0000813672 2009-01-04 2010-01-02 0000813672 2009-10-03 0000813672 2009-01-03 0000813672 2009-07-04 0000813672 2010-07-04 2010-10-02 0000813672 2009-07-05 2009-10-03 0000813672 2009-01-04 2009-10-03 0000813672 2010-10-02 0000813672 2010-01-02 0000813672 2010-01-03 2010-10-02 iso4217:USD xbrli:shares xbrli:shares iso4217:USD   <div align="left" style="font-family: 'Times New Roman',Times,serif; margin-left: 0%">   <div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b> </div> <div align="left"> </div> <div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b> </div> <div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 1. BASIS OF PRESENTATION</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q have been prepared by Cadence Design Systems, Inc., or Cadence, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, Cadence believes that the disclosures contained in this Quarterly Report on Form 10-Q comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These Condensed Consolidated Financial Statements are meant to be, and should be, read in conjunction with the Consolidated Financial Statements and the Notes thereto included in Cadence’s Annual Report on Form 10-K for the fiscal year ended January 2, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q reflect all adjustments (which include only normal, recurring adjustments and those items discussed in these Notes) that are, in the opinion of management, necessary to state fairly the results, financial position and cash flows for the periods and dates presented. The results for such periods are not necessarily indicative of the results to be expected for the full fiscal year. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Preparation of the Condensed Consolidated Financial Statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence adopted new disclosure requirements related to the fair value of Cadence’s financial instruments on the first day of fiscal 2010. This adoption did not have a material impact on Cadence’s consolidated financial position, results of operations or cash flows. See Note 5 for these disclosures. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence has evaluated subsequent events through the date of issuance of the unaudited Condensed Consolidated Financial Statements. </div> </div>   <div align="left" style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 2. CONVERTIBLE NOTES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>2.625% Cash Convertible Senior Notes Due 2015</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In June 2010, Cadence issued $350.0 million principal amount of its 2.625% Cash Convertible Senior Notes Due 2015, or the 2015 Notes. The 2015 Notes have a stated interest rate of 2.625%, mature on June 1, 2015 and may be settled only in cash. The indenture for the 2015 Notes does not contain any financial covenants. Contractual interest payable on the 2015 Notes began accruing in June 2010 and is payable semi-annually each December 1st and June 1st. The initial purchasers’ transaction fees and expenses totaling $10.6 million were capitalized as deferred financing costs and will be amortized over the term of the 2015 Notes using the effective interest method. An aggregate of $187.2 million of the net proceeds was used to purchase $100.0 million principal amount of Cadence’s 1.375% Convertible Senior Notes Due December 15, 2011, or the 2011 Notes, and $100.0 million principal amount of its 1.500% Convertible Senior Notes Due December 15, 2013, or the 2013 Notes, and collectively with the 2011 Notes, the Convertible Senior Notes. Cadence also used $40.0 million of the net proceeds to repurchase approximately 6.5 million shares of Cadence common stock. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Prior to March 1, 2015, holders may convert their 2015 Notes into cash upon the occurrence of one of the following events: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>The price of Cadence’s common stock reaches $9.81 during certain periods of time specified in the 2015 Notes;</td> </tr> <tr> <td style="font-size: 0pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Specified corporate transactions occur; or</td> </tr> <tr> <td style="font-size: 0pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>The trading price of the 2015 Notes falls below 98% of the product of (i) the last reported sale price of Cadence’s common stock and (ii) the conversion rate on that date.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">From March 1, 2015 and until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2015 Notes into cash at any time, regardless of the foregoing circumstances. Cadence may not redeem the 2015 Notes prior to maturity. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The initial cash conversion rate for the 2015 Notes is 132.5205 shares of Cadence common stock per $1,000 principal amount of 2015 Notes, equivalent to a cash conversion price of approximately $7.55 per share of Cadence common stock, with the amount due on conversion payable in cash. Upon cash conversion, a holder will receive the sum of the daily settlement amounts, calculated on a proportionate basis for each day, during a specified observation period following the cash conversion date. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">If a fundamental change occurs prior to maturity and Cadence’s stock price is greater than $6.16 per share at that time, the cash conversion rate will increase by an additional amount of up to 29.8171 shares of Cadence’s common stock per $1,000 principal amount of 2015 Notes, which amount would be paid entirely in cash to each holder that elects to convert its 2015 Notes at that time. A fundamental change is any transaction or event (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) in which more than 50% of Cadence’s common stock is exchanged for, converted into, acquired for or constitutes solely the right to receive, consideration. No fundamental change will have occurred if at least 90% of the consideration received consists of shares of common stock, or depositary receipts representing such shares, that are: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Listed on, or immediately after the transaction or event will be listed on, a United States national securities exchange; or</td> </tr> <tr> <td style="font-size: 0pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Approved, or immediately after the transaction or event will be approved, for quotation on a United States system of automated dissemination of quotations of securities prices similar to the NASDAQ National Market prior to its designation as a national securities exchange.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">As of October 2, 2010, none of the conditions allowing the holders of the 2015 Notes to convert the 2015 Notes into cash had been met. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The cash conversion feature of the 2015 Notes, or the 2015 Notes Embedded Conversion Derivative, requires bifurcation from the 2015 Notes and the 2015 Notes Embedded Conversion Derivative is accounted for as a derivative liability, which is included in Other long-term liabilities in Cadence’s Condensed Consolidated Balance Sheet. The fair value of the 2015 Notes Embedded Conversion Derivative at the time of issuance of the 2015 Notes was $76.6 million, and was recorded as the original debt discount for purposes of accounting for the debt component of the 2015 Notes. This discount will be recognized as interest expense using the effective interest method over the term of the 2015 Notes. The estimated fair value of the 2015 Notes Embedded Conversion Derivative, as of October 2, 2010 was $114.3 million. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Concurrently with the issuance of the 2015 Notes, Cadence entered into hedge transactions, or the 2015 Notes Hedges, with various parties whereby Cadence has the option to receive the cash equivalent of approximately 46.4 million shares of Cadence’s common stock at a price of approximately $7.55 per share, subject to certain conversion rate adjustments in the 2015 Notes. These options expire on June 1, 2015 and must be settled in cash. The aggregate cost of the 2015 Notes Hedges was $76.6 million. The 2015 Notes Hedges are accounted for as derivative assets, and are included in Other assets in Cadence’s Condensed Consolidated Balance Sheet. The estimated fair value of the 2015 Notes Hedges, as of October 2, 2010, was $114.3 million. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The 2015 Notes Embedded Conversion Derivative and the 2015 Notes Hedges are adjusted to fair value each reporting period and unrealized gains and losses are reflected in Cadence’s Condensed Consolidated Statements of Operations. As the fair values of the 2015 Notes Embedded Conversion Derivative and the 2015 Notes Hedges are similar, there was no impact to Cadence’s Condensed Consolidated Statements of Operations relating to these adjustments to fair value during the three months ended October 2, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In separate transactions, Cadence also sold warrants, or the 2015 Warrants, to various parties for the purchase of up to approximately 46.4 million shares of Cadence’s common stock at a price of $10.78 per share in a private placement pursuant to Section 4(2) of the Securities Act of 1933, as amended, or the Securities Act. The 2015 Warrants expire on various dates from September 2015 through December 2015 and must be settled in net shares. Cadence received $37.5 million in cash proceeds from the sale of the 2015 Warrants, which has been recorded as an increase in Stockholders’ equity. Changes in the fair value of the 2015 Warrants will not be recognized in Cadence’s Condensed Consolidated Financial Statements as long as the instruments remain classified as equity. The 2015 Warrants are included in diluted earnings per share to the extent the impact is dilutive. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The principal amount, unamortized debt discount and net carrying amount of the liability component of the 2015 Notes as of October 2, 2010 was as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="85%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="10%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">As of</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Principal amount of 2015 Notes </div></td> <td> </td> <td align="left">$</td> <td align="right">350,000</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Unamortized debt discount of 2015 Notes </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(72,848</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Net liability of 2015 Notes </div></td> <td> </td> <td align="left">$</td> <td align="right">277,152</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The effective interest rate, contractual interest expense and amortization of debt discount for the 2015 Notes for the three and nine months ended October 2, 2010 and October 3, 2009 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="46%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine Months Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands, except percentages)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Effective interest rate </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">8.1%</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td align="right">N/A</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">8.1%</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td align="right">N/A</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Contractual interest expense </div></td> <td> </td> <td align="left">$</td> <td align="right">2,289</td> <td> </td> <td> </td> <td align="left">$</td> <td nowrap="nowrap" align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,716</td> <td> </td> <td> </td> <td align="left">$</td> <td nowrap="nowrap" align="right">----</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of debt discount </div></td> <td> </td> <td align="left">$</td> <td align="right">3,196</td> <td> </td> <td> </td> <td align="left">$</td> <td nowrap="nowrap" align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,788</td> <td> </td> <td> </td> <td align="left">$</td> <td nowrap="nowrap" align="right">----</td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">As of October 2, 2010, the if-converted value of the 2015 Notes exceeded the principal amount of the 2015 Notes. The total fair value of the 2015 Notes was $414.8 million. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><b>1.375% Convertible Senior Notes Due December 15, 2011 and 1.500% Convertible Senior Notes Due December 15, 2013</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In December 2006, Cadence issued $250.0 million principal amount of its 2011 Notes and $250.0 million principal amount of its 2013 Notes. The indentures for the Convertible Senior Notes do not contain any financial covenants. Contractual interest payable on the Convertible Senior Notes began accruing in December 2006 and is payable semi-annually each December 15th and June 15th. In June 2010, Cadence repurchased $100.0 million principal amount of its 2011 Notes and $100.0 million principal amount of its 2013 Notes, resulting in a remaining principal balance of $150.0 million for the 2011 Notes and $150.0 million for the 2013 Notes. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Holders may convert their Convertible Senior Notes prior to maturity upon the occurrence of one of the following events: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>The price of Cadence’s common stock reaches $27.50 during certain periods of time specified in the Convertible Senior Notes;</td> </tr> <tr> <td style="font-size: 0pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Specified corporate transactions occur; or</td> </tr> <tr> <td style="font-size: 0pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>The trading price of the Convertible Senior Notes falls below 98% of the product of (i) the last reported sale price of Cadence’s common stock and (ii) the conversion rate on that date.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">From November 2, 2011, in the case of the 2011 Notes, and November 1, 2013, in the case of the 2013 Notes, and until the close of business on the scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Senior Notes at any time, regardless of the foregoing circumstances. Cadence may not redeem the Convertible Senior Notes prior to maturity. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The initial conversion rate for the Convertible Senior Notes is 47.2813 shares of Cadence common stock per $1,000 principal amount of Convertible Senior Notes, equivalent to a conversion price of approximately $21.15 per share of Cadence common stock. Upon conversion, a holder will receive the sum of the daily settlement amounts, calculated on a proportionate basis for each day, during a specified observation period following the conversion date. The daily settlement amount during each date of the observation period consists of: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Cash up to the principal amount of the note; and</td> </tr> <tr> <td style="font-size: 0pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Cadence’s common stock to the extent that the conversion value exceeds the amount of cash paid upon conversion of the Convertible Senior Notes.