<SUBMISSION>
<ACCESSION-NUMBER>0000891618-01-502132
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20010929
<FILING-DATE>20011113
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CADENCE DESIGN SYSTEMS INC
<CIK>0000813672
<ASSIGNED-SIC>7372
<IRS-NUMBER>770148231
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0102
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-10606
<FILM-NUMBER>1783204
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2655 SEELY ROAD BLDG 5
<CITY>SAN JOSE
<STATE>CA
<ZIP>95134
<PHONE>4089431234
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>555 RIVER OAKS PARKWAY
<CITY>SAN JOSE
<STATE>CA
<ZIP>95134
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>ECAD INC /DE/
<DATE-CHANGED>19880609
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>f76986e10-q.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>Cadence Design Systems, Inc. Form 10-Q 9/29/01</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
 <B><FONT size="4">UNITED STATES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="4">SECURITIES AND EXCHANGE COMMISSION</FONT></B>
</DIV>

<DIV align="center">
<B>Washington, D.C. 20549</B>
</DIV>

<P align="center">
<HR size="1" width="41%" align="center" noshade>

<P align="center">
<B><FONT size="5">FORM 10-Q</FONT></B>

<P align="left">
(Mark One)

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD>[X]</TD>
	<TD align="left">
	<B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>

</TABLE>

<P align="center">
<B>For the quarterly period ended September&nbsp;29, 2001</B>

<P align="center">
<B>OR</B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT face="wingdings">&#111;</FONT></B></TD>
	<TD align="left">
	<B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>

</TABLE>

<P align="center">
<B>For the transition period from
<U>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</U> to
<U>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</U></B>

<P align="center">
<B>Commission file number 1-10606</B>

<P align="center">
<HR size="1" width="41%" align="center" noshade>

<P align="center">
<B><FONT size="6">CADENCE DESIGN SYSTEMS, INC.</FONT></B>

<DIV align="center">
(Exact name of Registrant as Specified in Its Charter)
</DIV>

<P align="center">
<HR size="1" width="41%" align="center" noshade>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Delaware<BR>
	 </FONT></B><FONT size="2">(State or Other Jurisdiction of<BR>
	Incorporation or Organization)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<B><FONT size="2">77-0148231<BR>
	 </FONT></B><FONT size="2">(I.R.S. Employer<BR>
	Identification No.)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">2655 Seely Avenue, Building 5, San Jose,
	California<BR>
	 </FONT></B><FONT size="2">(Address of Principal Executive
	Offices)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<B><FONT size="2">95134<BR>
	 </FONT></B><FONT size="2">(Zip Code)
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<B>(408)&nbsp;943-1234</B>

<DIV align="center">
Registrant&#146;s Telephone Number, including Area Code
</DIV>

<P align="center">
<HR size="1" width="41%" align="center" noshade>

<P align="left">
Indicate by check mark whether the registrant (1)&nbsp;has filed
all reports required to be filed by Section&nbsp;13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12&nbsp;months (or for such shorter period that the registrant
was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past
90&nbsp;days.&nbsp;&nbsp;Yes&nbsp;[X]&nbsp;&nbsp;No&nbsp;
<FONT face="wingdings">&#111;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At November&nbsp;3, 2001, there were 244,512,305&nbsp;shares of
the registrant&#146;s common stock, $0.01 par value, outstanding.
<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">PART I. FINANCIAL INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">Item 1. Financial Statements</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">Item 2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">Item 3. Quantitative and Qualitative Disclosures About Market Risk</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">PART II. OTHER INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">Item 1. Legal Proceedings</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">Item 2. Changes in Securities and Use of Proceeds</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">Item 3. Defaults Upon Senior Securities</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">Item 4. Submission of Matters to a Vote of Security Holders</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#009">Item 5. Other Information</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">Item 6. Exhibits and Reports on Form 8-K</A></TD></TR>
<TR><TD colspan="9"><A HREF="f76986ex10-59.txt">EXHIBIT 10.59</A></TD></TR>
<TR><TD colspan="9"><A HREF="f76986ex10-60.txt">EXHIBIT 10.60</A></TD></TR>
<TR><TD colspan="9"><A HREF="f76986ex10-61.txt">EXHIBIT 10.61</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B>CADENCE DESIGN SYSTEMS, INC.</B>

<DIV align="center">
<B>INDEX</B>
</DIV>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Page</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="4" align="left" valign="top">
	<B><FONT size="2">PART I.&nbsp;&nbsp;FINANCIAL
	INFORMATION</FONT></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp; 1.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Financial Statements:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Condensed Consolidated Balance Sheets: September
	29, 2001 and December 30, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Condensed Consolidated Statements of Operations:
	Three and Nine Months Ended September 29, 2001 and September 30,
	2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Condensed Consolidated Statements of Cash Flows:
	Nine Months Ended September 29, 2001 and September 30, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes to Condensed Consolidated Financial
	Statements
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp; 2.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Management&#146;s Discussion and Analysis of
	Financial Condition and Results of Operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp; 3.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Quantitative and Qualitative Disclosures About
	Market Risk
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="4" align="left" valign="top">
	<B><FONT size="2">PART II.&nbsp;&nbsp;OTHER
	INFORMATION</FONT></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp; 1.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Legal Proceedings
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp; 2.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Changes in Securities and Use of Proceeds
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp; 3.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Defaults Upon Senior Securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp; 4.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Submission of Matters to a Vote of Security
	Holders
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp; 5.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other Information
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Item&nbsp; 6.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Exhibits and Reports on Form 8-K
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="4" align="left" valign="top">
	<FONT size="2">Signatures
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">2

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "PART I. FINANCIAL INFORMATION" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="left">
<B>PART I. FINANCIAL INFORMATION</B>

<!-- link2 "Item 1. Financial Statements" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="left">
<B>Item&nbsp;1. Financial Statements</B>

<P align="center">
<B>CADENCE DESIGN SYSTEMS, INC.</B>

<DIV align="center">
<B>CONDENSED CONSOLIDATED BALANCE SHEETS</B>
</DIV>

<DIV align="center">
<B>(In thousands)</B>
</DIV>

<P align="center">
<B>ASSETS</B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">December 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">(Unaudited)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current Assets:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">85,220</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Short-term investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,029</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51,749</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Receivables, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">262,202</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">289,468</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventories, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,076</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,149</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prepaid expenses and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,413</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110,262</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total current assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">512,584</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">556,848</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property, plant, and equipment, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">406,725</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">368,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Software development costs, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,638</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,738</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acquired intangibles, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">333,972</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">326,518</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Installment contract receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,122</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,420</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,021</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175,918</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,509,062</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,477,321</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="11" align="center" valign="top">
	<B><FONT size="2">LIABILITIES AND STOCKHOLDERS&#146;
	EQUITY</FONT></B></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current Liabilities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes payable and current portion of capital
	leases
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,636</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,212</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounts payable and accrued liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">227,495</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">273,594</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income taxes payable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,950</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">216,980</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">215,768</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total current liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">480,061</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">491,574</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Long-term Liabilities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capital leases
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,700</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,298</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Minority interest
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,612</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other long-term liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,716</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61,372</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total long-term liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">64,416</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">76,282</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stockholders&#146; Equity:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common stock and capital in excess of par value
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">766,430</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">847,099</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Treasury stock at cost
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(250,557</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(256,260</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(39,106</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(60,978</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Retained earnings
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">496,583</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">394,224</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accumulated other comprehensive loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,765</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(14,620</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">964,585</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">909,465</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,509,062</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,477,321</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center">
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</DIV>

<P align="center">3

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B>CADENCE DESIGN SYSTEMS, INC.</B>

<DIV align="center">
<B>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</B>
</DIV>

