] maintenance on IP licenses and hardware, operating leases of hardware and revenue recognized at varying points in time over the term of our IP Access [removed: Agreements.][added: Agreements that include non-cancellable commitments from customers.]

We enable our customers to develop electronic products.

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During fiscal 2021, we continued to execute our Intelligent System Design strategy and expanded our product offerings and solutions into computational fluid dynamics (“CFD”) with our acquisitions of Belgium-based NUMECA International, a leader in CFD technology, and Pointwise, Inc, a leading provider of CFD meshing technology.

The addition of these technologies and talent broadens our System Design and Analysis portfolio and expertise.

Chief Executive Officer Transition

On December 15, 2021, Anirudh Devgan assumed the role of President and Chief Executive Officer of Cadence, replacing Lip-Bu Tan.

Prior to his role as Chief Executive Officer, Dr. Devgan served as President of Cadence.

Concurrently, Mr. Tan transitioned to the role of Executive Chair.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

Many of these attributes contribute to the sustainability of our planet by enabling our customers to create innovative products that optimize power, space and energy needs.

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Our customers also use our System VIP offerings to perform full system-level chip verification.

The addition of our CFD solution expands our ability to meet the growing design challenges of electronic and systems companies.

Our CFD solution enables our customers to extend their multi-physics analysis workflows to address simulation and analysis challenges for applications such as aerodynamics, hydrodynamics, propulsion, heat transfer, and combustion.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

The remainder of our revenue is recognized at a point in time and is characterized as up-front revenue.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

Future export regulations may also impact our ability to transact business with certain customers and in certain countries and may restrict certain non-U.S. person employees from performing their duties at Cadence without first obtaining appropriate authorization if their duties involve an export, reexport, or transfer of export-controlled technology.

To measure engagement and collect feedback from our employees, we administer regular employee engagement surveys.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

Compensation and Benefits

During fiscal 2021, we formed the Cadence Giving Foundation with the goal of giving back to the communities where we live and work.

This stand-alone, non-profit foundation will partner with other charitable initiatives to support critical needs in areas such as diversity, equity and inclusion, environmental sustainability and science, technology, engineering, and mathematics (“STEM”) education.

Through these initiatives, we plan to reduce our scope 1 and scope 2 greenhouse gas emissions 25% by 2025, over our 2019 baseline.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

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| Thomas P. Beckley | | | | | | 64 | | | | | | Senior Vice President and General Manager of the Custom IC and PCB Group | | |

| Paul Cunningham | | | | | | 44 | | | | | | Senior Vice President and General Manager of the System and Verification Group | | |

PAUL CUNNINGHAM has served as Senior Vice President and General Manager of the System and Verification Group since March 2021.

From August 2011 to March 2021, Mr. Cunningham held several positions at Cadence, most recently as Corporate Vice President of the System Verification Group beginning January 2018.

Prior to joining Cadence, Mr. Cunningham was co-founder and Chief Executive Officer of Azuro, Inc., a clock concurrent optimization company, that Cadence acquired in July 2011.

Mr. Cunningham has an M.A. and Ph.D. in computer science from the University of Cambridge in the United Kingdom.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

Our customers create and sell electronic products at differing levels of end-product completeness.

Recently, we have added System VIP offerings for system-level verification to model full system-level behavior at the chip level.

In 2020, we expanded our technology portfolio with the Clarity 3D Transient Solver, a 3D finite difference time domain (“FDTD”) electromagnetic (“EM”) simulation software tool for simulating complex systems and subsystems, the EMX Planar 3D Solver, an EM simulator for high-frequency RF- and mixed-signal circuits and the portfolio from our acquisition of AWR Corporation (“AWR”) that provides software products used by microwave and RF engineers to design wireless products for complex, high-frequency RF applications.

To broaden the Cadence System Design and Analysis portfolio and expand the engineering talent, we entered into a definitive agreement to acquire Belgium-based Numerical Mechanics Applications International SA (“NUMECA”), a leader in computational fluid dynamics (“CFD”), mesh generation, multi-physics simulation and optimization.

The addition of NUMECA’s technologies and talent supports our Intelligent System Design™ strategy, servicing a fast-moving CFD market segment where accuracy, reliability and predictability are paramount concerns for high-fidelity modeling.

The acquisition is expected to close in the first quarter of fiscal 2021, subject to customary closing conditions.

In fiscal 2020, as part of our continuous endeavor to simplify training for our customers, we integrated Cadence Training’s Learning Management System and Cadence Support to create the Cadence Learning and Support System.

With a single sign-on and an improved user experience, the new system gives customers easy access to extensive content.

- Networking events hosted by our Women@Cadence group to build a strong community.

Additionally, we enhanced our global employee assistance programs to connect employees and their families with resources, information, and counseling to address the challenges caused by the pandemic, such as increased anxiety or stress.

Compensation

Using 2019 as a baseline, we have set a target to reduce our scope 1 and scope 2 emissions by 15% by 2025.

| Anirudh Devgan | | | | | | 51 | | | | | | President | | |

| Surendra Babu Mandava | | | | | | 62 | | | | | | Senior Vice President, Research and Development | | |

LIP-BU TAN has served as Chief Executive Officer of Cadence since January 2009.

From January 2009 to November 2017, Mr. Tan also served as President of Cadence.

Mr. Tan has been a member of the Cadence Board of Directors since February 2004.

In 1987, Mr. Tan founded Walden International, an international venture capital firm, and since that time has served as its Chairman.

Mr. Tan serves as a director of Hewlett Packard Enterprise Company, Schneider Electric SE and SoftBank Group Corp. Mr. Tan has a B.S. from Nanyang University in Singapore, an M.S. in nuclear engineering from the Massachusetts Institute of Technology and an M.B.A. from the University of San Francisco.