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">If a fundamental change occurs prior to maturity and Cadence’s stock price is greater than $18.00 per share at that time, the conversion rate will increase by an additional amount of up to $8.27 per share, which amount would be paid entirely in cash to each holder that elects to convert its Convertible Senior Notes at that time. A fundamental change is any transaction or event (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) in which more than 50% of Cadence’s common stock is exchanged for, converted into, acquired for or constitutes solely the right to receive, consideration. No fundamental change will have occurred if at least 90% of the consideration received consists of shares of common stock, or depositary receipts representing such shares, that are: </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Listed on, or immediately after the transaction or event will be listed on, a United States national securities exchange; or</td> </tr> <tr> <td style="font-size: 0pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%"> </td> <td width="4%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Approved, or immediately after the transaction or event will be approved, for quotation on a United States system of automated dissemination of quotations of securities prices similar to the NASDAQ National Market prior to its designation as a national securities exchange.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">As of October 2, 2010, none of the conditions allowing the holders of the Convertible Senior Notes to convert had been met. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In connection with the issuance of the 2015 Notes, an aggregate of $187.2 million of the net proceeds were used to purchase in the open market $100.0 million principal amount of the 2011 Notes and $100.0 million principal amount of the 2013 Notes. At settlement, the fair value of the liability component immediately prior to its extinguishment is measured first and the difference between the fair value of the aggregate consideration remitted to its holders and the fair value of the liability component immediately prior to its extinguishment is attributed to the reacquisition of the equity component. The components of the repurchase and related loss on early extinguishment of debt are as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="60%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011 Notes</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2013 Notes</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="10">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Principal amount repurchased </div></td> <td> </td> <td align="left">$</td> <td align="right">100,000</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">100,000</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">200,000</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Amount allocated to: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Extinguishment of liability component </div></td> <td> </td> <td align="left">$</td> <td align="right">95,865</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">85,751</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">181,616</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Extinguishment of equity component </div></td> <td> </td> <td> </td> <td align="right">2,285</td> <td> </td> <td> </td> <td> </td> <td align="right">3,249</td> <td> </td> <td> </td> <td> </td> <td align="right">5,534</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total cash paid for repurchase </div></td> <td> </td> <td align="left">$</td> <td align="right">98,150</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">89,000</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">187,150</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Principal amount repurchased </div></td> <td> </td> <td align="left">$</td> <td align="right">100,000</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">100,000</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">200,000</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Unamortized debt discount </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(6,958</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(15,036</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(21,994</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Extinguishment of liability component </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(95,865</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(85,751</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(181,616</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Related debt issuance costs </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(676</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,035</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,711</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Loss on early extinguishment of debt </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(3,499</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(1,822</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(5,321</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Concurrently with the issuance of the Convertible Senior Notes, Cadence entered into hedge transactions, or the Convertible Senior Notes Hedges, with various parties whereby Cadence had the option to purchase up to 23.6 million shares of Cadence’s common stock at a price of $21.15 per share, subject to adjustment. The aggregate cost of the Convertible Senior Notes Hedges was $119.8 million and has been recorded as a reduction to Stockholders’ equity. In connection with the purchase of a portion of the Convertible Senior Notes in June 2010, Cadence also sold a portion of the Convertible Senior Notes Hedges representing options to purchase approximately 9.5 million shares of Cadence’s common stock and received proceeds of $0.4 million. The estimated fair value of the remaining Convertible Senior Notes Hedges was $1.2 million as of October 2, 2010. These options expire on December 15, 2011, in the case of the 2011 Notes, and December 15, 2013, in the case of the 2013 Notes, and must be settled in net shares. Subsequent changes in the fair value of the Convertible Senior Notes Hedges will not be recognized in Cadence’s Condensed Consolidated Financial Statements as long as the instruments remain classified as equity. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In separate transactions, Cadence also sold warrants, or the Convertible Senior Notes Warrants, to various parties for the purchase of up to 23.6 million shares of Cadence’s common stock at a price of $31.50 per share in a private placement pursuant to Section 4(2) of the Securities Act. Cadence received $39.4 million in cash proceeds from the sale of the Convertible Senior Notes Warrants, which has been recorded as an increase in Stockholders’ equity. In connection with the purchase of a portion of the Convertible Senior Notes in June 2010, Cadence also purchased a portion of the Convertible Senior Notes Warrants, reducing the number of shares of Cadence common stock available for purchase by 9.5 million shares at a cost of $0.1 million. The Convertible Senior Notes Warrants expire on various dates from February 2012 through April 2012 in the case of the 2011 Notes, and February 2014 through April 2014 in the case of the 2013 Notes, and must be settled in net shares. Changes in the fair value of the Convertible Senior Notes Warrants will not be recognized in Cadence’s Condensed Consolidated Financial Statements as long as the instruments remain classified as equity. The remaining warrants are included in diluted earnings per share to the extent the impact is dilutive. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The carrying amount of the equity component of the Convertible Senior Notes and the principal amount, unamortized debt discount and net carrying amount of the liability component of the Convertible Senior Notes as of October 2, 2010 and January 2, 2010 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">As of</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">January 2,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Equity component of Convertible Senior Notes </div></td> <td> </td> <td align="left">$</td> <td align="right">111,459</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">116,993</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Principal amount of Convertible Senior Notes </div></td> <td> </td> <td align="left">$</td> <td align="right">300,000</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">500,000</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Unamortized debt discount of Convertible Senior Notes </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(29,241</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(64,166</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Liability component of Convertible Senior Notes </div></td> <td> </td> <td align="left">$</td> <td align="right">270,759</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">435,834</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The effective interest rate, contractual interest expense and amortization of debt discount for the Convertible Senior Notes for the three and nine months ended October 2, 2010 and October 3, 2009 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="46%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine Months Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands, except percentages)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Effective interest rate </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">6.3%</td> <td nowrap="nowrap"> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">6.3%</td> <td nowrap="nowrap"> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">6.3%</td> <td nowrap="nowrap"> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">6.3%</td> <td nowrap="nowrap"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Contractual interest expense </div></td> <td> </td> <td align="left">$</td> <td align="right">1,075</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,791</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4,515</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5,373</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of debt discount </div></td> <td> </td> <td align="left">$</td> <td align="right">3,130</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4,902</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">12,931</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">14,503</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">As of October 2, 2010, the if-converted value of the Convertible Senior Notes does not exceed the principal amount of the Convertible Senior Notes and the total fair value of the Convertible Senior Notes, including the equity component, was $284.5 million. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 3. ACQUISITIONS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">For each of the acquisitions described below, the results of operations and the estimated fair value of the assets acquired and liabilities assumed have been included in Cadence’s Condensed Consolidated Financial Statements from the date of the acquisition. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><u>Denali Software, Inc.</u> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In June 2010, Cadence acquired Denali Software, Inc., or Denali<sup style="font-size: 85%; vertical-align: text-top">®</sup>. Denali was a privately-held provider of electronic design automation software and intellectual property used in system-on-chip design and verification. Cadence acquired Denali to expand its portfolio to provide system component modeling and IP integration. The aggregate initial purchase price was $296.8 million, which was paid in cash. An additional $12.6 million of payments were deferred on the acquisition date and will be paid in cash if certain Denali shareholders remain employees of Cadence during the periods specified in the respective agreements. Of the $12.6 million, $5.3 million was expensed in Cadence’s Condensed Consolidated Statements of Operations during the three months ended October 2, 2010 and $6.0 million was expensed in Cadence’s Condensed Consolidated Statements of Operations during the nine months ended October 2, 2010. The remaining amounts will be expensed in Cadence’s Condensed Consolidated Statements of Operations over the stated retention periods. As of October 2, 2010 $0.5 million of the $12.6 million has been paid. The $152.2 million of goodwill recorded in connection with this acquisition is not expected to be deductible for income tax purposes. This acquisition does not include any contingent consideration that is subject to performance metrics, milestone achievement or other similar criteria. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The following table summarizes the allocation of the purchase price for Denali and the estimated amortization period for the acquired intangibles: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="85%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="10%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td align="center" colspan="2" nowrap="nowrap">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Current assets </div></td> <td> </td> <td align="left">$</td> <td align="right">59,398</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Property, plant and equipment </div></td> <td> </td> <td> </td> <td align="right">347</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other assets </div></td> <td> </td> <td> </td> <td align="right">283</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Acquired intangibles: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Existing technology (six to nine-year weighted-average useful lives) </div></td> <td> </td> <td> </td> <td align="right">65,700</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Agreements and relationships (three to twelve-year weighted-average useful lives) </div></td> <td> </td> <td> </td> <td align="right">98,800</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Tradenames / trademarks / patents (ten-year weighted-average useful life) </div></td> <td> </td> <td> </td> <td align="right">4,300</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Goodwill </div></td> <td> </td> <td> </td> <td align="right">152,172</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total assets acquired </div></td> <td> </td> <td> </td> <td align="right">381,000</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Current liabilities </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(17,042</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term deferred tax liabilities (Note 8) </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(67,153</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:60px; text-indent:-15px">Net assets acquired </div></td> <td> </td> <td align="left">$</td> <td align="right">296,805</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Denali’s current assets, property, plant and equipment and other assets were reviewed and adjusted to their fair value on the date of acquisition, as necessary. Among the current assets acquired, $46.7 million was cash and cash equivalents and $11.1 million was trade receivables. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The fair values of Denali’s intangible assets were determined using the income approach with significant inputs that are not observable in the market. Key assumptions include the expected future cash flows, the timing of the expected future cash flows and the discount rates consistent with the level of risk. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Denali’s current liabilities were reviewed and adjusted to their fair value on the date of acquisition, as necessary. Included in net current liabilities is deferred revenue, which represents advance payments from customers. Cadence estimated its obligation related to the deferred revenue using the cost build-up approach. The cost build-up approach determines fair value by estimating the costs relating to supporting the obligation plus an assumed profit. The sum of the costs and assumed profit approximates the amount that Cadence would be required to pay a third party to assume the obligation. The estimated costs to fulfill the obligation were based on the projected cost structure to provide the contractual deliverables. As a result, Cadence recorded deferred revenue of $11.3 million, representing Cadence’s estimate of the fair value of the contractual obligations assumed. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The financial information in the table below summarizes the combined results of operations of Cadence and Denali, on a pro forma basis, as though the companies had been combined as of the beginning of the fiscal years of the periods presented. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 3, 2010 or January 4, 2009 or of results that may occur in the future. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="46%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"> Nine Months Ended </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total revenue </div></td> <td> </td> <td align="left">$</td> <td align="right">237,934</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">223,435</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">698,831</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">650,569</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net income (loss) </div></td> <td> </td> <td align="left">$</td> <td align="right">131,549</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(18,732</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">143,057</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(178,516</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Because Cadence recorded deferred taxes of $66.7 million, primarily related to the intangible assets acquired with Denali, Cadence released a corresponding amount of its deferred tax asset valuation allowance. The $66.7 million release of the valuation allowance was recognized as a benefit for income taxes during the nine months ended October 2, 2010. The pro forma net income (loss) presented above does not include this non-recurring benefit for income taxes. The pro forma tax effects were calculated considering Cadence’s valuation allowance position on its United States losses and tax credits. See Note 8 for additional details of Cadence’s income taxes. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><u>Other Acquisition</u> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">During the nine months ended October 2, 2010, Cadence acquired another company and recorded $3.9 million of Goodwill and $2.2 million of intangible assets. The $3.9 million of goodwill recorded in connection with this acquisition is not expected to be deductible for income tax purposes. Of the $2.2 million of intangible assets, $0.5 million was allocated to in-process research and development and is classified as an indefinite-lived intangible asset until the project is completed or abandoned. The remaining $1.7 million of intangible assets has a weighted average life of 5 years. The fair value of the intangible assets was determined using the income approach with significant inputs that are not observable in the market. Key assumptions include the expected future cash flows, the timing of the expected future cash flows and discount rates consistent with the level of risk. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">This acquisition includes contingent consideration payments based on future financial measures of the acquired technology. Cadence makes estimates regarding the fair value of contingent consideration liabilities on the acquisition date and at the end of each reporting period until the contingency is resolved. Cadence estimates the fair value of these liabilities based on Cadence’s expectations as to the projected levels of business and Cadence’s assessment of the probability of achievement. Cadence believes that its estimates and assumptions are reasonable, but there is significant judgment involved. Changes in the fair value of contingent consideration liabilities subsequent to the acquisition are recorded in General and administrative expense in Cadence’s Condensed Consolidated Statements of Operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The contingent consideration arrangement requires payments of up to $4.0 million if certain financial measures are met during the three-year period subsequent to the consummation of the acquisition. This contingent consideration arrangement does not require continuing employment of the selling shareholders. The initial fair value of the contingent consideration arrangement of $0.8 million was determined using the income approach with significant inputs that are not observable in the market. Key assumptions include discount rates consistent with the level of risk of achievement and probability-adjusted revenue amounts. The expected outcomes were recorded at net present value. The fair value of this contingent consideration was $0.9 million as of October 2, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>Acquisition-Related Contingent Consideration</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence accounts for business combinations with acquisition dates on or before January 3, 2009 under the purchase method in accordance with Statement of Financial Accounting Standard, or SFAS, No. 141, “Business Combinations,” and contingent consideration is added to Goodwill as it is paid. During the nine months ended October 2, 2010, Cadence recorded $2.8 million of Goodwill in connection with acquisitions accounted for under SFAS No. 141. Cadence accounts for business combinations with acquisition dates after January 3, 2009 under the acquisition method in accordance with the Accounting Standards Codification and contingent consideration is recorded at fair value on the acquisition date as noted above. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In connection with Cadence’s acquisitions completed before October 2, 2010, Cadence may be obligated to pay up to an aggregate of $16.4 million in cash (including the up to $4.0 million in cash referred to in “Other Acquisition” above) during the next 30 months if certain defined performance goals are achieved in full, of which $9.5 million would be expensed in its Condensed Consolidated Statements of Operations. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 4. GOODWILL AND ACQUIRED INTANGIBLES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>Goodwill</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence completed its annual goodwill impairment test during the three months ended October 2, 2010 and determined that the fair value of Cadence’s single reporting unit substantially exceeded the carrying amount of its net assets and that no impairment existed. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The changes in the carrying amount of goodwill during the nine months ended October 2, 2010 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="85%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="10%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Gross Carrying</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td align="center" colspan="2">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of January 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td nowrap="nowrap" align="right">----</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Goodwill resulting from acquisitions during the period (Note 3) </div></td> <td> </td> <td> </td> <td align="right">156,103</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Additions due to contingent consideration (Note 3) </div></td> <td> </td> <td> </td> <td align="right">2,790</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of October 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">158,893</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>Acquired Intangibles, net</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Acquired intangibles with finite lives as of October 2, 2010 were as follows, excluding intangibles that were fully amortized as of January 2, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="30%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Gross Carrying</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Accumulated</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Acquired</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Amortization</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Intangibles, net</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="10">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Existing technology and backlog </div></td> <td> </td> <td align="left">$</td> <td align="right">91,800</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(25,154</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">66,646</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Agreements and relationships </div></td> <td> </td> <td> </td> <td align="right">135,456</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(33,682</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">101,774</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Distribution rights </div></td> <td> </td> <td> </td> <td align="right">30,100</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(21,823</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">8,277</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Tradenames, trademarks and patents </div></td> <td> </td> <td> </td> <td align="right">26,183</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(17,514</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">8,669</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total acquired intangibles </div></td> <td> </td> <td align="left">$</td> <td align="right">283,539</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(98,173</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">185,366</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">As of October 2, 2010, Cadence also had $0.5 million of in-process research and development intangibles that will have an indefinite useful life until they are placed into service or the associated research and development efforts are abandoned. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Acquired intangibles with finite lives as of January 2, 2010 were as follows, excluding intangibles that were fully amortized as of January 3, 2009: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="30%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Gross Carrying</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Accumulated</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Acquired</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Amortization</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Intangibles, net</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="10">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Existing technology and backlog </div></td> <td> </td> <td align="left">$</td> <td align="right">64,900</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(61,332</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">3,568</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Agreements and relationships </div></td> <td> </td> <td> </td> <td align="right">35,364</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(27,905</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">7,459</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Distribution rights </div></td> <td> </td> <td> </td> <td align="right">30,100</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(19,565</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">10,535</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Tradenames, trademarks and patents </div></td> <td> </td> <td> </td> <td align="right">22,984</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(15,705</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">7,279</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total acquired intangibles </div></td> <td> </td> <td align="left">$</td> <td align="right">153,348</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(124,507</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">28,841</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Amortization of acquired intangibles for the three and nine months ended October 2, 2010 and October 3, 2009 was as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="48%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="4%" nowrap="nowrap">    </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine Months Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cost of product </div></td> <td> </td> <td align="left">$</td> <td align="right">2,196</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">620</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,407</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,721</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cost of maintenance </div></td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">1,045</td> <td> </td> <td> </td> <td> </td> <td align="right">1,045</td> <td> </td> <td> </td> <td> </td> <td align="right">3,135</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of acquired intangibles </div></td> <td> </td> <td> </td> <td align="right">4,459</td> <td> </td> <td> </td> <td> </td> <td align="right">2,726</td> <td> </td> <td> </td> <td> </td> <td align="right">9,701</td> <td> </td> <td> </td> <td> </td> <td align="right">8,694</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total amortization of acquired intangibles </div></td> <td> </td> <td align="left">$</td> <td align="right">6,665</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4,391</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">14,153</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">15,550</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Amortization of costs from existing technology is included in Cost of product. Amortization of costs from acquired maintenance contracts is included in Cost of maintenance. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Estimated amortization expense for the following fiscal years and thereafter is as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="85%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="10%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">2010 — remaining period </div></td> <td> </td> <td align="left">$</td> <td align="right">6,747</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">2011 </div></td> <td> </td> <td> </td> <td align="right">25,488</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">2012 </div></td> <td> </td> <td> </td> <td align="right">23,455</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">2013 </div></td> <td> </td> <td> </td> <td align="right">19,981</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">2014 </div></td> <td> </td> <td> </td> <td align="right">17,206</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Thereafter </div></td> <td> </td> <td> </td> <td align="right">92,489</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total estimated amortization expense </div></td> <td> </td> <td align="left">$</td> <td align="right">185,366</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Cadence’s market assumptions. These two types of inputs have created the following fair-value hierarchy: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%"> </td> <td width="1%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td><u>Level 1</u> — Quoted prices for identical instruments in active markets;</td> </tr> <tr> <td style="font-size: 6pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%"> </td> <td width="1%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td><u>Level 2</u> — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and</td> </tr> <tr> <td style="font-size: 6pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%"> </td> <td width="1%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td><u>Level 3</u> — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.</td> </tr> </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div style="margin-top: 6pt"> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">This hierarchy requires Cadence to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. Cadence recognizes transfers between levels of this hierarchy based on the fair values of the respective financial instruments at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the three and nine months ended October 2, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The fair value of Cadence’s cash and cash equivalents, short-term investments, receivables, accounts payable and foreign currency forward exchange contracts approximate their carrying value due to the short-term nature of these instruments. The fair value of Cadence’s long-term investments and installment contract receivables approximate their carrying values based upon current market rates of interest. The fair values of Cadence’s 2015 Notes and Convertible Senior Notes are influenced by interest rates and Cadence’s stock price and stock price volatility and are determined by market trading. The fair values of Cadence’s 2015 Notes Hedges and the 2015 Notes Embedded Conversion Derivative are determined using an option pricing model based on observable inputs, including Cadence’s stock price, stock price volatility and risk-free interest rates. See Note 2 for additional details on Cadence’s 2015 Notes, 2015 Notes Hedges, 2015 Notes Embedded Conversion Derivative, and Convertible Senior Notes. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">On a quarterly basis, Cadence measures at fair value certain financial assets and liabilities. The fair value of financial assets and liabilities was determined using the following levels of inputs as of October 2, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000">Fair Value Measurements as of October 2, 2010:</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 1</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 2</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 3</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><u>Assets</u> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cash equivalents — Money market funds </div></td> <td> </td> <td align="left">$</td> <td align="right">414,175</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">414,175</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Available-for-sale securities </div></td> <td> </td> <td> </td> <td align="right">2,416</td> <td> </td> <td> </td> <td> </td> <td align="right">2,416</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Trading securities held in Non-Qualified Deferred Compensation Plan (NQDC) </div></td> <td> </td> <td> </td> <td align="right">26,105</td> <td> </td> <td> </td> <td> </td> <td align="right">26,105</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">2015 Notes Hedges </div></td> <td> </td> <td> </td> <td align="right">114,254</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">114,254</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign currency exchange contracts </div></td> <td> </td> <td> </td> <td align="right">1,858</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">1,858</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Time deposits </div></td> <td> </td> <td> </td> <td align="right">224</td> <td> </td> <td> </td> <td> </td> <td align="right">224</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total Assets </div></td> <td> </td> <td align="left">$</td> <td align="right">559,032</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">442,920</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">  116,112</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td width="52%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 1</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 2</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 3</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><u>Liabilities</u> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Acquisition-related contingent consideration </div></td> <td> </td> <td align="left">$</td> <td align="right">930</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">930</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">2015 Notes Embedded Conversion Derivative </div></td> <td> </td> <td> </td> <td align="right">114,254</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">114,254</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total Liabilities </div></td> <td> </td> <td align="left">$</td> <td nowrap="nowrap" align="right">  115,184</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td nowrap="nowrap" align="right">  114,254</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">930</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The 2015 Notes Hedges, foreign currency forward exchange contracts and the 2015 Notes Embedded Conversion Derivative are classified as Level 2 because these assets and liabilities are not actively traded and are valued using standard pricing methodologies that use observable market data for all inputs. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The fair value of these financial assets and liabilities was determined using the following levels of inputs as of January 2, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="31%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="11%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="11%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="11%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="12%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000">Fair Value Measurements as of January 2, 2010:</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 1</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 2</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 3</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><u>Assets</u> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cash equivalents — Money market funds </div></td> <td> </td> <td align="left">$</td> <td align="right">  446,335</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">  446,335</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Available-for-sale securities </div></td> <td> </td> <td> </td> <td align="right">1,951</td> <td> </td> <td> </td> <td> </td> <td align="right">1,951</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Time deposits </div></td> <td> </td> <td> </td> <td align="right">233</td> <td> </td> <td> </td> <td> </td> <td align="right">233</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Trading securities held in NQDC </div></td> <td> </td> <td> </td> <td align="right">31,403</td> <td> </td> <td> </td> <td> </td> <td align="right">31,403</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total Assets </div></td> <td> </td> <td align="left">$</td> <td align="right">479,922</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">479,922</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td width="52%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="11%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="11%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="11%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="11%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 1</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 2</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 3</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><u>Liabilities</u> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign currency exchange contracts </div></td> <td> </td> <td align="left">$</td> <td align="right">478</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">478</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total Liabilities </div></td> <td> </td> <td align="left">$</td> <td align="right">478</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">478</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence acquired intangible assets of $171.0 million in connection with business combinations during the nine months ended October 2, 2010. The fair value of these intangible assets was estimated using Level 3 inputs. See Note 3 for additional details of these business combinations and the key inputs used in the valuations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence recorded the initial fair value of contingent consideration liabilities in connection with a business combination during the nine months ended October 2, 2010. This liability will be measured at fair value at the end of each reporting period. See Note 3 for additional details of this business combination and the key inputs used in the valuation. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence vacated certain facilities in connection with a restructuring plan and recorded lease losses of $0.5 million during the nine months ended October 2, 2010, which are included in Restructuring and other charges (credits) in Cadence’s Condensed Consolidated Statement of Operations. The fair value of these lease losses was estimated using Level 2 inputs. See Note 6 for additional details on Cadence’s lease loss estimates. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 6. RESTRUCTURING AND OTHER CHARGES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">During the second quarter of fiscal 2009, Cadence initiated a restructuring plan, or the 2009 Restructuring Plan, and during the fourth quarter of fiscal 2009, Cadence determined that it would initiate further actions under the 2009 Restructuring Plan. During fiscal 2008, Cadence initiated a restructuring plan, or the 2008 Restructuring Plan, and Cadence also initiated restructuring plans in each year from 2001 through 2005, which are referred to as the Other Restructuring Plans. Cadence initiated the 2009 Restructuring Plan, 2008 Restructuring Plan, and Other Restructuring Plans, collectively known as the Restructuring Plans, in an effort to operate more efficiently. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">As of October 2, 2010, Cadence’s total amount accrued for the Restructuring Plans was $6.1 million, consisting of $5.6 million of estimated lease losses and $0.5 million of severance and severance-related benefits. The estimated lease losses will be adjusted in the future based on changes in the assumptions used to estimate the lease losses. The lease losses could be as high as $9.3 million and will be influenced by rental rates and the amount of time it takes to find suitable tenants to sublease the facilities. Of the $6.1 million accrued as of October 2, 2010, $1.4 million was included in Accounts payable and accrued liabilities and $4.7 million was included in Other long-term liabilities on Cadence’s Condensed Consolidated Balance Sheet. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence regularly evaluates the adequacy of its lease loss, severance and related benefits accruals, and adjusts the balances based on actual costs incurred or changes in estimates and assumptions. Cadence may incur future charges to reflect actual costs incurred or for changes in estimates related to amounts previously recorded under the Restructuring Plans. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>2009 Restructuring Plan</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence has recorded total costs associated with the 2009 Restructuring Plan of $32.1 million. These costs include severance payments, severance-related benefits and costs for outplacement services that were communicated to the affected employees before January 2, 2010, and estimated severance payments and related benefits that were both probable and estimable as of January 2, 2010 for employees notified after January 2, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence recorded a net credit of $1.7 million during the three months ended October 2, 2010, and a net credit of $3.6 million during the nine months ended October 2, 2010, due to severance and related benefits costs that were less than previously estimated. Cadence also recorded charges of $0.4 million related to facilities that Cadence vacated during the nine months ended October 2, 2010 and $0.1 million for assets related to these vacated facilities. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Total severance and termination benefits of approximately $30.5 million were paid to employees before October 2, 2010. Approximately $0.4 million of severance and termination benefits will be paid after October 2, 2010, all of which is included in Accounts payable and accrued liabilities in Cadence’s Condensed Consolidated Balance Sheet as of October 2, 2010. Due to varying regulations in the jurisdictions and countries in which Cadence operates, Cadence expects substantially all termination benefits to be paid by April 3, 2011. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The following table presents activity associated with the 2009 Restructuring Plan for the three months ended October 2, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Severance</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">and</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Excess</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Benefits</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Facilities</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Other</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, July 3, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">2,508</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">394</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,902</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Restructuring and other charges (credits), net </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,720</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(37</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,757</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Non-cash charges </div></td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Cash payments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(434</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(159</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(593</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Effect of foreign currency translation </div></td> <td> </td> <td> </td> <td align="right">93</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">93</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, October 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">447</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">200</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">647</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The following table presents activity associated with the 2009 Restructuring Plan for the nine months ended October 2, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Severance</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">and</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Excess</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Benefits</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Facilities</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Other</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, January 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">18,638</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">18,638</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Restructuring and other charges (credits), net </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3,573</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">418</td> <td> </td> <td> </td> <td> </td> <td align="right">82</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3,073</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Non-cash charges (credits) </div></td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(82</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(76</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Cash payments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(14,192</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(224</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(14,416</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Effect of foreign currency translation </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(426</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(426</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, October 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">447</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">200</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">647</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>2008 Restructuring Plan</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The following table presents activity associated with the 2008 Restructuring Plan for the three months ended October 2, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Severance</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">and</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Excess</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Benefits</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Facilities</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Other</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, July 3, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">57</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,430</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,492</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Restructuring and other charges (credits), net </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(11</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">20</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">9</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Non-cash charges </div></td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">19</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">19</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Cash payments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(4</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(168</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(172</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Effect of foreign currency translation </div></td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td align="right">51</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">53</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, October 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">44</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,352</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,401</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The following table presents activity associated with the 2008 Restructuring Plan for the nine months ended October 2, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Severance</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">and</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Excess</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Benefits</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Facilities</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Other</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, January 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">287</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,874</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,166</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Restructuring and other charges (credits), net </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(52</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(6</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(25</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(83</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Non-cash charges </div></td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">58</td> <td> </td> <td> </td> <td> </td> <td align="right">25</td> <td> </td> <td> </td> <td> </td> <td align="right">83</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Cash payments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(169</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(526</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(695</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Effect of foreign currency translation </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(22</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(48</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(70</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, October 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">44</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,352</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,401</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>Other Restructuring Plans</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The following table presents activity associated with the Other Restructuring Plans for the three months ended October 2, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="85%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="10%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Excess</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Facilities</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, July 3, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">3,794</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Restructuring and other charges (credits), net </div></td> <td> </td> <td> </td> <td align="right">66</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Non-cash charges </div></td> <td> </td> <td> </td> <td align="right">35</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Cash payments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(135</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Effect of foreign currency translation </div></td> <td> </td> <td> </td> <td align="right">252</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, October 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">4,012</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The following table presents activity associated with the Other Restructuring Plans for the nine months ended July 3, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="85%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="10%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Excess</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Facilities</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, January 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">4,648</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Restructuring and other charges (credits), net </div></td> <td> </td> <td> </td> <td align="right">83</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Non-cash charges </div></td> <td> </td> <td> </td> <td align="right">151</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Cash payments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(721</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Effect of foreign currency translation </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(149</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, October 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">4,012</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 7. ALLOWANCE FOR DOUBTFUL ACCOUNTS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence analyzes the creditworthiness of its customers, historical experience, changes in customer demand, and the overall economic climate in the industries that Cadence serves, makes judgments as to its ability to collect outstanding receivables, and provides allowances for the portion of receivables when collection is not probable. Provisions are made based upon a specific review of customer receivables and are recorded in operating expenses. Receivables and Installment contract receivables are presented net of allowance for doubtful accounts of $10.8 million as of October 2, 2010 and $23.7 million as of January 2, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence’s customers are primarily concentrated within the semiconductor sector, which was adversely affected by the 2008 and 2009 economic downturn. As of October 2, 2010, approximately one-third of Cadence’s total Receivables, net and Installment contract receivables, net were attributable to the ten customers with the largest balances of Receivables, net and Installment contract receivables, net. As of January 2, 2010, approximately half of Cadence’s total Receivables, net and Installment contract receivables, net were attributable to the ten customers with the largest balances of Receivables, net and Installment contract receivables, net. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence believes that its allowance for doubtful accounts is adequate, but Cadence will continue to monitor customer liquidity and other economic conditions, which may result in changes to Cadence’s estimates regarding its allowance for doubtful accounts. The adequacy of the allowance for doubtful accounts is evaluated by Cadence at least quarterly, and any adjustments to the allowance for doubtful accounts resulting from these evaluations could be material to Cadence’s Condensed Consolidated Financial Statements. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 8. INCOME TAXES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence determined that uncertain tax positions that were subject to the Internal Revenue Service, or IRS, examination of Cadence’s federal income tax returns for the tax years 2000 through 2002 were effectively settled during the three and nine months ended October 2, 2010. Cadence recognized a benefit for income taxes of $143.2 million during the three months ended October 2, 2010, including the impact of the effective settlement. Cadence recognized a benefit for income taxes of $192.7 million during the nine months ended October 2, 2010, including the impact of the effective settlement and the $66.7 million release of the deferred tax asset valuation allowance primarily resulting from the increase in deferred tax liabilities from the intangible assets acquired with Denali. Cadence also recorded an increase in its Prepaid expenses and other assets of $14.4 million because of the effective settlement. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">During the three months ended October 2, 2010, Cadence decreased Common stock and capital in excess of par by approximately $9.7 million for taxes related to employee stock transactions that should have been recognized during fiscal 2007. Cadence recognized the $9.7 million payment as Tax effect related to employee stock transactions allocated to equity in its Condensed Consolidated Statements of Cash Flows for the nine months ended October 2, 2010, but should have recognized this payment during fiscal 2007. Cadence also recognized $3.6 million of provision for income taxes during the three and nine months ended October 2, 2010 for uncertain tax positions that should have been recognized during fiscal 2008 and fiscal 2009. The effect of the tax payment and the provision for income taxes on Cadence’s Condensed Consolidated Financial Statements for the three and nine months ended October 2, 2010 and on Cadence’s Consolidated Financial Statements for fiscal 2007, fiscal 2008 and fiscal 2009 is not considered material. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>Internal Revenue Service Examinations</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The IRS and other tax authorities regularly examine Cadence’s income tax returns. Cadence’s federal income tax returns beginning with the 2000 tax year remain subject to examination by the IRS. Cadence’s California state income tax returns beginning with the 2001 tax year remain subject to examination by the California Franchise Tax Board. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In July 2006, the IRS completed its field examination of Cadence’s federal income tax returns for the tax years 2000 through 2002 and issued a Revenue Agent’s Report, or RAR, in which the IRS proposed to assess an aggregate tax deficiency for the three-year period of approximately $324.0 million. In November 2006, the IRS revised the proposed aggregate tax deficiency for the three-year period to be approximately $318.0 million. In October 2010, the Appeals Office of the IRS, or the Appeals Office provided Cadence with copies of the settlement agreements that were executed by the Appeals Office in August 2010 that resolve the previously disputed tax positions. While Cadence did not receive the final IRS determination of the amount that will be owed by Cadence, Cadence considers the tax positions to be effectively settled, because the IRS has completed its examination procedures and Cadence believes that there is a remote possibility that the IRS will re-examine the settled tax positions. As a result of this effective settlement Cadence recognized a benefit for income taxes of $148.3 million in the Condensed Consolidated Statements of Operations for the three and nine months ended October 2, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In May 2009, the IRS completed its field examination of Cadence’s federal income tax returns for the tax years 2003 through 2005 and issued a RAR, in which the IRS proposed to assess an aggregate deficiency for the three-year period of approximately $94.1 million. In August 2009, the IRS revised the proposed aggregate tax deficiency for the three-year period to approximately $60.7 million. The IRS is contesting Cadence’s transfer pricing arrangements with its foreign subsidiaries and deductions for foreign trade income. The IRS made similar claims against Cadence’s transfer pricing arrangements and deductions for foreign trade income in prior examinations. Cadence has filed a timely protest with the IRS and is seeking resolution of the issues through the Appeals Office. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence believes that the proposed IRS adjustments are inconsistent with applicable tax laws and Cadence is vigorously challenging these proposed adjustments. The RAR is not a final Statutory Notice of Deficiency, but the IRS imposes interest on the proposed deficiencies until the matters are resolved. Interest is compounded daily at rates that are published by the IRS, are adjusted quarterly and have been at an annual rate between 4% and 10% since 2001. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The IRS is currently examining Cadence’s federal income tax returns for the tax years 2006 through 2008. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>Unrecognized Tax Benefits</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence takes a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not the tax position will be sustained upon audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon effective settlement. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The changes in Cadence’s gross amount of unrecognized tax benefits during the nine months ended October 2, 2010 are as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="85%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="10%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Unrecognized Tax</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Benefits</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td align="center" colspan="2">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Unrecognized tax benefits as of January 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">324,837</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Amount of the decreases in unrecognized tax benefits of tax positions taken during a prior year </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(130,484</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Amount of the increases in unrecognized tax benefits as a result of tax positions taken during the current year </div></td> <td> </td> <td> </td> <td align="right">7,594</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Amount of decreases in unrecognized tax benefits relating to settlements with taxing authorities </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(75,038</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Amount of reductions to unrecognized tax benefits resulting from the lapse of the applicable statute of limitations </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(109</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Effect of foreign currency translation </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(21</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Unrecognized tax benefits as of October 2, 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">126,779</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">As of October 2, 2010, $80.7 million of the unrecognized tax benefits would affect our effective tax rate if recognized upon resolution of the uncertain tax positions. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The total amount of interest and penalties recognized in the Consolidated Statements of Operations for the nine months ended October 2, 2010 as income tax expense (benefit) is $(47.2) million and $3.4 million, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The total amounts of gross accrued interest and penalties recognized in the Condensed Consolidated Balance Sheets as of October 2, 2010, were $32.8 million and $14.0 million, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence believes that it is reasonably possible that the total amount of unrecognized tax benefits related to the IRS examination of its federal income tax returns for the tax years 2003 through 2005 could decrease during fiscal 2010 if Cadence is able to effectively settle the disputed issues with the Appeals Office. Cadence cannot currently provide an estimate of the range of possible outcomes. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In addition, Cadence believes that it is reasonably possible that the total amounts of unrecognized tax benefits for its transfer pricing arrangements with its foreign subsidiaries could significantly increase or decrease during fiscal 2010 if the Appeals Office develops new settlement guidelines or adjusts its settlement positions that change Cadence’s measurement of the tax benefits to be recognized upon effective settlement with the IRS. Because of the uncertain impact of any potential settlement guidelines, Cadence cannot currently provide an estimate of the range of possible outcomes. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The calculation of Cadence’s Provision (benefit) for income taxes requires significant judgment and involves dealing with uncertainties in the application of complex tax laws and regulations. In determining the adequacy of the provision (benefit) for income taxes, Cadence regularly assesses the potential settlement outcomes resulting from income tax examinations. However, the final outcome of tax examinations, including the total amount payable or the timing of any such payments upon resolution of these issues, cannot be estimated with certainty. In addition, Cadence cannot be certain that such amount will not be materially different from the amount that is reflected in its historical income tax provisions and accruals. Should the IRS or other tax authorities assess additional taxes as a result of a current or a future examination, Cadence may be required to record charges to operations in future periods that could have a material impact on its results of operations, financial position or cash flows in the applicable period or periods. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 9. NET INCOME (LOSS) PER SHARE</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding, less unvested restricted stock awards, during the period. None of Cadence’s outstanding grants of restricted stock contain nonforfeitable dividend rights. Diluted net income per share is impacted by equity instruments considered to be potential common shares, if dilutive, computed using the treasury stock method of accounting. In periods in which a net loss is recorded, potentially dilutive equity instruments would decrease the loss per share and therefore are not added to the weighted average shares outstanding for the diluted net loss per share calculation. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The calculation for basic and diluted net income (loss) per share for the three and nine months ended October 2, 2010 and October 3, 2009 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="46%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine Months Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands, except per share amounts)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net income (loss) </div></td> <td> </td> <td align="left">$</td> <td align="right">126,753</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(14,047</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">163,575</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(151,661</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted average common shares used to calculate basic net income (loss) per share </div></td> <td> </td> <td> </td> <td align="right">258,606</td> <td> </td> <td> </td> <td> </td> <td align="right">259,193</td> <td> </td> <td> </td> <td> </td> <td align="right">261,122</td> <td> </td> <td> </td> <td> </td> <td align="right">256,792</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">2023 Notes </div></td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Options </div></td> <td> </td> <td> </td> <td align="right">1,678</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">1,409</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Restricted stock </div></td> <td> </td> <td> </td> <td align="right">2,945</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">2,801</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Employee stock purchase plan (ESPP) </div></td> <td> </td> <td> </td> <td align="right">62</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">40</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted average common shares used to calculate diluted net income (loss) per share </div></td> <td> </td> <td> </td> <td align="right">263,302</td> <td> </td> <td> </td> <td> </td> <td align="right">259,193</td> <td> </td> <td> </td> <td> </td> <td align="right">265,383</td> <td> </td> <td> </td> <td> </td> <td align="right">256,792</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Basic net income (loss) per share </div></td> <td> </td> <td align="left">$</td> <td align="right">0.49</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(0.05</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">0.63</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(0.59</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted net income (loss) per share </div></td> <td> </td> <td align="left">$</td> <td align="right">0.48</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(0.05</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">0.62</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(0.59</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The following table presents the potential shares of Cadence’s common stock outstanding for the three and nine months ended October 2, 2010 and October 3, 2009 that were not included in the computation of diluted net income (loss) per share because the effect of including these shares would have been anti-dilutive: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="48%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine Months Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Options to purchase shares of common stock (various expiration dates through 2020) </div></td> <td> </td> <td> </td> <td align="right">21,350</td> <td> </td> <td> </td> <td> </td> <td align="right">37,657</td> <td> </td> <td> </td> <td> </td> <td align="right">22,789</td> <td> </td> <td> </td> <td> </td> <td align="right">37,657</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Non-vested shares of restricted stock </div></td> <td> </td> <td> </td> <td align="right">1,412</td> <td> </td> <td> </td> <td> </td> <td align="right">9,630</td> <td> </td> <td> </td> <td> </td> <td align="right">2,056</td> <td> </td> <td> </td> <td> </td> <td align="right">9,630</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Employee stock purchase plan (ESPP) </div></td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">544</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">544</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">2023 Notes </div></td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Convertible Senior Notes Warrants (various expiration dates through 2014) </div></td> <td> </td> <td> </td> <td align="right">14,184</td> <td> </td> <td> </td> <td> </td> <td align="right">23,640</td> <td> </td> <td> </td> <td> </td> <td align="right">14,184</td> <td> </td> <td> </td> <td> </td> <td align="right">23,640</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">2015 Warrants (various expiration dates through 2015) </div></td> <td> </td> <td> </td> <td align="right">46,382</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">46,382</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total potential common shares excluded </div></td> <td> </td> <td> </td> <td align="right">83,328</td> <td> </td> <td> </td> <td> </td> <td align="right">71,482</td> <td> </td> <td> </td> <td> </td> <td align="right">85,411</td> <td> </td> <td> </td> <td> </td> <td align="right">71,482</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 10. ACCUMULATED DEFICIT</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The changes in accumulated deficit for the three and nine months ended October 2, 2010 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="85%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="10%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Three Months</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of July 3, 2010 </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(1,215,391</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Net income </div></td> <td> </td> <td> </td> <td align="right">126,753</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Re-issuance of treasury stock </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(11,473</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of October 2, 2010 </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(1,100,111</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="85%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="10%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Nine Months</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of January 2, 2010 </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(1,177,983</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Net income </div></td> <td> </td> <td> </td> <td align="right">163,575</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Re-issuance of treasury stock </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(85,703</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of October 2, 2010 </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(1,100,111</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">When treasury stock is reissued at a price higher than its cost, the difference is recorded as a component of Capital in excess of par in the Condensed Consolidated Balance Sheets. When treasury stock is reissued at a price lower than its cost, the difference is recorded as a component of Capital in excess of par to the extent that there are treasury stock gains to offset the losses. If there are no treasury stock gains in Capital in excess of par, the losses upon re-issuance of treasury stock are recorded as a component of Accumulated deficit in the Condensed Consolidated Balance Sheets. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 11. STOCK REPURCHASE PROGRAMS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence’s Board of Directors has authorized the following programs to repurchase shares of Cadence’s common stock in the open market, which remained in effect on October 2, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Remaining</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">Authorization Date</td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Authorization</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">February 2008 </div></td> <td> </td> <td align="left">$</td> <td align="right">500,000</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">314,389</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">August 2008 </div></td> <td> </td> <td align="left">$</td> <td align="right">500,000</td> <td> </td> <td> </td> <td> </td> <td align="right">500,000</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total remaining authorization </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">814,389</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The shares repurchased under Cadence’s stock repurchase programs and the total cost of repurchased shares during the nine months ended October 2, 2010 and October 3, 2009 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">Nine</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Months Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Shares repurchased </div></td> <td> </td> <td> </td> <td align="right">6,493</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total cost of repurchased shares </div></td> <td> </td> <td align="left">$</td> <td align="right">39,997</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">----</td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 12. OTHER COMPREHENSIVE INCOME (LOSS)</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Other comprehensive income (loss) includes foreign currency translation gains and losses and unrealized gains and losses on available-for-sale marketable securities, net of related tax effects. These items have been excluded from net income and are reflected instead in Stockholders’ Equity. Cadence’s comprehensive income (loss) for the three and nine months ended October 2, 2010 and October 3, 2009 was as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="48%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine Months Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net income (loss) </div></td> <td> </td> <td align="left">$</td> <td align="right">126,753</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(14,047</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">163,575</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(151,661</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign currency translation gain, net of related tax effects </div></td> <td> </td> <td> </td> <td align="right">7,552</td> <td> </td> <td> </td> <td> </td> <td align="right">4,141</td> <td> </td> <td> </td> <td> </td> <td align="right">3,639</td> <td> </td> <td> </td> <td> </td> <td align="right">2,772</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Changes in unrealized holding gains (losses) on available-for-sale securities, net of reclassification adjustment for realized gains and losses, net of related tax effects </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(239</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(544</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">465</td> <td> </td> <td> </td> <td> </td> <td align="right">1,082</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Changes in defined benefit plan liabilities, net of related tax effects </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(4,675</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">143</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(4,576</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">108</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Comprehensive income (loss) </div></td> <td> </td> <td align="left">$</td> <td align="right">129,391</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(10,307</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">163,103</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(147,699</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">During the three months ended October 2, 2010, Cadence recorded an adjustment to the minimum pension liability related to a defined benefit plan, which resulted in a decrease of $4.7 million in other comprehensive income. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 13. CONTINGENCIES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>Legal Proceedings</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">From time to time, Cadence is involved in various disputes and litigation that arise in the ordinary course of business. These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contracts, distribution arrangements and employee relations matters. At least quarterly, Cadence reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on Cadence’s judgments using the best information available at the time. As additional information becomes available, Cadence reassesses the potential liability related to pending claims and litigation matters and may revise its estimates. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">During fiscal 2008, three complaints were filed in the United States District Court for the Northern District of California, or District Court, all alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, on behalf of a purported class of purchasers of Cadence’s common stock. The first such complaint was filed on October 29, 2008, captioned Hu v. Cadence Design Systems, Inc., Michael J. Fister, William Porter and Kevin S. Palatnik; the second such complaint was filed on November 4, 2008, captioned Vyas v. Cadence Design Systems, Inc., Michael J. Fister, and Kevin S. Palatnik; and the third such complaint was filed on November 21, 2008, captioned Collins v. Cadence Design Systems, Inc., Michael J. Fister, John B. Shoven, Kevin S. Palatnik and William Porter. On March 4, 2009, the District Court entered an order consolidating these three complaints and captioning the consolidated case “In re Cadence Design Systems, Inc. Securities Litigation.” The District Court also named a lead plaintiff and lead counsel for the consolidated litigation. The lead plaintiff filed its consolidated amended complaint on April 24, 2009, naming Cadence, Michael J. Fister, Kevin S. Palatnik, William Porter and Kevin Bushby as defendants, and alleging violations of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder, on behalf of a purported class of purchasers of Cadence’s common stock who traded Cadence’s common stock between April 23, 2008 and December 10, 2008, or the Alleged Class Period. The amended complaint alleged that Cadence and the individual defendants made statements during the Alleged Class Period regarding Cadence’s financial results that were false and misleading because Cadence had recognized revenue that should have been recognized in subsequent periods. The amended complaint requested certification of the action as a class action, unspecified damages, interest and costs, and unspecified equitable relief. On June 8, 2009, Cadence and the other defendants filed a motion to dismiss the amended complaint. On September 11, 2009, the District Court held that the plaintiffs had failed to allege a valid claim under the relevant legal standards, and granted the defendants’ motion to dismiss the amended complaint. The District Court gave the plaintiffs leave to file another amended complaint, and the plaintiffs did so on October 13, 2009. The amended complaint filed on October 13, 2009 names the same defendants, asserts the same causes of action, and seeks the same relief as the earlier amended complaint. Cadence moved to dismiss the October 13, 2009 amended complaint. The District Court denied the motion to dismiss on March 2, 2010. On July 7, 2010, the parties agreed, and the District Court ordered, that the litigation be stayed in order to facilitate mediation. This litigation remains stayed while the parties continue participating in the mediation process. If this mediation process is unsuccessful and the litigation is not resolved through a negotiated settlement, Cadence plans to continue to vigorously defend these consolidated cases and any other securities lawsuits that may be filed. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">During fiscal 2008, two derivative complaints were filed in Santa Clara County Superior Court, or Superior Court. The first was filed on November 20, 2008, and captioned Ury Priel, derivatively on behalf of nominal defendant Cadence Design Systems, Inc. v. John B. Shoven, Lip-Bu Tan, Alberto Sangiovanni-Vincentelli, Donald L. Lucas, Sr., Roger Siboni, George Scalise, Michael J. Fister, and Doe Defendants 1- 15. The second was filed on December 1, 2008, and captioned Mark Levine, derivatively on behalf of nominal defendant Cadence Design Systems, Inc. v. John B. Shoven, Lip-Bu Tan, Alberto Sangiovanni-Vincentelli, Donald L. Lucas, Sr., Roger Siboni, George Scalise, Michael J. Fister, John Swainson and Doe Defendants 1-10. These complaints purport to bring suit derivatively, on behalf of Cadence, against certain of Cadence’s current and former directors for alleged breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment. Many of the allegations underlying these claims are similar or identical to the allegations in the consolidated securities class action lawsuits described above, and the claims also include allegations that the individual defendants approved compensation based on inflated financial results. The plaintiffs request unspecified damages, restitution, equitable relief and their reasonable attorneys’ fees, experts’ fees, costs and expenses on behalf of Cadence against the individual defendants. A motion to consolidate these complaints was granted on January 20, 2009, and the cases were captioned “In re Cadence Design Systems, Inc. Derivative Litigation.” The consolidated cases were then stayed by agreement of the parties. The plaintiffs filed a consolidated amended derivative complaint on June 1, 2010. The consolidated amended derivative complaint names as defendants Cadence (as a nominal defendant), James S. Miller, R.L. Smith McKeithen, John B. Shoven, Lip-Bu Tan, Alberto Sangiovanni-Vincentelli, Donald L. Lucas, Sr., Roger S. Siboni, George Scalise, Michael J. Fister, John A.C. Swainson, Kevin S. Palatnik, William Porter, and Kevin Bushby. The consolidated amended derivative complaint alleges purported causes of action for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, and unjust enrichment (which is asserted against certain defendants). Many of the factual allegations of the consolidated amended derivative complaint are similar to those alleged in the First Amended Complaint in the securities class action case described above. In addition, the claims include allegations that the director defendants made inappropriate personnel decisions with respect to the former officers and that the former officers were unjustly enriched. The consolidated derivative complaint seeks unspecified monetary damages and equitable relief, disgorgement of profits and compensation, and costs and attorneys’ fees. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">On April 28, 2010, a derivative complaint was filed in the District Court, captioned Walter Hamilton, derivatively on behalf of nominal defendant Cadence Design Systems, Inc. v. Michael J. Fister, William Porter, James S. Miller, Jr., Kevin Bushby, R.L. Smith McKeithen, Lip-Bu Tan, Alberto Sangiovanni-Vincentelli, John B. Shoven, Donald L. Lucas, George M. Scalise, Roger S. Siboni, John A.C. Swainson, and KPMG LLP. This complaint purports to bring suit derivatively, on behalf of Cadence, against certain of Cadence’s current and former officers and directors for breach of fiduciary duty, abuse of control, gross mismanagement, and waste of corporate assets, against the former executive defendants for unjust enrichment, and against Cadence’s independent auditors for professional negligence and breach of contract. Many of the allegations underlying these claims are similar or identical to the allegations in the consolidated securities class action lawsuits described above. In addition, the claims include allegations that the director defendants made inappropriate personnel decisions with respect to the former officers and that the former officers were unjustly enriched, as well as allegations that Cadence’s independent auditors performed allegedly inadequate audits. The complaint seeks unspecified monetary relief, injunctive relief relating to certain corporate governance matters, and attorneys’ costs and fees. On June 28, 2010, the plaintiff dismissed Cadence’s independent auditors from the case, without prejudice. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">On August 17, 2010, two complaints were filed in the District Court: one captioned George Powers, derivatively on behalf of Cadence Design Systems, Inc. v. Michael J. Fister, Kevin Bushby, R.L. Smith McKeithen, James S. Miller, Jr., William Porter, James J. Cowie, Kevin S. Palatnik, John B. Shoven, PhD, Donald L. Lucas and Roger S. Siboni; the other captioned Arash Samani, derivatively on behalf of Cadence Design Systems, Inc. v. Michael J. Fister, Kevin Bushby, R.L. Smith McKeithen, James S. Miller, Jr., William Porter, James J. Cowie, Kevin S. Palatnik, John B. Shoven, PhD, Donald L. Lucas and Roger S. Siboni. These complaints are virtually identical to one another, and purport to bring suit derivatively, on behalf of Cadence, against certain of Cadence’s current and former officers and directors for breach of fiduciary duty. Many of the allegations underlying this claim are similar or identical to the allegations in the consolidated securities class action lawsuits described above. The complaints seek unspecified monetary and equitable relief, as well as attorneys’ fees and costs. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The parties to the derivative cases pending in the Superior Court and to the Hamilton v. Fister case agreed to participate in the mediation and to stay these derivative cases. These cases remain stayed while the parties continue with the mediation process. The Powers v. Fister and Samani v. Fister cases were also stayed by the district court. If these derivative cases do not end in negotiated resolutions, Cadence will respond to the derivative complaints appropriately. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In light of the preliminary status of these lawsuits, Cadence cannot predict the outcome of these matters. While the outcome of these litigation matters cannot be predicted with any certainty, management does not believe that the outcome of any current matters will have a material adverse effect on Cadence’s consolidated financial position, liquidity or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%"><b>Other Contingencies</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence provides its customers with a warranty on sales of hardware products, generally for a 90-day period. To date, Cadence has not incurred any significant costs related to warranty obligations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence’s product license and services agreements typically include a limited indemnification provision for claims from third parties relating to Cadence’s intellectual property. If the potential loss from any indemnification claim is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. The indemnification is generally limited to the amount paid by the customer. To date, claims under such indemnification provisions have not been significant. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 14. STATEMENT OF CASH FLOWS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The supplemental cash flow information for the nine months ended October 2, 2010 and October 3, 2009 is as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine Months Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash Paid During the Period for: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Interest </div></td> <td> </td> <td align="left">$</td> <td align="right">3,594</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,594</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Income taxes </div></td> <td> </td> <td align="left">$</td> <td align="right">21,527</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8,630</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">During the nine months ended October 2, 2010, Cadence paid $9.7 million of taxes related to employee stock transactions. See Note 8 for further discussion of this payment. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 15. OTHER INCOME (EXPENSE), NET</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence’s Other income (expense), net, for the three and nine months ended October 2, 2010 and October 3, 2009 was as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="46%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine Months Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Interest income </div></td> <td> </td> <td align="left">$</td> <td align="right">303</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">278</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">853</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,056</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Gains on sale of non-marketable securities </div></td> <td> </td> <td> </td> <td align="right">129</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">4,885</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Gains on sale of available-for-sale securities </div></td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">32</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">32</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Gains (losses) on trading securities in the non-qualified deferred compensation trust </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,931</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">3,652</td> <td> </td> <td> </td> <td> </td> <td align="right">248</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(4,339</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Gains (losses) on foreign exchange </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,285</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(881</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">905</td> <td> </td> <td> </td> <td> </td> <td align="right">1,542</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Equity losses from investments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(32</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(138</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(105</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(369</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Write-down of investments </div></td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(601</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,500</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,207</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Loss on early extinguishment of debt (Note 2) </div></td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,321</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">----</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other income (expense) </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(91</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">575</td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td align="right">520</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total other income (expense), net </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(2,907</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">2,917</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(33</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(5,765</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">During the nine months ended October 2, 2010, Cadence recorded gains totaling $4.9 million for five cost method investments that were liquidated. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">It is Cadence’s policy to review the fair value of its investment securities on a regular basis to determine whether its investments in these companies are other-than-temporarily impaired. This evaluation includes, but is not limited to, reviewing each company’s cash position, financing needs, earnings or revenue outlook, operational performance, management or ownership changes and competition. If Cadence believes the carrying value of an investment is in excess of its fair value, and this difference is other-than-temporary, it is Cadence’s policy to write down the investment to reduce its carrying value to fair value. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Cadence determined that certain of its non-marketable securities were other-than-temporarily impaired and Cadence wrote down the investments by $1.5 million during the nine months ended October 2, 2010, $0.6 million during the three months ended October 3, 2009 and $5.2 million during the nine months ended October 3, 2009. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 16. SEGMENT REPORTING</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Segment reporting requires disclosures of certain information regarding reportable segments, products and services, geographic areas of operation and major customers. Segment reporting is based upon the “management approach”: how management organizes the company’s reportable segments for which separate financial information is (i) available and (ii) evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Cadence’s chief operating decision maker is its President and Chief Executive Officer, or CEO. Cadence’s CEO reviews Cadence’s consolidated results as one reportable segment. In making operating decisions, the CEO primarily considers consolidated financial information, accompanied by disaggregated information about revenues by geographic region. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">Outside the United States, Cadence markets and supports its products and services primarily through its subsidiaries. Revenue is attributed to geography based on the country in which the product is used or services are delivered. Long-lived assets are attributed to geography based on the country where the assets are located. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The following table presents a summary of revenue by geography<b>:</b> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="48%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="6%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine Months Ended</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 3,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Americas: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">United States </div></td> <td> </td> <td align="left">$</td> <td align="right">97,577</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">87,926</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">274,874</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">263,877</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Other Americas </div></td> <td> </td> <td> </td> <td align="right">3,679</td> <td> </td> <td> </td> <td> </td> <td align="right">4,069</td> <td> </td> <td> </td> <td> </td> <td align="right">17,174</td> <td> </td> <td> </td> <td> </td> <td align="right">14,039</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total Americas </div></td> <td> </td> <td> </td> <td align="right">101,256</td> <td> </td> <td> </td> <td> </td> <td align="right">91,995</td> <td> </td> <td> </td> <td> </td> <td align="right">292,048</td> <td> </td> <td> </td> <td> </td> <td align="right">277,916</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Europe, Middle East and Africa: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Germany </div></td> <td> </td> <td> </td> <td align="right">12,212</td> <td> </td> <td> </td> <td> </td> <td align="right">12,918</td> <td> </td> <td> </td> <td> </td> <td align="right">49,094</td> <td> </td> <td> </td> <td> </td> <td align="right">36,112</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Other Europe, Middle East and Africa </div></td> <td> </td> <td> </td> <td align="right">36,276</td> <td> </td> <td> </td> <td> </td> <td align="right">30,472</td> <td> </td> <td> </td> <td> </td> <td align="right">101,553</td> <td> </td> <td> </td> <td> </td> <td align="right">100,518</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total Europe, Middle East and Africa </div></td> <td> </td> <td> </td> <td align="right">48,488</td> <td> </td> <td> </td> <td> </td> <td align="right">43,390</td> <td> </td> <td> </td> <td> </td> <td align="right">150,647</td> <td> </td> <td> </td> <td> </td> <td align="right">136,630</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Japan </div></td> <td> </td> <td> </td> <td align="right">47,245</td> <td> </td> <td> </td> <td> </td> <td align="right">50,218</td> <td> </td> <td> </td> <td> </td> <td align="right">130,121</td> <td> </td> <td> </td> <td> </td> <td align="right">125,594</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Asia </div></td> <td> </td> <td> </td> <td align="right">40,945</td> <td> </td> <td> </td> <td> </td> <td align="right">30,519</td> <td> </td> <td> </td> <td> </td> <td align="right">114,120</td> <td> </td> <td> </td> <td> </td> <td align="right">92,213</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total </div></td> <td> </td> <td align="left">$</td> <td align="right">237,934</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">216,122</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">686,936</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">632,353</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">As of October 2, 2010, no single customer accounted for 10% or more of Cadence’s Receivables, net and Installment contract receivables, net. As of January 2, 2010, one customer accounted for 15% of Cadence’s Receivables, net and Installment contract receivables, net. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The following table presents a summary of long-lived assets by geography: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="8%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">As of</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">October 2,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">January 2,</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Americas: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">United States </div></td> <td> </td> <td align="left">$</td> <td align="right">260,125</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">282,002</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Other Americas </div></td> <td> </td> <td> </td> <td align="right">14</td> <td> </td> <td> </td> <td> </td> <td align="right">25</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total Americas </div></td> <td> </td> <td> </td> <td align="right">260,139</td> <td> </td> <td> </td> <td> </td> <td align="right">282,027</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Europe, Middle East and Africa: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Germany </div></td> <td> </td> <td> </td> <td align="right">793</td> <td> </td> <td> </td> <td> </td> <td align="right">1,060</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Other Europe, Middle East and Africa </div></td> <td> </td> <td> </td> <td align="right">4,723</td> <td> </td> <td> </td> <td> </td> <td align="right">5,216</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total Europe, Middle East and Africa </div></td> <td> </td> <td> </td> <td align="right">5,516</td> <td> </td> <td> </td> <td> </td> <td align="right">6,276</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Japan </div></td> <td> </td> <td> </td> <td align="right">4,521</td> <td> </td> <td> </td> <td> </td> <td align="right">5,130</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Asia </div></td> <td> </td> <td> </td> <td align="right">19,927</td> <td> </td> <td> </td> <td> </td> <td align="right">18,069</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total </div></td> <td> </td> <td align="left">$</td> <td align="right">290,103</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">311,502</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div>

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