<DIV align="center">
<B>(In thousands, except per share amounts)</B>
</DIV>

<DIV align="center">
<B>(Unaudited)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Three Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenue:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Product
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217,408</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">165,341</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">588,831</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">411,256</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Services
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57,992</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">87,320</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">211,810</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">243,312</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Maintenance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">84,608</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">251,599</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">234,068</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">360,008</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">332,461</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,052,240</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">888,636</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Costs and Expenses:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of product
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,161</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,931</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,644</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63,910</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of services
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,652</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,991</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">151,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,174</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of maintenance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,849</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,183</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49,725</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,701</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Marketing and sales
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96,593</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97,845</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">286,243</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">279,043</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Research and development
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74,247</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66,614</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">219,129</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">194,959</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General and administrative
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,640</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,121</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">85,849</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">70,404</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,995</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,648</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,915</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,182</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of deferred stock
	compensation<SUP>(1)</SUP>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,480</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,164</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,595</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,164</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Restructuring, asset impairment, and unusual items
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(154,818</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,937</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(70,030</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,937</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total costs and expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">154,799</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">315,434</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">872,203</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">882,474</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income from operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,209</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,027</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180,037</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,162</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">277</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,573</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">435</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,026</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before provision for income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,486</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180,472</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,188</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Provision for income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78,061</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,929</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78,114</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,700</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">127,425</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,671</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">102,358</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,488</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Basic net income per share</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">$0.52</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">$0.06</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">$0.41</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">$0.03</FONT></B></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Diluted net income per share</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">$0.50</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">$0.05</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">$0.40</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">$0.03</FONT></B></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Weighted average common shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">246,487</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">244,597</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">246,864</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">244,543</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">outstanding</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Weighted average common and</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">256,978</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">262,823</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">258,700</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">261,803</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">potential common shares outstanding-</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">assuming dilution</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD><SUP>(1)</SUP>&nbsp;</TD>
	<TD align="left">
	Amortization of deferred stock compensation would be classified
	as follows:</TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of services
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">712</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,448</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,758</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,448</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Marketing and sales
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">172</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,029</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,958</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,029</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Research and development
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">365</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">244</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,443</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">244</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General and administrative
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,231</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,443</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,436</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,443</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,480</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,164</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,595</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,164</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
The accompanying notes are an integral part of these condensed
consolidated financial statements.

<P align="center">4
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B>CADENCE DESIGN SYSTEMS, INC.</B>

<DIV align="center">
<B>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</B>
</DIV>

<DIV align="center">
<B>(In thousands)</B>
</DIV>

<DIV align="center">
<B>(Unaudited)</B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="5"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="5"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="5"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="5"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="5"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="5"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="5" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and Cash Equivalents at Beginning of Period
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">85,220</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">111,401</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="5" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash Flows from Operating Activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">102,358</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,488</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjustments to reconcile net income to net cash
	provided by operating activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation and amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">177,060</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">150,414</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net investment gain on sale, equity gain, and
	write-downs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,736</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,645</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Minority interest (income)&nbsp;expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,959</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,209</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fair market value of options issued to consultants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(690</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,737</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,075</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Write-off of acquired in-process technology
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Write-off of goodwill
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,834</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Non-cash restructuring and other related charges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,178</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tax benefit on stock option exercise
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,055</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,773</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Provisions for losses on trade accounts receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,554</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,443</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Changes in operating assets and liabilities, net
	of effect of acquired and disposed businesses:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(123,273</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(134,588</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventories
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(12,190</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,875</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prepaid expenses and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,919</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(27,151</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Installment contract receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(23,344</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79,190</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounts payable and accrued liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(12,019</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(897</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42,480</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other long-term liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,269</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,508</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash provided by operating activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">263,956</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,273</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="5" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash Flows from Investing Activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Maturities of short-term
	investments-held-to-maturity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">999</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Maturities of short-term
	investments-available-for-sale
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,372</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,621</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of short-term
	investments-available-for-sale
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(39,651</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of property, plant, and equipment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(120,142</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(78,575</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capitalization of software development costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,589</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(21,428</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Increase in acquired intangibles and other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(28,135</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(45,586</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investment in venture capital partnership and
	equity investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,957</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,543</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash effect of business acquisitions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,188</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,503</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Sale of put warrants
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,163</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchase of call options
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(14,934</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(30,163</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash used for investing activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(149,290</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(141,929</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="5" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash Flows from Financing Activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from long-term debt and capital leases
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">222,900</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Principal payments on long-term debt and capital
	leases
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(224,857</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(60,821</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from issuance of common stock
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,077</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72,298</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of treasury stock
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(241,408</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(158,396</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Repurchase of minority interest
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,958</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from repayment of notes receivable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,523</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from transfer of financial assets in
	exchange for cash
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155,252</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">124,303</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash (used for) provided by financing
	activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(41,471</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,384</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="5" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Effect of exchange rate changes on cash
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,551</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,939</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="5" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net increase in cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">70,644</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,789</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="5" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and Cash Equivalents at End of Period
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122,190</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center">
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</DIV>

<P align="center">5
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B>CADENCE DESIGN SYSTEMS, INC.</B>

<DIV align="center">
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center">
<B>(Unaudited)</B>
</DIV>

<P align="left">
<B>Basis of Presentation</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The condensed consolidated financial statements included herein
have been prepared by Cadence, without audit, pursuant to the
rules&nbsp;and regulations of the Securities and Exchange
Commission. 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&nbsp;and
regulations. However, Cadence believes that the disclosures are
adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the
notes thereto included in Cadence&#146;s Annual Report on
Form&nbsp;10-K for the fiscal year ended December&nbsp;30, 2000.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The unaudited condensed consolidated financial statements
included herein reflect all adjustments (which include only
normal, recurring adjustments) that are, in the opinion of
management, necessary to state fairly the results for the
periods presented. The results for such periods are not
necessarily indicative of the results to be expected for the
full fiscal year.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The preparation of 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.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain amounts in the consolidated financial statements as of
December&nbsp;30, 2000 and for the three and nine months ended
September&nbsp;30, 2000 have been reclassified to conform with
the September&nbsp;29, 2001 presentation.

<P align="left">
<B>Acquisitions</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the three months ended June&nbsp;30, 2001, Cadence acquired
substantially all of the assets of two companies for an
aggregate price of $10.5&nbsp;million, net of acquisition costs,
of which $4.4&nbsp;million was cash and $6.1&nbsp;million was
shares of Cadence common stock, plus future contingent payments.
Each acquisition was accounted for as a purchase. Upon
consummation of the acquisitions, Cadence immediately charged to
expense $1&nbsp;million representing acquired in-process
technology that had not yet reached technological feasibility
and had no alternative future use.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In February&nbsp;2001, Cadence acquired CadMOS Design
Technology, Inc., a privately-held design tools firm
headquartered in San Jose. CadMOS provides solutions to the
noise problems experienced in ultra-deep submicron processes.
Its noise-analysis solutions are targeted at both digital and
mixed signal designers working on microprocessors, dynamic
random access memory, mixed-signal System-on-a-Chip, and
application-specific integrated circuits. Cadence acquired all
of the outstanding stock of CadMOS and assumed all outstanding
stock options and warrants. The purchase price was
$92.7&nbsp;million and the acquisition was accounted for as a
purchase. The purchase price could increase up to an additional
$12.6&nbsp;million, representing up to 488,970 shares, if
certain predetermined performance factors are achieved over the
next three years. Of the $12.6&nbsp;million, $1.7&nbsp;million
is contingent on continued employment of certain CadMOS
employees. The $12.6&nbsp;million is based on the share price of
Cadence&#146;s common stock at the time of the acquisition. In
connection with the acquisition, Cadence acquired goodwill of
$58.3&nbsp;million, which is being amortized over 5&nbsp;years,
and technology and workforce intangibles of $12.9&nbsp;million,
which are being amortized over 3 to 5&nbsp;years. The results of
operations of CadMOS and the estimated fair value of the assets
acquired and liabilities assumed are included in Cadence&#146;s
consolidated financial statements from the date of acquisition.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon consummation of the CadMOS acquisition, Cadence immediately
charged to expense $12.1&nbsp;million representing acquired
in-process technology that had not yet reached technological
feasibility and had no

<P align="center">6

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
alternative future use. See &#147;Management&#146;s Discussion
and Analysis of Financial Condition and Results of
Operations&nbsp;&#150; Unusual Items.&#148; The value assigned
to acquired in-process technology was determined by identifying
research projects in areas for which technological feasibility
has not been established. The value was determined by estimating
the costs to develop the acquired in-process technology into
commercially viable products, estimating the resulting net cash
flows from such projects, and discounting the net cash flows
back to their present value. The discount rate included a factor
that took into account the uncertainty surrounding the
successful development of the acquired in-process technology.
The in-process technology is expected to be commercially viable
in 2002. As of September&nbsp;29, 2001, expenditures to complete
the in-process technology have totaled $0.7&nbsp;million and
expenditures to complete the remaining in-process technology are
expected to total approximately $1.2&nbsp;million. These
estimates are subject to change, given the uncertainties of the
development process, and no assurance can be given that
deviations from these estimates will not occur. Additionally,
these projects will require additional research and development
after they have reached a state of technological and commercial
feasibility.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Comparative pro forma financial information for all acquisitions
has not been presented because the results of operations were
not material to Cadence&#146;s consolidated financial statements.