SURENDRA BABU MANDAVA has served as Senior Vice President, Research and Development of Cadence since January 2017.

Prior to joining Cadence, Mr. Mandava served as Chief Executive Officer of Ineda Systems Inc., a low-power SoC solutions company, from November 2014 to July 2016, Vice President of Broadcom Corporation, a provider of semiconductor solutions, from November 2010 to December 2012, and President and then as Chief Executive Officer of Beceem Communications Inc., a semiconductor company, from December 2003 until it was acquired by Broadcom in November 2010.

Mr. Mandava has a B.Tech.

in electronics and communication engineering from the Regional Engineering College, Trichy, and a M.Tech.

in electrical engineering and computer science from the Indian Institute of Technology, Kanpur.

From time to time, we are involved in various disputes and [removed: litigation] [added: legal proceedings] that arise in the ordinary course of business.

These include disputes and [removed: lawsuits] [added: legal proceedings] related to intellectual property, indemnification obligations, mergers and acquisitions, licensing, contracts, [added: customers, products,] distribution [added: and other commercial] arrangements and employee relations matters.

As additional information becomes available, we reassess the potential liability related to pending claims and [removed: litigation matters] [added: legal proceedings] and may revise estimates.

For the fiscal year ended January [removed: 2, 2021][added: 1, 2022]

[removed: ][added: ]

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter ended [removed: June 27, 2020] [added: July 3, 2021] was approximately [removed: $26,162,000,000.][added: $38,179,000,000.]

On February [removed: 6, 2021,] [added: 5, 2022,] approximately [removed: 278,974,000] [added: 277,336,000] shares of the Registrant’s Common Stock, $0.01 par value, were outstanding.

Portions of the definitive proxy statement for Cadence Design Systems, Inc.’s [removed: 2021] [added: 2022] Annual Meeting of Stockholders are incorporated by reference into Part III hereof.

| Item 1. | | | [removed: [Business](#i7db652776ff546b7bfc0141f88148829_13)] [added: [Business](#i090043fcb1da400aaac214abf3d3ee98_13)] | | | [removed: [1](#i7db652776ff546b7bfc0141f88148829_13)] [added: [1](#i090043fcb1da400aaac214abf3d3ee98_13)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i7db652776ff546b7bfc0141f88148829_22)] [added: Factors](#i090043fcb1da400aaac214abf3d3ee98_22)] | | | [removed: [11](#i7db652776ff546b7bfc0141f88148829_22)] [added: [11](#i090043fcb1da400aaac214abf3d3ee98_22)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i7db652776ff546b7bfc0141f88148829_25)] [added: Comments](#i090043fcb1da400aaac214abf3d3ee98_25)] | | | [removed: [25](#i7db652776ff546b7bfc0141f88148829_25)] [added: [25](#i090043fcb1da400aaac214abf3d3ee98_25)] | | |

| Item 2. | | | [removed: [Properties](#i7db652776ff546b7bfc0141f88148829_28)] [added: [Properties](#i090043fcb1da400aaac214abf3d3ee98_28)] | | | [removed: [25](#i7db652776ff546b7bfc0141f88148829_28)] [added: [25](#i090043fcb1da400aaac214abf3d3ee98_28)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i7db652776ff546b7bfc0141f88148829_31)] [added: Proceedings](#i090043fcb1da400aaac214abf3d3ee98_31)] | | | [removed: [26](#i7db652776ff546b7bfc0141f88148829_31)] [added: [26](#i090043fcb1da400aaac214abf3d3ee98_31)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i7db652776ff546b7bfc0141f88148829_34)] [added: Disclosures](#i090043fcb1da400aaac214abf3d3ee98_34)] | | | [removed: [26](#i7db652776ff546b7bfc0141f88148829_34)] [added: [26](#i090043fcb1da400aaac214abf3d3ee98_34)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i7db652776ff546b7bfc0141f88148829_40)] [added: Securities](#i090043fcb1da400aaac214abf3d3ee98_40)] | | | [removed: [27](#i7db652776ff546b7bfc0141f88148829_40)] [added: [27](#i090043fcb1da400aaac214abf3d3ee98_40)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i7db652776ff546b7bfc0141f88148829_55)] [added: Operations](#i090043fcb1da400aaac214abf3d3ee98_55)] | | | [removed: [29](#i7db652776ff546b7bfc0141f88148829_55)] [added: [28](#i090043fcb1da400aaac214abf3d3ee98_55)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i7db652776ff546b7bfc0141f88148829_85)] [added: Risk](#i090043fcb1da400aaac214abf3d3ee98_85)] | | | [removed: [42](#i7db652776ff546b7bfc0141f88148829_85)] [added: [41](#i090043fcb1da400aaac214abf3d3ee98_85)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i7db652776ff546b7bfc0141f88148829_88)] [added: Data](#i090043fcb1da400aaac214abf3d3ee98_88)] | | | [removed: [43](#i7db652776ff546b7bfc0141f88148829_88)] [added: [42](#i090043fcb1da400aaac214abf3d3ee98_88)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i7db652776ff546b7bfc0141f88148829_91)] [added: Disclosure](#i090043fcb1da400aaac214abf3d3ee98_91)] | | | [removed: [44](#i7db652776ff546b7bfc0141f88148829_91)] [added: [42](#i090043fcb1da400aaac214abf3d3ee98_91)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i7db652776ff546b7bfc0141f88148829_94)] [added: Procedures](#i090043fcb1da400aaac214abf3d3ee98_94)] | | | [removed: [44](#i7db652776ff546b7bfc0141f88148829_94)] [added: [42](#i090043fcb1da400aaac214abf3d3ee98_94)] | | |

