Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Cadence Design Systems Inc., income tax expense (benefit), continuing operations

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
Federal	156,495)	212,380)	19,957)	15,083)	15,282)
State and local	15,933)	7,280)	25,246)	6,401)	2,716)
Foreign	104,866)	84,357)	70,455)	46,737)	48,729)
Current	277,294)	304,017)	115,658)	68,221)	66,727)
Federal	(87,851)	(79,170)	(16,415)	(11,155)	(9,001)
State and local	25,440)	(50,640)	(30,406)	(24,186)	6,593)
Foreign	25,899)	22,204)	3,643)	9,224)	(574,330)
Deferred	(36,512)	(107,606)	(43,178)	(26,117)	(576,738)
Provision for income taxes	240,782)	196,411)	72,480)	42,104)	(510,011)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

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Item	Description	The company
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Cadence Design Systems Inc. current increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Cadence Design Systems Inc. deferred decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Provision for income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Cadence Design Systems Inc. provision for income taxes increased from 2021 to 2022 and from 2022 to 2023.

Cadence Design Systems Inc., effective income tax rate (EITR) reconciliation

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
	United States statutory federal income tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
	Effective tax rate	19.00%	19.00%	9.00%	7.00%	-106.00%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

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Item	Description	The company
Effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

Cadence Design Systems Inc., components of deferred tax assets and liabilities

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
Tax credit carryforwards	129,513)	142,374)	147,248)	197,436)	206,008)
Reserves and accruals	78,993)	75,543)	72,287)	60,272)	47,562)
Intangible assets	506,398)	538,424)	568,199)	578,267)	583,323)
Capitalized research and development expense for income tax purposes	242,465)	149,625)	34,467)	39,427)	18,477)
Operating loss carryforwards	9,598)	11,081)	6,630)	5,935)	6,201)
Deferred income	77,066)	64,897)	42,753)	21,170)	16,704)
Capital loss carryforwards	16,483)	16,777)	16,957)	16,944)	17,320)
Stock-based compensation costs	27,409)	22,830)	17,690)	14,656)	15,097)
Depreciation and amortization	10,671)	9,176)	5,005)	4,402)	8,721)
Investments	15,949)	9,016)	6,833)	2,521)	2,459)
Lease liability	33,639)	37,758)	27,362)	31,278)	25,016)
Prepaid expenses	3,253)	14,699)	53,893)	—)	—)
Deferred tax assets	1,151,437)	1,092,200)	999,324)	972,308)	946,888)
Valuation allowance	(79,162)	(70,085)	(108,158)	(116,419)	(125,520)
Net deferred tax assets	1,072,275)	1,022,115)	891,166)	855,889)	821,368)
Intangible assets	(83,308)	(82,971)	(55,178)	(44,549)	(24,907)
Undistributed foreign earnings	(64,371)	(51,394)	(45,460)	(41,957)	(31,916)
ROU assets	(33,639)	(37,758)	(27,362)	(31,278)	(25,016)
Investments	(6,318)	—)	—)	—)	—)
Other	(13,455)	(11,060)	(8,528)	(10,749)	(8,350)
Deferred tax liabilities	(201,091)	(183,183)	(136,528)	(128,533)	(90,189)
Net deferred tax assets (liabilities)	871,184)	838,932)	754,638)	727,356)	731,179)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

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Item	Description	The company
Deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Cadence Design Systems Inc. deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Net deferred tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Cadence Design Systems Inc. net deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Cadence Design Systems Inc. net deferred tax assets (liabilities) increased from 2021 to 2022 and from 2022 to 2023.

Cadence Design Systems Inc., deferred tax assets and liabilities, classification

US$ in thousands

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
	Deferred tax assets	880,001)	853,691)	763,770)	732,290)	732,367)
	Deferred tax liabilities	8,817)	14,759)	9,132)	4,934)	1,188)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

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Item	Description	The company
Deferred tax assets	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Cadence Design Systems Inc. deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Deferred tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Cadence Design Systems Inc. deferred tax liabilities increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Cadence Design Systems Inc., adjustments to financial statements

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
Adjustment to Total Assets
Total assets (as reported)	5,669,491)	5,137,071)	4,386,299)	3,950,785)	3,357,225)
Less: Noncurrent deferred tax assets, net	880,001)	853,691)	763,770)	732,290)	732,367)
Total assets (adjusted)	4,789,490)	4,283,380)	3,622,529)	3,218,495)	2,624,858)
Adjustment to Total Liabilities
Total liabilities (as reported)	2,265,220)	2,391,958)	1,645,624)	1,457,767)	1,254,331)
Less: Noncurrent deferred tax liabilities, net	8,817)	14,759)	9,132)	4,934)	1,188)
Total liabilities (adjusted)	2,256,403)	2,377,199)	1,636,492)	1,452,833)	1,253,143)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	3,404,271)	2,745,113)	2,740,675)	2,493,018)	2,102,894)
Less: Net deferred tax assets (liabilities)	871,184)	838,932)	754,638)	727,356)	731,179)
Stockholders’ equity (adjusted)	2,533,087)	1,906,181)	1,986,037)	1,765,662)	1,371,715)
Adjustment to Net Income
Net income (as reported)	1,041,144)	848,952)	695,955)	590,644)	988,979)
Add: Deferred income tax expense (benefit)	(36,512)	(107,606)	(43,178)	(26,117)	(576,738)
Net income (adjusted)	1,004,632)	741,346)	652,777)	564,527)	412,241)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