<P align="left">
<B>Tality Corporation</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;17, 2000, Cadence announced its plan to separate
its electronics design services group into a new company named
Tality Corporation, or Tality. Tality&#146;s separation from
Cadence was substantially completed on October&nbsp;4, 2000, and
the electronic design services business operated as a subsidiary
of Cadence. Tality filed a registration statement with the
Securities and Exchange Commission for Tality&#146;s initial
public offering, or IPO. As a result of the separation in the
third quarter of 2000, Cadence has recorded deferred stock
compensation resulting from Tality option grants and restricted
stock sales. See &#147;Management&#146;s Discussion and Analysis
of Financial Condition and Results of Operations&nbsp;&#150;
Unusual Items.&#148; On October&nbsp;9, 2000, Cadence announced
the postponement of Tality&#146;s IPO due to unfavorable market
conditions. As a result of the postponement of the Tality IPO,
Cadence wrote off $2.8&nbsp;million of IPO related expenses in
the first quarter of 2001. See &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations &#150; Unusual Items.&#148; On April&nbsp;17, 2001,
Cadence announced the withdrawal of the Tality IPO registration
statement. The financial statements and financial information in
this Quarterly Report on Form&nbsp;10-Q do not give effect to
the IPO. As a result of a reorganization of the Tality entities
during the second and third quarter of 2001, Tality is currently
an indirect wholly-owned subsidiary of Cadence.

<P align="left">
<B>Restructuring and Asset Impairment</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the third quarter of 2001, Cadence recorded $170&nbsp;million
of the $195 million criminal restitution award from Avant!
Corporation, less costs associated with the restitution. Avant!
paid the remaining $25&nbsp;million plus interest on
October&nbsp;3, 2001. See &#147;Subsequent Events&#148;.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the second quarter of 2001, Cadence announced a worldwide
restructuring and asset impairment plan targeted at reducing
workforce and consolidating facilities and assets.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence recorded $32.7&nbsp;million of restructuring charges
classified as unusual operating expenses associated with the
worldwide restructuring plan. Cadence&#146;s restructuring plan
and associated costs consisted of $11.3&nbsp;million for
reduction in personnel and $21.4&nbsp;million to downsize and
close excess facilities. The restructuring plan was initiated
primarily due to the severe downturn in the economic environment
in the electronics industry, particularly in the U.S. The
restructuring was primarily aimed at reducing excess personnel
and capacity costs within its Tality subsidiary. Management
estimates that the restructuring resulted in annualized cost
reductions of approximately $30.8&nbsp;million in salary and
benefit costs and $35.1&nbsp;million in facility costs.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The restructuring plan will result in the reduction of
approximately 325 employees. While employee reductions are
across all business functions, operating units, and geographic
regions, Cadence&#146;s wireless communications-related areas
within its Tality subsidiary are affected more than other areas.
In addition, the number of temporary and contract workers
employed by Cadence is being reduced. Severance costs resulting

<P align="center">7
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
from the restructuring included severance benefits, notice pay,
and out-placement services. Approximately $5.3&nbsp;million of
these costs resulted from the payments to certain participants
in Cadence&#146;s employee stock purchase plan prior to
Tality&#146;s separation from Cadence in October&nbsp;2000. All
terminations and termination benefits were communicated to the
affected employees prior to June 30, 2001. All severance
benefits will be paid out by the end of 2001.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Facilities consolidation charges of $21.4&nbsp;million were
incurred in connection with the downsizing and closing of 16
sites. Closure and downsizing costs included payments required
under lease contracts, less any applicable sublease income after
the properties were abandoned, lease buyout costs, restoration
costs associated with certain lease arrangements, and costs to
maintain facilities during the period after abandonment. To
determine the lease loss, which is the loss after Cadence&#146;s
cost recovery efforts from subleasing a building, certain
assumptions were made related to the: (1)&nbsp;time period over
which the relevant building would remain vacant,
(2)&nbsp;sublease terms, and (3)&nbsp;sublease rates, including
common area charges. The lease loss is an estimate under
Statement of Financial Accounting Standards No.&nbsp;5
<I>Accounting for Contingencies</I> and represents the low end
of the range, $10.8&nbsp;million, which will be adjusted in the
future upon triggering events (change in estimate of time to
sublease, actual sublease rates, etc.). Cadence has estimated
that the high end of the lease loss could be $50.4&nbsp;million
if facilities operating lease rental rates continue to decrease
in the applicable markets or if it takes longer than expected to
find a suitable tenant to sublease the facility. Asset-related
costs that were expensed consisted of leasehold improvements for
facilities that were abandoned and whose estimated fair market
value is zero. As of September&nbsp;29, 2001, seven sites had
been vacated and seven sites had been downsized.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence expects to record restructuring charges in the fourth
quarter of 2001, estimated between $25&nbsp;million and
$30&nbsp;million. These restructuring efforts are targeted at
workforce and infrastructure reductions and facilities and asset
consolidations within Tality and Cadence. See Subsequent Events.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In relation to the wireless communications business downsizing
within its Tality subsidiary and current decline in business
conditions generally, Cadence restructured certain of its
businesses and realigned resources to reduce costs. As a result,
Cadence recorded a charge of $25.8&nbsp;million related to the
impairment of goodwill and acquired intangibles associated with
the acquisition of Diablo Research Company LLC, or Diablo. Key
factors in this write-off were significant downsizing or
reassignment of personnel directly related to these assets and
abandonment of most of this line of business. The charge was
determined as the amount by which the carrying value of the
goodwill and intangible assets associated with Diablo&#146;s
acquisition exceeded the fair value of those assets.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes Cadence&#146;s restructuring
activity for the nine months ended September&nbsp;29, 2001:

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><FONT size="2">For the Nine Months Ended September 29, 2001</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Severance</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Excess</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">And Benefits</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Facilities</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Assets</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><FONT size="2">(In thousands)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, December&nbsp;30, 2000
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,319</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,938</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">280</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,537</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2001 restructuring charges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,264</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,469</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Non-cash charges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,399</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,978</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,349</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash charges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(12,714</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,834</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(843</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(19,391</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reclassifications
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">525</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">525</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, September&nbsp;29, 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,738</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,494</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,559</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,791</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the three and nine months ended September&nbsp;29, 2001,
approximately $2.6&nbsp;million and $3.7&nbsp;million,
respectively, of the restructuring reserve balance at
December&nbsp;30, 2000 was offset to the 2001 restructuring plan.

<P align="center">8

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B>Inventories</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence&#146;s inventories include high technology parts and
components for complex computer systems that emulate the
performance and operation of computer chips and electronic
systems.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the third quarter of 2001, Cadence recorded a
$12.9&nbsp;million reserve against inventory, which is included
in restructuring, asset impairment, and unusual items in the
Condensed Consolidated Statements of Operations. The
$12.9&nbsp;million reserve was related to excess inventory from
revised sales forecasts.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the second quarter of 2001, Cadence recorded a
$5.8&nbsp;million reserve against inventory, which is included
in restructuring, asset impairment, and unusual items in the
Condensed Consolidated Statements of Operations. Of the
$5.8&nbsp;million, $3.7&nbsp;million related to two discontinued
product lines as part of Cadence&#146;s restructuring and
$2.1&nbsp;million related to excess inventory of emulation
products. The $3.7&nbsp;million related to inventory and other
related costs for two product lines Cadence will no longer sell.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In both cases, Cadence examined the business and determined that
these products would not result in future revenue growth. The
excess inventory charges were due to a sudden and significant
decrease in forecasted revenue for emulation products and was
calculated in accordance with Cadence&#146;s policy, which is
based on inventory in excess of 12-month demand. Inventory
purchases and commitments are based on future sales forecasts.
Cadence typically buys and builds inventory levels for certain
key components to mitigate component supply constraints. Based
on Cadence&#146;s current 12-month demand forecast, Cadence does
not anticipate that the excess inventory subject to these
reserves will be used at a later date.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A summary of inventories follows:

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">December 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><FONT size="2">(In thousands)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Raw materials
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,151</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,897</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Work in process
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,925</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,252</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total inventories, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,076</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,149</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B>Credit Facility</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;29, 2000, Cadence entered into two syndicated
senior unsecured credit facilities that allowed Cadence to
borrow up to $350&nbsp;million, referred to as the 2000
Facilities. The 2000 Facilities replaced a prior
$355&nbsp;million revolving credit facility consisting of a
$177.5&nbsp;million two-year revolving credit facility, which
was terminated on September&nbsp;27, 2000, and a
$177.5&nbsp;million 364-day revolving credit facility, which was
terminated immediately prior to consummation of the 2000
Facilities. One of the new 2000 Facilities is a
$100&nbsp;million three-year revolving credit facility, referred
to as the Three-Year Facility. The other 2000 Facility was a
$250&nbsp;million 364-day revolving credit facility convertible
into a two-year term loan, referred to as the 364-Day Facility.
The Three-Year Facility terminates on September&nbsp;29, 2003.
The 364-Day Facility was extended and increased on
September&nbsp;28, 2001. On September&nbsp;28, 2001, the 364-Day
Facility was increased to $260&nbsp;million and will terminate
on September&nbsp;27, 2002, at which time the 364-Day Facility
may be converted to a one-year term loan with a maturity date of
September&nbsp;29, 2003, or, at the request of Cadence and with
the consent of members of the bank group that wish to do so, the
termination date of the 364-Day Facility may be extended for one
additional 364-day period with respect to the portion of the
364-Day Facility that a consenting bank holds. For both of the
2000 Facilities, Cadence has the option to pay interest based on
LIBOR plus a spread of between 1.25% and 1.50%, based on a
pricing grid tied to a financial covenant, or the higher of
(i)&nbsp;the Federal Funds Rate plus 0.50% or (ii)&nbsp;the
prime rate. As a result, Cadence&#146;s interest expenses
associated with this borrowing will vary with market rates. In
addition, commitment fees are payable on the unused portion of
the Three-Year Facility at rates between 0.25% and 0.34% based
on a pricing grid tied to a financial covenant and on the unused
portion of the 364-Day Facility at a fixed rate of 0.225%. A
utilization fee of 0.25% is payable on amounts borrowed under
the 364-Day Facility whenever combined

<P align="center">9

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
borrowings under the two 2000 facilities exceed
$118.8&nbsp;million. Cadence may not borrow under the 364-Day
Facility at any time that any portion of the Three-Year Facility
remains unused. The 2000 Facilities contain certain financial
and other covenants. At September&nbsp;29, 2001, Cadence was in
compliance with the covenants to the 2000 Facilities and there
were no borrowings outstanding.
</DIV>

<P align="left">
<B>Comprehensive Income (Loss)</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Comprehensive income (loss)&nbsp;includes foreign currency
translation gains and losses and other unrealized gains and
losses that have been previously excluded from net income and
reflected instead in stockholders&#146; equity. A summary of
comprehensive income (loss)&nbsp;follows:

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><FONT size="2">Three Months Ended</FONT></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><FONT size="2">(In thousands)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">127,425</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,671</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">102,358</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,488</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized income (loss)&nbsp;on investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,910</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,413</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,242</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,190</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Translation income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,329</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,924</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,387</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,591</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">136,664</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,160</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,213</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(19,293</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B>Net Income Per Share</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a reconciliation of the weighted average common
shares used to calculate basic net income per share to the
weighted average common and potential common shares used to
calculate diluted net income per share:

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><FONT size="2">Three Months Ended</FONT></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><FONT size="2">(In thousands)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Weighted average common shares used to calculate
	basic net income per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246,487</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">244,597</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">246,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">244,543</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Options
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,330</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,662</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,079</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,143</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Warrants and other contingent shares
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">154</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">537</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">190</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">583</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Puts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,007</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">567</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">534</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Weighted average common and potential common
	shares used to calculate diluted net income per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">256,978</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">262,823</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">258,700</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">261,803</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Options to purchase 14,579,911 and 10,192,215 shares of common
stock were outstanding for the three and nine months ended
September&nbsp;29, 2001, respectively, but were not included in
the computation of diluted net income per share because their
effect would be antidilutive. These options expire at various
dates through 2011. Put warrants to purchase 13,297 and 562,235
shares of common stock were outstanding for the three and nine
months ended September&nbsp;29, 2001, respectively, but were not
included in the computation of diluted net income per share
because their effect would be antidilutive. The put warrants
outstanding during the three and nine months ended
September&nbsp;29, 2001 expire on various dates through
May&nbsp;2002.

<P align="center">10

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Options to purchase 7,055,484&nbsp;shares of common stock were
outstanding for the three and nine months ended
September&nbsp;30, 2000, but were not included in the
computation of diluted net income per share because their effect
would be antidilutive. These options expire at various dates
through 2010. Put warrants to purchase 2,490,710&nbsp;shares of
common stock were outstanding for the three and nine months
ended September&nbsp;30, 2000, but were not included in the
computation of diluted net loss per share because their effect
would be antidilutive. The put warrants outstanding during the
three and nine months ended September&nbsp;30, 2000 expired on
various dates through May&nbsp;2001.

<P align="left">
<B>Contingencies</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Refer to Part&nbsp;II, Item&nbsp;1 for a description of legal
proceedings.

<P align="left">
<B>Put Warrants and Call Options</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On August&nbsp;1, 2001, Cadence authorized a share repurchase
program under which repurchased shares with a value of up to
$500&nbsp;million will be used for general corporate purposes,
including the share issuance requirements of Cadence&#146;s
employee stock option and purchase plans and acquisitions.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence had also authorized three seasoned systematic stock
repurchase programs under which it repurchased common stock to
satisfy estimated requirements for shares to be issued under its
employee stock option and purchase plans.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its authorized stock repurchase program, Cadence has
sold put warrants through private placements. At
September&nbsp;29, 2001, there were 4.6&nbsp;million put
warrants outstanding that entitle the holder to sell one share
of common stock to Cadence on a specified date and at a
specified price ranging from $15.50 to $26.90&nbsp;per share.
Additionally, during this same period, Cadence purchased call
options that entitle Cadence to buy one share of common stock at
a specified price to satisfy anticipated stock repurchase
requirements under Cadence&#146;s systematic stock repurchase
programs. At September&nbsp;29, 2001, Cadence had
3.5&nbsp;million call options outstanding at prices ranging from
$15.75 to $27.15&nbsp;per share. The put warrants and call
options outstanding at September&nbsp;29, 2001 expire on various
dates through May&nbsp;2002 and Cadence has the contractual
ability to settle the options prior to their maturity. At
September&nbsp;29, 2001, the estimated fair value of the call
options was approximately $4.3&nbsp;million and the estimated
fair value of the put warrants was approximately
$33.5&nbsp;million.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If exercised, Cadence has the right to settle the put warrants
with common stock equal to the difference between the exercise
price and the fair value of the common stock at the date of
exercise. Settlement of the put warrants with common stock could
cause Cadence to issue a substantial number of shares, depending
on the exercise price of the put warrants and the per share fair
value of Cadence&#146;s common stock at the time of exercise. In
addition, settlement of put warrants in common stock could lead
to the disposition by put warrant holders of shares of
Cadence&#146;s common stock that such holders may have
accumulated in anticipation of the exercise of the put warrants
or call options, which may adversely affect the price of
Cadence&#146;s common stock. At September&nbsp;29, 2001, Cadence
had the ability to settle these put warrants with common stock
and, therefore, no amount was classified out of
stockholders&#146; equity in the condensed consolidated balance
sheets.

<P align="left">
<B>Minority Interest</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In relation to the postponement of the Tality IPO, Cadence and
Tality began to redeem the minority interest in Tality. As of
September&nbsp;29, 2001, Cadence had repurchased all the
minority interest shares outstanding. In conjunction with the
transaction, Cadence reacquired 1,740,000 restricted Tality
shares from certain Cadence executives and key employees who
then repaid their related notes payable to Cadence. Tality
repurchased 220,000 restricted shares from three of its
directors. The purchase price was $6.10, the fair market value
of Tality stock at the time of repurchase. This transaction was
accounted for as a purchase and resulted in $2.3&nbsp;million of
goodwill, which is being amortized over 3&nbsp;years.