| Item 9B. | | | [Other [removed: Information](#i7db652776ff546b7bfc0141f88148829_97)] [added: Information](#i090043fcb1da400aaac214abf3d3ee98_97)] | | | [removed: [44](#i7db652776ff546b7bfc0141f88148829_97)] [added: [43](#i090043fcb1da400aaac214abf3d3ee98_97)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#i7db652776ff546b7bfc0141f88148829_103)] [added: Governance](#i090043fcb1da400aaac214abf3d3ee98_103)] | | | [removed: [45](#i7db652776ff546b7bfc0141f88148829_103)] [added: [44](#i090043fcb1da400aaac214abf3d3ee98_103)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i7db652776ff546b7bfc0141f88148829_106)] [added: Compensation](#i090043fcb1da400aaac214abf3d3ee98_106)] | | | [removed: [45](#i7db652776ff546b7bfc0141f88148829_106)] [added: [44](#i090043fcb1da400aaac214abf3d3ee98_106)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i7db652776ff546b7bfc0141f88148829_109)] [added: Matters](#i090043fcb1da400aaac214abf3d3ee98_109)] | | | [removed: [45](#i7db652776ff546b7bfc0141f88148829_109)] [added: [44](#i090043fcb1da400aaac214abf3d3ee98_109)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions and Director [removed: Independence](#i7db652776ff546b7bfc0141f88148829_112)] [added: Independence](#i090043fcb1da400aaac214abf3d3ee98_112)] | | | [removed: [45](#i7db652776ff546b7bfc0141f88148829_112)] [added: [44](#i090043fcb1da400aaac214abf3d3ee98_112)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#i7db652776ff546b7bfc0141f88148829_115)] [added: Services](#i090043fcb1da400aaac214abf3d3ee98_115)] | | | [removed: [45](#i7db652776ff546b7bfc0141f88148829_115)] [added: [44](#i090043fcb1da400aaac214abf3d3ee98_115)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#i7db652776ff546b7bfc0141f88148829_121)] [added: Schedules](#i090043fcb1da400aaac214abf3d3ee98_121)] | | | [removed: [46](#i7db652776ff546b7bfc0141f88148829_121)] [added: [45](#i090043fcb1da400aaac214abf3d3ee98_121)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#i7db652776ff546b7bfc0141f88148829_232)] [added: Summary](#i090043fcb1da400aaac214abf3d3ee98_214)] | | | [removed: [86](#i7db652776ff546b7bfc0141f88148829_232)] [added: [85](#i090043fcb1da400aaac214abf3d3ee98_214)] | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

FOR THE FISCAL YEAR ENDED JANUARY 1, 2022

| Item 6. | | | [\[Reserved\]](#i090043fcb1da400aaac214abf3d3ee98_52) | | | [28](#i090043fcb1da400aaac214abf3d3ee98_52) | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i090043fcb1da400aaac214abf3d3ee98_1884) | | | [43](#i090043fcb1da400aaac214abf3d3ee98_1884) | | |

| | | | | | | | | |

| | | | [Signatures](#i090043fcb1da400aaac214abf3d3ee98_217) | | | [86](#i090043fcb1da400aaac214abf3d3ee98_217) | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

| Item 6. | | | [Selected Financial Data](#i7db652776ff546b7bfc0141f88148829_52) | | | [28](#i7db652776ff546b7bfc0141f88148829_52) | | |

| | | | [Signatures](#i7db652776ff546b7bfc0141f88148829_235) | | | [87](#i7db652776ff546b7bfc0141f88148829_235) | | |

As of January [removed: 2, 2021,] [added: 1, 2022,] the total square footage of our owned buildings was approximately 1,010,000.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

As of February [removed: 6, 2021,] [added: 5, 2022,] we had [removed: 410] [added: 384] registered stockholders and approximately [removed: 250,000] [added: 340,000] beneficial owners of our common stock.

The graph assumes that the value of the investment in our common stock and in each index on [removed: January 2,] [added: December 31,] 2016 (including reinvestment of dividends) was $100 and tracks it each year thereafter on the last day of our fiscal year through January [removed: 2, 2021] [added: 1, 2022] and, for each index, on the last day of the calendar year.

[removed: ][added: ]

| | | | | | | [removed: 1/2/2016] [added: 12/31/2016] | | | | | | [removed: 12/31/2016] [added: 12/30/2017] | | | | | | [removed: 12/30/2017] [added: 12/29/2018] | | | | | | [removed: 12/29/2018] [added: 12/28/2019] | | | | | | [removed: 12/28/2019] [added: 1/2/2021] | | | | | | [removed: 1/2/2021] [added: 1/1/2022] | | |

[removed: At] [added: As of] the end of fiscal [removed: 2019,] [added: 2020,] approximately [removed: $369] [added: $739] million remained available under [removed: our] [added: the] previously announced authorization to repurchase shares of our common stock.

In [removed: July 2020,] [added: August 2021,] our Board of Directors increased the [removed: previously announced] [added: prior] authorization to repurchase shares of our common stock by [added: authorizing] an additional [removed: $750 million.][added: $1 billion.]

As of January [removed: 2, 2021,] [added: 1, 2022,] approximately [removed: $739 million] [added: $1.1 billion of the share repurchase authorization] remained available to repurchase shares of our common stock.