Cadence Design Systems Inc., Financial Data: Reported vs. Adjusted

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Cadence Design Systems Inc., adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
Net Profit Margin
Reported net profit margin	25.46%	23.84%	23.29%	22.02%	42.33%
Adjusted net profit margin	24.56%	20.81%	21.84%	21.04%	17.64%
Total Asset Turnover
Reported total asset turnover	0.72	0.69	0.68	0.68	0.70
Adjusted total asset turnover	0.85	0.83	0.82	0.83	0.89
Financial Leverage
Reported financial leverage	1.67	1.87	1.60	1.58	1.60
Adjusted financial leverage	1.89	2.25	1.82	1.82	1.91
Return on Equity (ROE)
Reported ROE	30.58%	30.93%	25.39%	23.69%	47.03%
Adjusted ROE	39.66%	38.89%	32.87%	31.97%	30.05%
Return on Assets (ROA)
Reported ROA	18.36%	16.53%	15.87%	14.95%	29.46%
Adjusted ROA	20.98%	17.31%	18.02%	17.54%	15.71%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Cadence Design Systems Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Cadence Design Systems Inc. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Cadence Design Systems Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Cadence Design Systems Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Cadence Design Systems Inc. adjusted ROA deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Cadence Design Systems Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income	1,041,144)	848,952)	695,955)	590,644)	988,979)
Revenue	4,089,986)	3,561,718)	2,988,244)	2,682,891)	2,336,319)
Profitability Ratio
Net profit margin¹	25.46%	23.84%	23.29%	22.02%	42.33%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,004,632)	741,346)	652,777)	564,527)	412,241)
Revenue	4,089,986)	3,561,718)	2,988,244)	2,682,891)	2,336,319)
Profitability Ratio
Adjusted net profit margin²	24.56%	20.81%	21.84%	21.04%	17.64%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

2023 Calculations

¹ Net profit margin = 100 × Net income ÷ Revenue
= 100 × 1,041,144 ÷ 4,089,986 = 25.46%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Revenue
= 100 × 1,004,632 ÷ 4,089,986 = 24.56%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Cadence Design Systems Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
As Reported
Selected Financial Data (US$ in thousands)
Revenue	4,089,986)	3,561,718)	2,988,244)	2,682,891)	2,336,319)
Total assets	5,669,491)	5,137,071)	4,386,299)	3,950,785)	3,357,225)
Activity Ratio
Total asset turnover¹	0.72	0.69	0.68	0.68	0.70
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Revenue	4,089,986)	3,561,718)	2,988,244)	2,682,891)	2,336,319)
Adjusted total assets	4,789,490)	4,283,380)	3,622,529)	3,218,495)	2,624,858)
Activity Ratio
Adjusted total asset turnover²	0.85	0.83	0.82	0.83	0.89

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

2023 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 4,089,986 ÷ 5,669,491 = 0.72

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 4,089,986 ÷ 4,789,490 = 0.85

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Cadence Design Systems Inc. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
As Reported
Selected Financial Data (US$ in thousands)
Total assets	5,669,491)	5,137,071)	4,386,299)	3,950,785)	3,357,225)
Stockholders’ equity	3,404,271)	2,745,113)	2,740,675)	2,493,018)	2,102,894)
Solvency Ratio
Financial leverage¹	1.67	1.87	1.60	1.58	1.60
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	4,789,490)	4,283,380)	3,622,529)	3,218,495)	2,624,858)
Adjusted stockholders’ equity	2,533,087)	1,906,181)	1,986,037)	1,765,662)	1,371,715)
Solvency Ratio
Adjusted financial leverage²	1.89	2.25	1.82	1.82	1.91

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

2023 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 5,669,491 ÷ 3,404,271 = 1.67

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 4,789,490 ÷ 2,533,087 = 1.89

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Cadence Design Systems Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income	1,041,144)	848,952)	695,955)	590,644)	988,979)
Stockholders’ equity	3,404,271)	2,745,113)	2,740,675)	2,493,018)	2,102,894)
Profitability Ratio
ROE¹	30.58%	30.93%	25.39%	23.69%	47.03%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,004,632)	741,346)	652,777)	564,527)	412,241)
Adjusted stockholders’ equity	2,533,087)	1,906,181)	1,986,037)	1,765,662)	1,371,715)
Profitability Ratio
Adjusted ROE²	39.66%	38.89%	32.87%	31.97%	30.05%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

2023 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 1,041,144 ÷ 3,404,271 = 30.58%

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted stockholders’ equity
= 100 × 1,004,632 ÷ 2,533,087 = 39.66%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Cadence Design Systems Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income	1,041,144)	848,952)	695,955)	590,644)	988,979)
Total assets	5,669,491)	5,137,071)	4,386,299)	3,950,785)	3,357,225)
Profitability Ratio
ROA¹	18.36%	16.53%	15.87%	14.95%	29.46%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,004,632)	741,346)	652,777)	564,527)	412,241)
Adjusted total assets	4,789,490)	4,283,380)	3,622,529)	3,218,495)	2,624,858)
Profitability Ratio
Adjusted ROA²	20.98%	17.31%	18.02%	17.54%	15.71%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).

2023 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 1,041,144 ÷ 5,669,491 = 18.36%

² Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 1,004,632 ÷ 4,789,490 = 20.98%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Cadence Design Systems Inc. adjusted ROA deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Cadence Design Systems Inc. (NASDAQ:CDNS)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Cadence Design Systems Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Cadence Design Systems Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)