<P align="center">11

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<P align="left">
<B>Statement of Cash Flows</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The supplemental cash-flow information for the nine months ended
September&nbsp;29, 2001 and September&nbsp;30, 2000 follows:

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">For the Nine Months Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">(In thousands)</FONT></B></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash Paid During the Period For:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,951</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,180</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income taxes (including foreign withholding tax)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,064</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,404</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Non-Cash Investing and Financing Activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common stock and options issued for acquisitions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100,452</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Transfer of Non-Qualified Deferred Compensation
	investment to Cadence
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,908</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capital lease obligations incurred for equipment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">153</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">689</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Transfer of inventory to fixed assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,462</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity investment by transfer of equipment or
	software
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,140</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B>Segment Reporting</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence&#146;s chief operating decision making group is the
Executive Staff, which includes Cadence&#146;s President and
Chief Executive Officer and Cadence&#146;s other senior
management. Cadence&#146;s Executive Staff reviews the Cadence
consolidated results within three segments: Product, Services,
and Maintenance, and also reviews Tality&#146;s results
separately as a stand-alone entity.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Product segment includes revenue and associated costs to
design and license to customers a variety of electronic design
automation products. The Services segment includes revenue and
associated costs to offer methodology and design services either
to assist companies in developing electronic designs or to
assume responsibility for the design effort when customers wish
to outsource this work. The Maintenance segment includes revenue
and associated costs primarily for a technical support
organization, and maintenance agreements are offered to
customers either as part of Cadence&#146;s product license
agreements or separately. Within the Cadence consolidated
results, Tality revenue, excluding inter-company revenue, is
included in the Services segment, associated Tality cost of
goods sold is reflected in each of the three segments,
consistent with the benefit derived by the respective segments
from those services, and Tality operating expenses are included
in the other items.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Segment income from operations is defined as gross margin under
generally accepted accounting principles and excludes
amortization of acquired intangibles, inventory write-down and
other, operating expenses (marketing and sales, research and
development, and general and administrative), unusual items,
other income, net, and income taxes. Profitability information
about Cadence&#146;s segments is available only to the extent of
gross margin by segment, and operating expenses and other income
and expense items are managed on a functional basis. There are
no differences between the accounting policies used to measure
profit and loss for segments and those used on a consolidated
basis. Revenue is defined as revenue from external customers
with no inter-segment revenue. Tality revenue includes
inter-company revenue of $3.7&nbsp;million and $5.7&nbsp;million
for the three and nine months ended September&nbsp;29, 2001,
respectively. There was no inter-company revenue in 2000.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence&#146;s management does not identify or allocate its
assets, including capital expenditures, by operating segment.
Accordingly, assets are not being reported by segment because
the information is not available by segment and is not reviewed
by Cadence&#146;s Executive Staff to make decisions about
resources to

<P align="center">12

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
be allocated among the segments or to assess their performance.
Depreciation and amortization of purchased software is allocated
among the segments in order to determine each segment&#146;s
gross margin.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following tables present information about reported segments
for the three months ended September&nbsp;29, 2001 and
September&nbsp;30, 2000:

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25" align="center" nowrap><B><FONT size="2">For the Three Months Ended September 29, 2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Product</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Services</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Maintenance</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Other</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Total</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Tality</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="2">(In thousands)</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217,408</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57,992</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">84,608</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">360,008</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37,880</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,161</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,652</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,849</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">84,662</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,174</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,995</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,995</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventory write-down and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,868</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,868</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross margin
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">198,247</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,340</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">67,759</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(36,863</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">238,483</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,706</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Marketing and sales
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(96,593</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(96,593</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,495</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Research and development
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(74,247</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(74,247</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,815</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General and administrative
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(27,640</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(27,640</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,256</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,858</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of deferred stock compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,480</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,480</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,135</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Restructuring, asset impairment, and unusual items
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">167,686</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">167,686</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(815</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income (expense), net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">277</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">277</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(209</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income (loss) before provision (benefit)&nbsp;for
	income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">198,247</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,340</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">67,759</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(69,860</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,486</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(15,877</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25" align="center" nowrap><B><FONT size="2">For the Three Months Ended September 30, 2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Product</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Services</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Maintenance</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Other</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Total</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Tality</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="2">(In thousands)</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">165,341</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">87,320</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">332,461</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52,033</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,931</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,991</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,183</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96,105</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,648</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,648</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross margin
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,410</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,329</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,617</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(20,648</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">215,708</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,383</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Marketing and sales
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(97,845</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(97,845</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,274</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Research and development
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(66,614</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(66,614</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,871</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General and administrative
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(24,121</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(24,121</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,214</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,074</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of deferred stock compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,164</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,164</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,099</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Restructuring, asset impairment, and unusual items
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,251</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,573</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,573</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">411</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income (loss) before provision (benefit)&nbsp;for
	income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,410</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,329</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,617</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(217,756</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,600</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(16,989</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">13

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following tables present information about reported segments
for the nine months ended September&nbsp;29, 2001 and
September&nbsp;30, 2000:

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25" align="center" nowrap><B><FONT size="2">For the Nine Months Ended September 29, 2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Product</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Services</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Maintenance</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Other</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Total</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Tality</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="2">(In thousands)</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">588,831</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">211,810</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">251,599</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,052,240</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">127,326</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,644</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">151,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49,725</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">263,502</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99,092</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,915</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,915</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventory write-down and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,812</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,812</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,148</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross margin
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">526,187</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">201,874</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(91,727</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">697,011</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,086</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Marketing and sales
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(286,243</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(286,243</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,160</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Research and development
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(219,129</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(219,129</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(18,217</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General and administrative
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(85,849</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(85,849</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(33,687</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,884</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of deferred stock compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(15,595</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(15,595</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,878</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Restructuring, asset impairment, and unusual items
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,842</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,842</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(47,033</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income (expense), net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">435</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">435</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(888</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income (loss) before provision (benefit)&nbsp;for
	income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">526,187</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">201,874</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(608,266</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180,472</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(113,661</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25" align="center" nowrap><B><FONT size="2">For the Nine Months Ended September 30, 2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="25" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Product</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Services</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Maintenance</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Other</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Total</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Tality</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="2">(In thousands)</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">411,256</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">243,312</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">234,068</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">888,636</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,317</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cost of revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63,910</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,174</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,701</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">267,785</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109,828</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,182</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60,182</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross margin
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">347,346</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">86,138</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">187,367</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(60,182</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">560,669</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,489</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Marketing and sales
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(279,043</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(279,043</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25,943</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Research and development
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(194,959</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(194,959</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,668</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General and administrative
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(70,404</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(70,404</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(23,893</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(12,167</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of deferred stock compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,164</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,164</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,099</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Restructuring, asset impairment, and unusual items
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,937</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,992</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,026</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,026</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">943</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income (loss) before provision (benefit)&nbsp;for
	income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">347,346</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">86,138</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">187,367</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(610,663</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,188</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(43,330</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Internationally, excluding Japan, Cadence markets and supports
its products and services primarily through its subsidiaries and
various distributors. Cadence licenses its products in Japan
through Innotech Corporation, in which Cadence is an
approximately 15% stockholder. Cadence markets its methodology
services in Japan through a wholly-owned subsidiary.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Revenues are attributed to geographic areas based on the country
in which the customer is domiciled. In the three months ended
September&nbsp;29, 2001, there was one customer that accounted
for 14% and one customer that accounted for 11% of total
revenue. In the nine months ended September&nbsp;29, 2001, and
the

<P align="center">14

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
three and nine months ended September&nbsp;30, 2000, no one
customer accounted for more than 10% of total revenues.
Long-lived assets are attributed to geographic areas based on
the country where the assets are located.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table presents a summary of revenues by geographic
region for the three months ended September&nbsp;29, 2001 and
September&nbsp;30, 2000:

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">For the Three Months Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">North America:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">172,091</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">193,246</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,698</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,742</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total North America
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">178,789</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">204,988</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Europe:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United Kingdom
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34,709</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">France
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,117</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,512</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Italy
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,892</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,672</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Germany
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,428</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,218</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,151</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,365</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Europe
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">118,297</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">67,757</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Japan and Asia:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Japan
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30,053</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37,984</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Asia
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,869</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,732</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Japan and Asia
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,922</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59,716</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">360,008</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">332,461</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table presents a summary of revenues by geographic
region for the nine months ended September&nbsp;29, 2001 and
September&nbsp;30, 2000:

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">For the Nine Months Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">North America:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">571,040</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">505,817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,453</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,833</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total North America
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">596,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">531,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Europe:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United Kingdom
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">65,704</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">77,980</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Germany
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59,389</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,974</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">138,840</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,858</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Europe
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">263,933</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">189,812</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Japan and Asia:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Japan
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122,440</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">121,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Asia
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,374</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45,849</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Japan and Asia
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">191,814</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">167,174</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,052,240</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">888,636</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">15

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table presents a summary of long-lived assets by
geographic region for the periods ended September&nbsp;29, 2001
and December&nbsp;30, 2000:

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">December 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">North America:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">354,062</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">316,091</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,518</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,344</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total North America
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">356,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">319,435</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Europe:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United Kingdom
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34,540</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,729</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">France
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,834</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,383</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Germany
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,267</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">924</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Italy
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">361</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">395</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,846</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,070</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Europe
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,848</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,501</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Japan and Asia:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Japan
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,592</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,702</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Asia
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,705</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,241</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total Japan and Asia
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,297</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,943</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">406,725</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">368,879</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B>Subsequent Events</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence expects to record restructuring charges in the fourth
quarter of 2001, estimated between $25&nbsp;million and
$30&nbsp;million. These restructuring efforts are targeted at
workforce and infrastructure reductions and facilities and asset
consolidations within Tality and Cadence.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;8, 2001, Cadence announced it has signed a
definitive agreement to acquire Silicon Perspective Corporation,
or SPC, a privately-held design technology firm headquartered in
Santa Clara, California. SPC provides electronic design tools
that bridge the gap between front-end logic designers and the
back-end physical realm. The financial terms of the agreement
were not disclosed and Cadence expects the acquisition to be
completed in December&nbsp;2001.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;25, 2001, Avant! Corporation was ordered to pay
Cadence $195 million in criminal restitution after Avant!
entered a plea of no contest and was found guilty by the
Superior Court of the State of California of conspiracy to take
and use Cadence&#146;s trade secrets. As of September&nbsp;29,
2001, Cadence had received $169&nbsp;million, plus
$1&nbsp;million of interest. The remaining $26&nbsp;million,
plus nominal interest was paid on October&nbsp;3, 2001. Cadence
is accounting for this transaction on a cash basis and no
contingent gain was recorded due to the uncertainty on
collectibility.

<P align="center">16
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<!-- link2 "Item 2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="left">
<B>Item&nbsp;2. Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The following discussion should be read in conjunction with
the Condensed Consolidated Financial Statements and notes
thereto included elsewhere in this quarterly report on
Form&nbsp;10-Q. Except for historical information, the following
discussion contains forward-looking statements based on current
expectations that involve certain risks and uncertainties.
Cadence&#146;s actual results could differ materially from those
discussed herein. Factors that could cause actual results or
performance to differ materially or contribute to such
differences include, but are not limited to, those discussed
below in &#147;Results of Operations,&#148; &#147;Liquidity and
Capital Resources,&#148; &#147;Factors That May Affect Future
Results,&#148; and &#147;Disclosures about Market Risk.&#148;</I>

<P align="left">
<B>Overview</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence provides comprehensive software and other technology and
offers design and methodology services for the product
development requirements of the world&#146;s leading electronics
companies. Cadence licenses its leading-edge electronic design
automation, or EDA, software and hardware technology and
provides a range of services to its customers throughout the
world to help them optimize their product development processes.
Cadence is a supplier of end-to-end products and services that
are used to design and develop complex chips and electronic
systems including semiconductors, computer systems and
peripherals, telecommunications and networking equipment, mobile
and wireless devices, automotive electronics, consumer products,
and other advanced electronics.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In late 2000, both the U.S. economy in general and the
electronics industry in particular began to experience a
slowdown, the severity of which has increased throughout 2001.
The electronics industry slowdown, especially in the
semiconductor industry, may reduce Cadence&#146;s revenue and
harm its results of operations.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;25, 2001, Avant! Corporation was ordered to pay
Cadence $195 million in criminal restitution after Avant!
entered a plea of no contest and was found guilty by the
Superior Court of the State of California of conspiracy to take
and use Cadence&#146;s trade secrets. As of September&nbsp;29,
2001, Cadence had received $169&nbsp;million, plus
$1&nbsp;million of interest. The remaining $26&nbsp;million,
plus nominal interest was paid on October&nbsp;3, 2001. Cadence
is accounting for this transaction on a cash basis and no
contingent gain was recorded due to the uncertainty on
collectibility.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;8, 2001, Cadence announced it has signed a
definitive agreement to acquire Silicon Perspective Corporation,
or SPC, a privately-held design technology firm headquartered in
Santa Clara, California. SPC provides electronic design tools
that bridge the gap between front-end logic designers and the
back-end physical realm. The financial terms of the agreement
were not disclosed and Cadence expects the acquisition to be
completed in December&nbsp;2001.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the three months ended June&nbsp;30, 2001, Cadence acquired
substantially all of the assets of two companies for an
aggregate price of $10.5&nbsp;million, net of acquisition costs,
of which $4.4&nbsp;million was cash and $6.1&nbsp;million was
shares of Cadence common stock, plus future contingent payments.
Each acquisition was accounted for as a purchase. Upon
consummation of the acquisitions, Cadence immediately charged to
expense $1&nbsp;million representing acquired in-process
technology that had not yet reached technological feasibility
and had no alternative future use.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In February&nbsp;2001, Cadence acquired CadMOS Design
Technology,&nbsp;Inc., a privately-held design tools firm
headquartered in San Jose. CadMOS provides solutions to the
noise problems experienced in ultra-deep submicron processes.
Its noise-analysis solutions are targeted at both digital and
mixed signal designers working on microprocessors, dynamic
random access memory, mixed-signal System-on-a-Chip, and
application-specific integrated circuits. Cadence acquired all
of the outstanding stock of CadMOS and assumed all outstanding
stock options and warrants. The purchase price was
$92.7&nbsp;million and the acquisition was accounted for as a
purchase. The purchase price could increase up to an additional
$12.6&nbsp;million, representing up to 488,970 shares, if
certain predetermined performance factors are achieved over the
next three years. Of the $12.6&nbsp;million, $1.7&nbsp;million
is contingent on continued employment of certain CadMOS
employees. The $12.6&nbsp;million is based on the share price of
Cadence&#146;s common stock at the time of the acquisition. In

<P align="center">17

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<DIV align="left">
connection with the acquisition, Cadence acquired goodwill of
$58.3&nbsp;million, which is being amortized over 5&nbsp;years,
and technology and workforce intangibles of $12.9&nbsp;million,
which are being amortized over 3 to 5 years. The results of
operations of CadMOS and the estimated fair value of the assets
acquired and liabilities assumed are included in Cadence&#146;s
consolidated financial statements from the date of acquisition.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;17, 2000, Cadence announced its plan to separate
its electronics design services group into a new company named
Tality Corporation, or Tality. Tality&#146;s separation from
Cadence was substantially completed on October&nbsp;4, 2000, and
the electronic design services business operated as a subsidiary
of Cadence. Tality filed a registration statement with the
Securities and Exchange Commission for Tality&#146;s initial
public offering, or IPO. As a result of the separation in the
third quarter of 2000, Cadence has recorded deferred stock
compensation resulting from Tality option grants and restricted
stock sales. See &#147;Management&#146;s Discussion and Analysis
of Financial Condition and Results of Operations &#150; Unusual
Items.&#148; On October&nbsp;9, 2000, Cadence announced the
postponement of Tality&#146;s IPO due to unfavorable market
conditions. As a result of the postponement of the Tality IPO
Cadence wrote off $2.8&nbsp;million of IPO related expenses in
the first quarter of 2001. See &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations &#150; Unusual Items.&#148; On April&nbsp;17, 2001,
Cadence announced the withdrawal of the Tality IPO registration
statement. The financial statements and financial information in
this Quarterly Report on Form&nbsp;10-Q do not give effect to
the IPO. As a result of a reorganization of the Tality entities
during the second and third quarter of 2001, Tality is currently
an indirect wholly-owned subsidiary of Cadence.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fourth quarter of 2001, Cadence expects to record
restructuring charges estimated between $25&nbsp;million and
$30&nbsp;million. These restructuring efforts are targeted at
workforce and infrastructure reductions and facilities and asset
consolidations within Tality and Cadence.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the third quarter of 2001, Cadence recorded a $12.9 reserve
against inventory related to its Quickturn subsidiary, which is
included in restructuring, asset impairment, and unusual items
in the Condensed Consolidated Statements of Operations. The
$12.9&nbsp;million reserve was related to excess inventory
related to revised sales forecasts.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the second quarter of 2001, Cadence announced a worldwide
restructuring and asset impairment plan targeted at reducing
workforce and consolidating facilities and assets. Cadence
recorded $32.7&nbsp;million of restructuring charges classified
as unusual operating expenses associated with the worldwide
restructuring plan. The restructuring plan will result in the
reduction of approximately 325 employees. While employee
reductions are across all business functions, operating units,
and geographic regions, Cadence&#146;s wireless
communications-related areas within its Tality subsidiary are
affected more than other areas. In addition, the number of
temporary and contract workers employed by Cadence is being
reduced. Facilities consolidation charges of $21.4&nbsp;million
were incurred in connection with the downsizing and closing of
16 sites.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In relation to the wireless communications business downsizing
within its Tality subsidiary and current decline in business
conditions generally, Cadence restructured certain of its
businesses and realigned resources to reduce costs. As a result,
Cadence recorded a charge of $25.8&nbsp;million related to the
impairment of goodwill and acquired intangibles associated with
the acquisition of Diablo Research Company&nbsp;LLC, or Diablo.
Key factors in this write-off were significant downsizing or
reassignment of personnel directly related to these assets and
abandonment of most of this line of business. The charge was
determined as the amount by which the carrying value of the
goodwill and intangible assets associated with Diablo&#146;s
acquisition exceeded the fair value of those assets.