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 January [removed: 2, 2021:][added: 1, 2022:]

| Period | | | Total Number of Shares Purchased (1) | | | | | | Average Price Paid Per Share (2) | | | | | | Total Number of Shares Purchased as Part of Publicly Announced [removed: Plan] [added: Plans] or [removed: Program] [added: Programs] | | | | | | Maximum Dollar Value of Shares Authorized for Repurchase Under Publicly Announced Plan or Program (1) (In millions) | | |

| Cadence Design Systems, Inc. | | | | | | $ | 100.00 | | | | | $ | 165.82 | | | | | $ | 171.85 | | | | | $ | 278.71 | | | | | $ | 540.96 | | | | | $ | 738.90 | |

| Nasdaq Composite | | | | | | 100.00 | | | | | | 129.64 | | | | | | 125.96 | | | | | | 172.17 | | | | | | 249.51 | | | | | | 304.85 | | |

| S&P 500 | | | | | | 100.00 | | | | | | 121.83 | | | | | | 116.49 | | | | | | 153.17 | | | | | | 181.35 | | | | | | 233.41 | | |

| S&P 500 Information Technology | | | | | | 100.00 | | | | | | 138.83 | | | | | | 138.43 | | | | | | 208.05 | | | | | | 299.37 | | | | | | 402.73 | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

| October 3, 2021 - November 6, 2021 | | | 273,361 | | | | | | $ | 160.04 | | | | | 258,000 | | | | | | $ | 1,195 | |

| November 7, 2021 - December 4, 2021 | | | 206,571 | | | | | | $ | 182.03 | | | | | 188,200 | | | | | | $ | 1,161 | |

| December 5, 2021 - January 1, 2022 | | | 202,711 | | | | | | $ | 182.44 | | | | | 188,800 | | | | | | $ | 1,126 | |

| Total | | | 682,643 | | | | | | $ | 173.34 | | | | | 635,000 | | | | | | | | |

| Cadence Design Systems, Inc. | | | | | | $ | 100.00 | | | | | $ | 121.19 | | | | | $ | 200.96 | | | | | $ | 208.27 | | | | | $ | 337.77 | | | | | $ | 655.60 | |

| Nasdaq Composite | | | | | | 100.00 | | | | | | 118.10 | | | | | | 153.10 | | | | | | 148.75 | | | | | | 203.33 | | | | | | 294.67 | | |

| S&P 500 | | | | | | 100.00 | | | | | | 117.81 | | | | | | 143.52 | | | | | | 137.23 | | | | | | 180.44 | | | | | | 213.64 | | |

| S&P 500 Information Technology | | | | | | 100.00 | | | | | | 119.63 | | | | | | 166.09 | | | | | | 165.61 | | | | | | 248.89 | | | | | | 358.13 | | |

| September 27, 2020 – October 31, 2020 | | | 456,598 | | | | | | $ | 110.99 | | | | | 416,064 | | | | | | $ | 823 | |

| November 1, 2020 – November 28, 2020 | | | 357,411 | | | | | | $ | 114.82 | | | | | 331,060 | | | | | | $ | 785 | |

| November 29, 2020 – January 2, 2021 | | | 479,517 | | | | | | $ | 121.92 | | | | | 375,702 | | | | | | $ | 739 | |

| Total | | | 1,293,526 | | | | | | $ | 116.10 | | | | | 1,122,826 | | | | | | | | |

The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and the notes thereto and the information contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Historical results are not necessarily indicative of future results.

The notes below the table are provided for comparability purposes due to adoptions of accounting pronouncements or to describe significant transactions that may not occur frequently.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

| | | | (In millions, except per share amounts) | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Revenue (1) (2) | | | $ | 2,682.9 | | | | | $ | 2,336.3 | | | | | $ | 2,138.0 | | | | | $ | 1,943.0 | | | | | $ | 1,816.1 | |

| Income from operations (1) (2) | | | 645.6 | | | | | | 491.8 | | | | | | 396.2 | | | | | | 324.0 | | | | | | 244.9 | | |

| Net income (1) (2) (3) (4) | | | 590.6 | | | | | | 989.0 | | | | | | 345.8 | | | | | | 204.1 | | | | | | 203.1 | | |

| Net income per share-diluted (1) (2) (3) (4) | | | 2.11 | | | | | | 3.53 | | | | | | 1.23 | | | | | | 0.73 | | | | | | 0.70 | | |

| Total assets (4) | | | 3,950.8 | | | | | | 3,357.2 | | | | | | 2,468.7 | | | | | | 2,418.7 | | | | | | 2,096.9 | | |

| Debt (5) | | | 346.8 | | | | | | 346.0 | | | | | | 445.3 | | | | | | 729.4 | | | | | | 693.5 | | |

| Stockholders’ equity (6) | | | 2,493.0 | | | | | | 2,102.9 | | | | | | 1,288.4 | | | | | | 989.2 | | | | | | 741.8 | | |

_________________

(1) On the first day of fiscal 2018, we adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provided a new basis of accounting for our revenue arrangements.

Because of the adoption, results of operations for fiscal 2020, 2019 and 2018 are not comparable to the results of operations for the other fiscal years presented in the table above.

(2) Fiscal 2020 was a 53-week year, compared to 2019 and 2018, which were each 52-week fiscal years.

The additional week in fiscal 2020 resulted in additional revenue of approximately $45 million and additional expense, including stock-based compensation and amortization of acquired intangibles, of approximately $35 million.

(3) During fiscal 2017, we recorded a provisional income tax expense of $96.8 million related to the income tax effects of the Tax Act, which included $67.2 million related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings.

In accordance with SAB 118, we updated the one-time transition tax estimate to $65.8 million during fiscal 2018.

We finalized our other fiscal 2017 provisional estimates without change during fiscal 2018.

(4) During fiscal 2019, we completed intercompany transfers of certain intangible property rights to our Irish subsidiary which resulted in the establishment of a net deferred tax asset and the recognition of an income tax benefit of $575.6 million.

(5) During fiscal 2018, we prepaid the outstanding principal balance and accrued interest on our $300.0 million 2019 Term Loan.

(6) We have never declared or paid any cash dividends on our common stock.

Summary Quarterly Data-Unaudited

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | | | | | | | |

| | | | | | | 4th | | | | | | 3rd | | | | | | 2nd | | | | | | 1st | | | | | | 4th | | | | | | 3rd | | | | | | 2nd | | | | | | 1st | | |

| | | | | | | (In thousands, except per share amounts) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Revenue (1) | | | | | | $ | 759,909 | | | | | $ | 666,607 | | | | | $ | 638,418 | | | | | $ | 617,957 | | | | | $ | 599,555 | | | | | $ | 579,603 | | | | | $ | 580,419 | | | | | $ | 576,742 | |

| Cost of revenue (1) | | | | | | 73,536 | | | | | | 82,284 | | | | | | 75,215 | | | | | | 74,463 | | | | | | 73,328 | | | | | | 60,975 | | | | | | 61,469 | | | | | | 70,585 | | |

| Net income (1) (2) | | | | | | 173,738 | | | | | | 161,630 | | | | | | 131,288 | | | | | | 123,988 | | | | | | 659,675 | | | | | | 101,514 | | | | | | 107,235 | | | | | | 120,555 | | |

| Net income per share –basic (1) (2) | | | | | | 0.63 | | | | | | 0.59 | | | | | | 0.48 | | | | | | 0.45 | | | | | | 2.41 | | | | | | 0.37 | | | | | | 0.39 | | | | | | 0.44 | | |

| Net income per share –diluted (1) (2) | | | | | | 0.62 | | | | | | 0.58 | | | | | | 0.47 | | | | | | 0.44 | | | | | | 2.36 | | | | | | 0.36 | | | | | | 0.38 | | | | | | 0.43 | | |

_________________

(1) Fiscal 2020 was a 53-week year, compared to 2019, which was a 52-week fiscal year.

The additional week in fiscal 2020 resulted in additional revenue of approximately $45 million and additional expense, including stock-based compensation and amortization of acquired intangibles, of approximately $35 million in the fourth quarter of fiscal 2020.

(2) During the fourth quarter of fiscal 2019, we completed intercompany transfers of certain intangible property rights to our Irish subsidiary, which resulted in the establishment of a net deferred tax asset and the recognition of an income tax benefit of $575.6 million.

For further discussion regarding the realignment of our international operating structure, see Note 6 in the notes to the consolidated financial statements.

As required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of January [removed: 2, 2021.][added: 1, 2022.]

Based on their evaluation as of January [removed: 2, 2021,] [added: 1, 2022,] our CEO and CFO have concluded that our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the fiscal quarter ended January [removed: 2, 2021] [added: 1, 2022] that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management assessed the effectiveness of our internal control over financial reporting as of January [removed: 2, 2021.][added: 1, 2022.]

Our management has concluded that, as of January [removed: 2, 2021,] [added: 1, 2022,] our internal control over financial reporting is effective based on these criteria.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

PART III.

None.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

PART III.

The information required by Item 10 as to directors is incorporated herein by reference from the sections entitled “Proposal 1 - Election of Directors” and, as applicable, “Security Ownership of Certain Beneficial Owners and Management - Delinquent Section 16(a) Reports” in Cadence’s definitive proxy statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

The information required by Item 10 as to Cadence’s code of ethics is incorporated herein by reference from the section entitled “Corporate Governance - Code of Business Conduct” in Cadence’s definitive proxy statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

The information required by Item 10 as to the director nomination process and Cadence’s Audit Committee is incorporated by reference from the section entitled “Board of Directors - Committees of the Board” in Cadence’s definitive proxy statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

The information required by Item 11 is incorporated herein by reference from the sections entitled “Board of Directors - Components of Director Compensation,” “Board of Directors - Director Compensation for Fiscal [removed: 2020,”] [added: 2021,”] “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Compensation Committee Interlocks and Insider Participation,” “Compensation of Executive Officers,” “Potential Payments Upon Termination or Change In Control,” and “Pay Ratio Disclosure” in Cadence’s definitive proxy statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

The information required by Item 12 is incorporated herein by reference from the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in Cadence’s definitive proxy statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

The information required by Item 13 is incorporated herein by reference from the sections entitled “Certain Transactions” and “Board of Directors - Director Independence” in Cadence’s definitive proxy statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

The information required by Item 14 is incorporated herein by reference from the section entitled “Fees Billed to Cadence by the Independent Registered Public Accounting Firm During Fiscal [removed: 2020] [added: 2021] and [removed: 2019”] [added: 2020”] in Cadence’s definitive proxy statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

| | | | [removed: [Report] [added: [Reports] of Independent Registered Public Accounting [removed: Firm](#i7db652776ff546b7bfc0141f88148829_124)] [added: Firms](#i090043fcb1da400aaac214abf3d3ee98_124) (Auditor Firm IDs 238 & 185)] | | | [removed: [47](#i7db652776ff546b7bfc0141f88148829_124)] [added: [46](#i090043fcb1da400aaac214abf3d3ee98_124)] | | |

| | | | [Consolidated Balance Sheets as of January [removed: 2, 2021] [added: 1, 2022] and [removed: December 28, 2019](#i7db652776ff546b7bfc0141f88148829_127)] [added: January 2, 2021](#i090043fcb1da400aaac214abf3d3ee98_127)] | | | [removed: [50](#i7db652776ff546b7bfc0141f88148829_127)] [added: [49](#i090043fcb1da400aaac214abf3d3ee98_127)] | | |