<P align="center">18

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<P align="left">
<B>Results of Operations</B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Three Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">% Change</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">% Change</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><B><I><FONT size="2">Revenue</FONT></I></B></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><FONT size="2">(In millions, except percentages)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Product
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">165.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">588.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">411.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Services
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">87.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(34</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">211.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">243.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Maintenance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">84.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">251.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">234.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">360.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">332.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,052.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">888.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="14" align="left" valign="top">
	<B><I><FONT size="2">Sources of Revenue as a Percent of Total
	Revenue</FONT></I></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Product
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Services
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Maintenance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Product revenue increased $52.1&nbsp;million and
$177.6&nbsp;million in the three and nine months ended
September&nbsp;29, 2001, respectively, when compared to the same
periods in 2000, primarily due to an increase in the value of
license renewals with major customers as well as an increase in
new sales of Cadence&#146;s software products to new customers.
The increase in sales volume in the three and nine months ended
September&nbsp;29, 2001 was primarily due to an increase in
sales volume of Cadence&#146;s integrated circuit implementation
products, partially offset by a decrease in sales volume of
intellectual property creation products, including emulation,
and printed circuit board-related products. In the three and
nine months ended September&nbsp;29, 2001, about one third of
software revenue came from Cadence&#146;s ratable software
license arrangements. In the three and nine months ended
September&nbsp;30, 2000, approximately 19% of software revenue
came from Cadence&#146;s ratable software license arrangements.
The percentage of ratable revenue will vary, in any given
quarter, depending on the actual mix of revenue generated from
Cadence&#146;s various licensing models.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Services revenue decreased $29.3&nbsp;million and
$31.5&nbsp;million in the three and nine months ended
September&nbsp;29, 2001, respectively, when compared to the same
periods in 2000, primarily due to customers&#146; tactical
spending cuts for services engagements. Tality&#146;s revenue
declined $17.9&nbsp;million and $20.7&nbsp;million in the three
and nine months ended September&nbsp;29, 2001, respectively,
when compared to the same periods in 2000, primarily due to
fewer active engagements and decreased total client service
hours billed. Tality&#146;s revenue is expected to continue to
be affected by the slowdown in the economy and electronics
industry specifically, with revenue expected to decline in the
fourth quarter of 2001. Methodology Services revenue declined
$11.4&nbsp;million and $10.8&nbsp;million in the three and nine
months ended September&nbsp;29, 2001, respectively, when
compared to the same periods in 2000, primarily due to a general
weakness in short-term consulting.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Maintenance revenue increased $4.8&nbsp;million and
$17.5&nbsp;million in the three and nine months ended
September&nbsp;29, 2001, respectively, when compared to the same
periods in 2000, primarily due to the growth of the installed
customer base and the renewal of maintenance and support
contracts.

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Three Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">% Change</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">% Change</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><FONT size="2">(In millions, except percentages)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="6" align="left" valign="top">
	<B><I><FONT size="2">Revenue by Geography</FONT></I></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Domestic
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">172.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">193.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">571.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">505.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">International
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">187.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">139.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">481.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">382.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">360.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">332.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,052.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">888.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="14" align="left" valign="top">
	<B><I><FONT size="2">Revenue by Geography as a Percent of Total
	Revenue</FONT></I></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Domestic
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">54%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">International
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
International revenue increased $48.7&nbsp;million and
$98.4&nbsp;million in the three and nine months ended
September&nbsp;29, 2001, respectively, when compared to the same
periods in 2000. The increase in the three and nine months ended
September&nbsp;29, 2001 was primarily due to increases in
product revenue in all regions and

<P align="center">19

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
maintenance revenue in Europe, Asia, and Canada, partially
offset by decreases in service revenue in all regions and
maintenance revenue in Japan.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Differences in the rate of revenue growth over the periods
presented and as compared geographically are primarily due to
fluctuations in sales volume of integrated circuit
implementation and intellectual property creation products and
for Cadence&#146;s design and methodology services offerings.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Foreign currency exchange rates negatively affected revenue by
$3.7 million and $13.5&nbsp;million during the three and nine
months ended September&nbsp;29, 2001, respectively, when
compared to the same periods in 2000, primarily due to the
weakening of the Japanese yen in relation to the U.S. dollar.

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Three Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">% Change</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">% Change</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><I><FONT size="2">Cost of Revenue</FONT></I></B></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><FONT size="2">(In millions, except percentages)</FONT></B></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Product
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(16</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Services
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">151.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Maintenance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="13" align="left" valign="top">
	<B><I><FONT size="2">&nbsp;&nbsp;Cost of Revenue as a Percent of
	Related Revenue</FONT></I></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Product
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Services
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">84%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">64%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">65%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Maintenance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of product revenue includes costs of production personnel,
packaging and documentation, royalties, and amortization of
capitalized software development costs for software products.
Manufacturing costs associated with hardware emulation system
products include materials, labor, and overhead.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of product revenue decreased $3.8&nbsp;million and
$1.3&nbsp;million for the three and nine months ended
September&nbsp;29, 2001, respectively, when compared to the same
period in 2000, primarily due to a decrease in manufacturing
expenses associated with emulation system product, partially
offset by an increase in third-party royalty costs and
amortization of software development costs.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because the majority of Cadence&#146;s cost of software product
revenue does not vary significantly with changes in revenue,
product gross margin increased in the three and nine months
ended September&nbsp;29, 2001, when compared to the same period
in 2000, primarily due to an increase in volume of license
renewals with major customers.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of services revenue includes costs associated with
providing services to customers, primarily salaries and costs to
recruit, develop, and retain personnel, and costs to maintain
the infrastructure necessary to manage a services organization.
Cost of services revenue decreased $7.3&nbsp;million and
$6.1&nbsp;million in the three and nine months ended
September&nbsp;29, 2001, respectively, when compared to the same
period in 2000, primarily due to a decrease in salaries and
benefits resulting from Cadence&#146;s reduction of services
professionals in connection with the restructuring plan
initiated during the second quarter of 2001, partially offset by
an increase in salaries and benefits resulting from
Cadence&#146;s addition of services professionals that occurred
during the three months ended March&nbsp;31, 2001.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Services gross margin decreased for the three and nine months
ended September&nbsp;29, 2001, when compared to the same periods
in 2000, primarily due to the slowdown in the economy generally
and in the electronics systems industry in particular resulting
in revenues declining faster than costs. In addition, services
gross margin has been, and may continue to be reduced by,
Cadence&#146;s inability to fully utilize its services resources.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of maintenance revenue includes the cost of customer
services, such as hot-line and on-site support, production
personnel, packaging, and documentation of maintenance updates.
Cost of maintenance revenue remained flat and increased
$3&nbsp;million for the three and nine months ended
September&nbsp;29, 2001, respectively,