| | | | [Consolidated [removed: Income] Statements [added: of Comprehensive Income] for the three fiscal years ended January [removed: 2, 2021](#i7db652776ff546b7bfc0141f88148829_133)] [added: 1, 2022](#i090043fcb1da400aaac214abf3d3ee98_133)] | | | [removed: [51](#i7db652776ff546b7bfc0141f88148829_133)] [added: [51](#i090043fcb1da400aaac214abf3d3ee98_133)] | | |

| | | | [Consolidated [removed: Statements of Comprehensive] Income [added: Statements] for the three fiscal years ended January [removed: 2, 2021](#i7db652776ff546b7bfc0141f88148829_136)] [added: 1, 2022](#i090043fcb1da400aaac214abf3d3ee98_130)] | | | [removed: [52](#i7db652776ff546b7bfc0141f88148829_136)] [added: [50](#i090043fcb1da400aaac214abf3d3ee98_130)] | | |

| | | | [Consolidated Statements of Stockholders’ Equity for the three fiscal years ended January [removed: 2, 2021](#i7db652776ff546b7bfc0141f88148829_139)] [added: 1, 2022](#i090043fcb1da400aaac214abf3d3ee98_136)] | | | [removed: [53](#i7db652776ff546b7bfc0141f88148829_139)] [added: [52](#i090043fcb1da400aaac214abf3d3ee98_136)] | | |

| | | | [Consolidated Statements of Cash Flows for the three fiscal years ended January [removed: 2, 2021](#i7db652776ff546b7bfc0141f88148829_142)] [added: 1, 2022](#i090043fcb1da400aaac214abf3d3ee98_139)] | | | [removed: [54](#i7db652776ff546b7bfc0141f88148829_142)] [added: [53](#i090043fcb1da400aaac214abf3d3ee98_139)] | | |

| | | | [Notes to Consolidated Financial [removed: Statements](#i7db652776ff546b7bfc0141f88148829_145)] [added: Statements](#i090043fcb1da400aaac214abf3d3ee98_142)] | | | [removed: [55](#i7db652776ff546b7bfc0141f88148829_145)] [added: [54](#i090043fcb1da400aaac214abf3d3ee98_142)] | | |

© [removed: 2021] [added: 2022] Cadence Design Systems, Inc. All rights reserved worldwide.

We have audited the accompanying consolidated balance [removed: sheet] [added: sheets] of Cadence Design Systems, Inc. and its subsidiaries (the “Company”) as of January [added: 1, 2022 and January] 2, 2021, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for the [removed: year] [added: years] then ended, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of January [removed: 2, 2021,] [added: 1, 2022,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January [added: 1, 2022 and January] 2, 2021, and the results of its operations and its cash flows for the [removed: year] [added: years] then ended in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January [removed: 2, 2021,] [added: 1, 2022,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our [removed: audit.][added: audits.]

Those standards require that we plan and perform the [removed: audit] [added: audits] to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our [removed: audit] [added: audits] of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

We believe that our [removed: audit provides] [added: audits provide] a reasonable basis for our opinions.

As described in Note 2 [added: and Note 5] to the consolidated financial statements, the Company enters into contracts that can include various combinations of licenses, products, and services, some of which are distinct and are accounted for as separate performance obligations.

For the year ended January [removed: 2, 2021,] [added: 1, 2022,] the Company’s total revenue was [removed: $2.683] [added: $2.988] billion.

We have audited the accompanying consolidated [removed: balance sheet of Cadence Design Systems, Inc. and subsidiaries (the Company) as of December 28, 2019, the related consolidated] statements of income, comprehensive income, stockholders’ equity, and cash flows for [removed: each of] the [removed: years in the two-year period] [added: year] ended December 28, 2019, and the related notes (collectively, the consolidated financial [removed: statements).][added: statements) of Cadence Design Systems, Inc. and subsidiaries (the Company).]

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the [removed: financial position of the Company as of December 28, 2019, and the] results of [removed: its] [added: the Company’s] operations and its cash flows for [removed: each of] the [removed: years in the two-year period] [added: year] ended December 28, 2019, in conformity with U.S. generally accepted accounting principles.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our [removed: audits.][added: audit.]

Those standards require that we plan and perform the [removed: audits] [added: audit] to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

We believe that our [removed: audits provide] [added: audit provided] a reasonable basis for our opinion.

[removed: January] [added: | | | | January 1, 2022 | | | | | | January] 2, 2021 [removed: and] [added: | | | | | |] December 28, [removed: 2019][added: 2019 | | |]

| | | | January [removed: 2, 2021] [added: 1, 2022] | | | | | | [removed: December 28, 2019] [added: January 2, 2021] | | |

| Cash and cash equivalents [added: at beginning of year] | | | $ | 928,432 | | | | | $ | 705,210 | | [added: | | | $ | 533,298 | |]

| Receivables, net | | | [removed: 338,487] [added: 337,596] | | | | | | [removed: 304,546] [added: 338,487] | | |

| Inventories | | | [removed: 75,956] [added: 115,721] | | | | | | [removed: 55,802] [added: 75,956] | | |

| Prepaid expenses and other | | | [removed: 135,712] [added: 173,512] | | | | | | [removed: 103,785] [added: 135,712] | | |

| Total current assets | | | [removed: 1,478,587] [added: 1,715,769] | | | | | | [removed: 1,169,343] [added: 1,478,587] | | |

| Property, plant and equipment, net | | | [removed: 311,125] [added: 305,911] | | | | | | [removed: 275,855] [added: 311,125] | | |

| Goodwill | | | [removed: 782,087] [added: 928,358] | | | | | | [removed: 661,856] [added: 782,087] | | |

| Acquired intangibles, net | | | [removed: 210,590] [added: 233,265] | | | | | | [removed: 172,375] [added: 210,590] | | |

| Deferred taxes | | | [removed: 732,290] [added: 763,770] | | | | | | [removed: 732,367] [added: 732,290] | | |

| Other assets | | | [removed: 436,106] [added: 439,226] | | | | | | [removed: 345,429] [added: 436,106] | | |

| Total assets | | | $ | [removed: 3,950,785] [added: 4,386,299] | | | | | $ | [removed: 3,357,225] [added: 3,950,785] | |

| [removed: Revolving] [added: Payment on revolving] credit facility | | | [removed: $ |] — | | | | | [removed: $] | [removed: —] [added: (350,000)] | | [added: | | | | (250,000) | | |]

| Accounts payable and accrued liabilities | | | [removed: 349,951] [added: $] | [added: 417,283] | | | | | [removed: 316,908] [added: $] | [added: 349,951] | |

| Current portion of deferred revenue | | | [removed: 446,857] [added: 553,942] | | | | | | [removed: 355,483] [added: 446,857] | | |

| Total current liabilities | | | [removed: 796,808] [added: 971,225] | | | | | | [removed: 672,391] [added: 796,808] | | |

| [(a) 3. Exhibits](#i090043fcb1da400aaac214abf3d3ee98_211) | | | | | | [83](#i090043fcb1da400aaac214abf3d3ee98_211) | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

February 22, 2022

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

February 24, 2020

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

January 1, 2022 and January 2, 2021

| Cash and cash equivalents | | | $ | 1,088,940 | | | | | $ | 928,432 | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

| Restructuring | | | (1,048) | | | | | | 9,215 | | | | | | 8,621 | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

For the three fiscal years ended January 1, 2022

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

For the three fiscal years ended January 1, 2022

| Net income | | | — | | | | | | — | | | | | | — | | | | | | 695,955 | | | | | | — | | | | | | $ | 695,955 | |

| Purchase of treasury stock | | | (4,401) | | | | | | — | | | | | | (612,297) | | | | | | — | | | | | | — | | | | | | $ | (612,297) | |

| Balance, January 1, 2022 | | | 276,796 | | | | | | $ | 2,467,701 | | | | | $ | (2,740,003) | | | | | $ | 3,046,288 | | | | | $ | (33,311) | | | | | $ | 2,740,675 | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

For the three fiscal years ended January 1, 2022

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| Net income | | | 695,955 | | | | | | 590,644 | | | | | | 988,979 | | |

| Purchases of intangible assets | | | (1,583) | | | | | | — | | | | | | — | | |

| Payment of debt issuance costs | | | (1,285) | | | | | | — | | | | | | — | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

For the three fiscal years ended January 1, 2022

*Lessors - Certain Leases with Variable Lease Payments*

In July 2021, the FASB issued ASU 2021-05, “Lessors - Certain Leases with Variable Lease Payments,” which allows lessors to classify and account for a lease with variable payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: (1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria as defined in ASC Topic 842 and (2) the lessor would have otherwise recognized a day-one loss on the lease arrangement.

This standard better aligns the accounting with the underlying economics of these arrangements as lessors are not permitted to include most variable payments which do not depend on a reference index or a rate in the lease receivable while assets are derecognized at lease commencement.

This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Cadence adopted this standard on January 2, 2022, the first day of fiscal 2022, on a prospective basis.

*Business Combinations*

In October 2021, the FASB issued ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which that requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with “Revenue from Contracts with Customers (Topic 606)” as if the acquiring entity had originated the contracts.

This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value.

Cadence adopted this standard on January 2, 2022, the first day of fiscal 2022.

The impact of the standard on Cadence’s consolidated financial statements is dependent on the size and frequency of future acquisitions and does not affect contract assets or contract liabilities related to acquisitions completed prior to the adoption date.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

Capitalized costs were not material during fiscal 2021, 2020 or 2019.

Acquired intangibles consist of acquired technology, certain contract rights, customer relationships, trademarks and trade names, capitalized software, and in-process research and development.

| [(a) 3. Exhibits](#i7db652776ff546b7bfc0141f88148829_229) | | | | | | [83](#i7db652776ff546b7bfc0141f88148829_229) | | |

February 22, 2021

*Change in Accounting Principle*

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases as of December 30, 2018, due to the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (ASU) 2016-02, Leases.

| Restructuring and other charges | | | 9,215 | | | | | | 8,621 | | | | | | 11,089 | | |

| Balance, December 30, 2017 | | | 282,067 | | | | | | $ | 1,829,950 | | | | | $ | (1,178,121) | | | | | $ | 341,003 | | | | | $ | (3,630) | | | | | $ | 989,202 | |

| Cumulative effect adjustment | | | — | | | | | | — | | | | | | — | | | | | | 85,929 | | | | | | (2,638) | | | | | | $ | 83,291 | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | 345,777 | | | | | | — | | | | | | $ | 345,777 | |

| Purchase of treasury stock | | | (5,934) | | | | | | — | | | | | | (250,059) | | | | | | — | | | | | | — | | | | | | $ | (250,059) | |

| Cash and cash equivalents at beginning of year | | | $ | 705,210 | | | | | $ | 533,298 | | | | | $ | 688,087 | |

| Payment on revolving credit facility | | | (350,000) | | | | | | (250,000) | | | | | | (85,000) | | |

| Principal payments on term loan | | | — | | | | | | — | | | | | | (300,000) | | |

| Change in book overdraft | | | — | | | | | | — | | | | | | (3,867) | | |

*Credit Losses*

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which required the establishment of an allowance for estimated credit losses on financial assets, including trade and other receivables, at each reporting date.

Cadence adopted the new standard on December 29, 2019, the first day of fiscal 2020, and recorded a cumulative-effect adjustment to decrease retained earnings in the amount of $2.0 million for expected credit losses on financial assets at the adoption date.

The adoption of this standard required Cadence to modify its existing process for establishing credit losses on trade receivables, including receivables derived from leasing arrangements for its emulation and prototyping hardware.

*Goodwill Impairment*

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” that eliminates “Step 2” from the goodwill impairment test.

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” which modifies the disclosure requirements on fair value measurements.

*Implementation Costs Incurred in a Cloud Computing Arrangement*

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which clarifies the accounting for implementation costs in cloud computing arrangements.

The new standard aligns the treatment of implementation costs incurred by customers in cloud computing arrangements that are service contracts with the treatment of similar costs incurred to develop or obtain internal-use software.

Under the new standard, implementation costs are deferred and presented in the same financial statement caption on the condensed consolidated balance sheet as a prepayment of related arrangement fees.

The deferred costs are recognized over the term of the arrangement in the same financial statement caption in the condensed consolidated income statement as the related fees of the arrangement.

The new standard did not have a material impact on Cadence’s condensed consolidated financial statements and related disclosures.

Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

Cadence is currently evaluating the impacts of the provisions of this standard on its financial condition, results of operations and cash flows.

Book overdraft balances are recorded in accounts payable and accrued liabilities in the consolidated balance sheets and are reported as a component of cash flows from financing activities in the consolidated statement of cash flows.

Cadence capitalized costs of software developed for internal use of $0.9 million, $2.4 million, and $3.6 million during fiscal 2020, 2019 and 2018, respectively.

Cadence adopted ASU 2016-02, “Leases (Topic 842)” (“Topic 842”) on the first day of fiscal 2019 and the adoption of the standard did not have a material impact on Cadence’s results from operations or cash flows.

When the remaining maturities of the underlying traded options are less than one year, expected volatility is based on a weighting of historical and implied volatilities.

The credit facility expires on January 28, 2022 and has no subsidiary guarantors.

| Year ended December 29, 2018 | | | | | | $ | — | | | | | $ | 5,102 | | | | | $ | — | | | | | $ | (1,166) | | | | | $ | 3,936 | |

For additional discussion of recently adopted accounting standards, see Note 2 in the notes to the consolidated financial statements.

| IP | | | 14 | | % | | | | 13 | | % | | | | 12 | | % |

Contracted but unsatisfied performance obligations were approximately $3.6 billion as of December 28, 2019, which included $205.7 million of non-cancellable IPAA commitments from customers.

During the third quarter of fiscal 2020, the State of California enacted legislation that, for a three-year period beginning in fiscal 2020, will limit Cadence’s utilization of California research and development tax credits to $5 million annually and will suspend the use of California net operating loss deductions.

Cadence accounted for the effects of the California tax law change in the period of enactment.

| Deemed repatriation transition tax | | | — | | | | | | — | | | | | | (1,409) | | |

| /s/ [added: | | |] Lip-Bu Tan | | | | | | [added: February 22, 2022 | | | | | |]

| Lip-Bu [removed: Tan] [added: Tan, Executive Chair] | | | | | | [added: | | | | | | | | |]

| [added: President and] Chief Executive Officer [removed: and Director] | | | | | |

| Dated: | | | February 22, [removed: 2021] [added: 2022] | | |

| [added: President and] Chief Executive Officer [removed: and Director] | | | | | | | | |

| /s/ John M. Wall | | | DATE: | | | February 22, [removed: 2021] [added: 2022] | | |

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints [removed: Lip-Bu Tan,] [added: Anirudh Devgan,] John M.

| /s/ | | | Dr. John B. Shoven | | | | | | February 22, [removed: 2021] [added: 2022] | | | | | |

| /s/ | | | Mark W. Adams | | | | | | February 22, [removed: 2021] [added: 2022] | | | | | |

| /s/ | | | Ita Brennan | | | | | | February 22, [removed: 2021] [added: 2022] | | | | | |

| /s/ | | | Lewis Chew | | | | | | February 22, [removed: 2021] [added: 2022] | | | | | |

| /s/ | | | Julia Liuson | | | | | | February 22, [removed: 2021] [added: 2022] | | | | | |

| /s/ | | | Dr. James D. Plummer | | | | | | February 22, [removed: 2021] [added: 2022] | | | | | |

| /s/ | | | Dr. Alberto Sangiovanni-Vincentelli | | | | | | February 22, [removed: 2021] [added: 2022] | | | | | |

| /s/ | | | Young K. Sohn | | | | | | February 22, [removed: 2021] [added: 2022] | | | | | |

None.

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

| /s/ Anirudh Devgan | | | | | |

| Anirudh Devgan | | | | | |

| /s/ Anirudh Devgan | | | DATE: | | | February 22, 2022 | | |

| Anirudh Devgan | | | | | | | | |

[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)

| Dr. John B. Shoven, Lead Independent Director | | | | | | | | | | | | | | |

| /s/ | | | Mary Louise Krakauer | | | | | | February 22, 2022 | | | | | |

| Mary Louise Krakauer, Director | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

Not applicable.

| /s/ Lip-Bu Tan | | | DATE: | | | February 22, 2021 | | |

| Lip-Bu Tan | | | | | | | | |

| Dr. John B. Shoven, Chairman of the Board of Directors | | | | | | | | | | | | | | |

| /s/ | | | Susan L. Bostrom | | | | | | February 22, 2021 | | | | | |

| Susan L. Bostrom, Director | | | | | | | | | | | | | | |