<P align="center">20

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
when compared to the same periods in 2000. The increase for the
nine months ended September&nbsp;29, 2001 was primarily due to
an increase in salaries and benefits resulting from an increase
in employee headcount.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Three Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">% Change</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">% Change</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><FONT size="2">(In millions, except percentages)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="5" align="left" valign="top">
	<B><I><FONT size="2">Operating Expenses</FONT></I></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Marketing and sales
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">286.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">279.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Research and development
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">219.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">195.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General and administrative
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">85.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">70.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="13" align="left" valign="top">
	<B><I><FONT size="2">&nbsp;&nbsp;Expenses as a Percent of Total
	Revenue</FONT></I></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Marketing and sales
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Research and development
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General and administrative
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Marketing and sales expenses decreased $1.2&nbsp;million in the
three months ended September&nbsp;29, 2001, when compared to the
same period of last year, primarily due to a decrease in outside
consulting and services costs. Marketing and sales expenses
increased $7.2&nbsp;million in the nine months ended September
29, 2001, when compared to the same periods in 2000, primarily
due to an increase in salaries and benefits resulting from an
increase in employee headcounts.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and development expenses, prior to the reduction for
capitalization of software development costs, were
$81.5&nbsp;million, representing 23% of total revenue, in the
three months ended September&nbsp;29, 2001, and $73.3 million,
representing 22% of total revenue, for the three months ended
September&nbsp;30, 2000. For the three and nine months ended
September&nbsp;29, 2001, Cadence capitalized software
development costs of $7.3&nbsp;million and $22.6 million,
respectively, representing 9% of total research and development
expenditures. For the three and nine months ended
September&nbsp;30, 2000, Cadence capitalized software
development costs of $6.7&nbsp;million and $21.4&nbsp;million,
respectively, representing 9% and 10% of total research and
development expenditures, respectively. The increase in
capitalized software development costs for the three and nine
months ended September&nbsp;29, 2001, resulted primarily from
increases in new product development projects that have reached
technological feasibility. In any given period, the amount of
capitalized software development costs may vary depending on the
exact nature of the development performed.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The increase in net research and development expenses of
$7.6&nbsp;million and $24.2&nbsp;million for the three and nine
months ended September&nbsp;29, 2001, respectively, when
compared to the same periods in 2000, was primarily due to an
increase in salaries and benefits resulting from an increase in
employee headcount and increased investment in research and
development projects.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
General and administrative expenses increased $3.5&nbsp;million
in the three months ended September&nbsp;29,2001, when compare
to the same period in 2000, primarily due to an increase in
salaries and benefits resulting from an increase in employee
headcount. General and administrative expenses increased
$15.4&nbsp;million in the nine months ended September&nbsp;29,
2001, when compared to the same period in 2000, primarily due to
an increased use of outside consulting services, salaries and
benefits resulting from an increase in employee headcount, and
increases in bad debt expense, primarily attributable to Tality
operations.

<P align="center">21
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Foreign currency exchange rates positively affected operating
expenses by $2.6&nbsp;million and $8.4&nbsp;million for the
three and nine months ended September&nbsp;29, 2001,
respectively, when compared to the same periods in 2000,
primarily due to the weakening of the Japanese yen and the
British pound in relation to the U.S. dollar.

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Three Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="2">(In millions)</FONT></B></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><I><FONT size="2">Amortization of Acquired
	Intangibles</FONT></I></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">60.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="5" align="left" valign="top">
	<B><I><FONT size="2">Amortization of Acquired Intangibles<BR>
	as a Percent of Total Revenue</FONT></I></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of acquired intangibles
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Amortization of acquired intangibles increased $3.3&nbsp;million
and $11.7 million in the three and nine months ended
September&nbsp;29, 2001, respectively, when compared with the
same periods in 2000, primarily due to the 2001 acquisition of
CadMOS, partially offset by the reduction of Diablo amortization
related to the write-off in the second quarter of 2001. See
&#147;Unusual Items&nbsp;&#150; Goodwill Write-Off&#148;.

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Three Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="2">(In millions)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="9" align="left" valign="top">
	<B><I><FONT size="2">Amortization of Deferred Stock
	Compensation</FONT></I></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of deferred stock compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="13" align="left" valign="top">
	<B><I><FONT size="2">Amortization of Deferred Stock
	Compensation<BR>
	as a Percent of Total Revenue</FONT></I></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of deferred stock compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence records deferred stock compensation resulting from
Tality option grants for Tality stock, Tality restricted stock
sales, and Cadence&#146;s acquisition of CadMOS. Deferred stock
compensation from Tality option grants and restricted stock
sales represents the difference between the exercise price of
stock option grants to Tality employees and directors, and
restricted stock sales to certain Cadence executives and key
employees, and the deemed fair market value of Tality&#146;s
common stock at the time of those grants and sales. Deferred
stock compensation from the CadMOS acquisition represents the
difference between the exercise price of stock option grants to
CadMOS employees and the fair market value of Cadence&#146;s
common stock at the time of acquisition. Cadence is amortizing
the deferred stock compensation to expense over the period
during which the stock options and restricted stock vest. In the
third quarter of 2001, Cadence reacquired 1,740,000 restricted
Tality shares from certain Cadence executives and key employees
who then repaid their related notes payable to Cadence. Tality
repurchased 220,000 restricted shares from three of its
directors. The purchase price was $6.10, the fair market value
of Tality stock at the time of repurchase. This transaction was
accounted for as a purchase and resulted in $2.4&nbsp;million of
goodwill, which is being amortized over 3&nbsp;years.
Amortization of deferred stock compensation decreased
$2.7&nbsp;million in the three months ended September&nbsp;29,
2001, when compared to the same period in 2000, primarily due to
Cadence reacquiring the Tality stock and a reduction in the
number of outstanding Tality option grants. Amortization of
deferred stock compensation increased $10.4&nbsp;million in the
nine months ended September&nbsp;29, 2001, when compared to the
same period in 2000, primarily due to no similar costs in the
first six months of 2000.

<P align="center">22
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B>&nbsp;&nbsp;<I>Restructuring, Asset Impairment, and Unusual
Items</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table presents information regarding unusual items
for the three and nine months ended September&nbsp;29, 2001 and
September&nbsp;30, 2000:

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Three Months Ended</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="2">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 29,</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">September 30,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="2">(In millions)</FONT></B></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Avant! criminal restitution, net of related costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(168.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(168.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Restructuring charges
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inventory write-off and other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Goodwill write-off
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Separation costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Write-off of acquired in-process technology
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total restructuring, asset impairment, and
	unusual items
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(154.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(70.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B>&nbsp;&nbsp;</B><I>Avant! Criminal Restitution</I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;25, 2001, Avant! Corporation was ordered to pay
Cadence $195 million in criminal restitution after Avant!
entered a plea of no contest and was found guilty by the
Superior Court of the State of California of conspiracy to take
and use Cadence&#146;s trade secrets. As of September&nbsp;29,
2001, Cadence had received $169&nbsp;million, plus
$1&nbsp;million of interest. The remaining $26&nbsp;million,
plus nominal interest was paid on October&nbsp;3, 2001. Cadence
is accounting for this transaction on a cash basis and no
contingent gain was recorded due to the uncertainty on
collectibility.

<P align="left">
<B>&nbsp;&nbsp;</B><I>Restructuring</I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the second quarter of 2001, Cadence announced a worldwide
restructuring and asset impairment plan targeted at reducing
workforce and consolidating facilities and assets.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence recorded $32.7&nbsp;million of restructuring charges
classified as unusual operating expenses associated with the
worldwide restructuring plan. Cadence&#146;s restructuring plan
and associated costs consisted of $11.3&nbsp;million for
reduction in personnel and $21.4&nbsp;million to downsize and
close excess facilities. The restructuring plan was initiated
due to the severe downturn in the economic environment in the
electronics industry, particularly in the U.S. The restructuring
was primarily aimed at reducing excess personnel and capacity
costs within its Tality subsidiary. Management estimates that
the restructuring will result in annualized cost reductions of
approximately $30.8&nbsp;million in salary and benefit costs and
$35.1&nbsp;million in facility costs.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The restructuring plan will result in the reduction of
approximately 325 employees. While employee reductions are
across all business functions, operating units, and geographic
regions, Cadence&#146;s wireless communications-related areas
within its Tality subsidiary are affected more than other areas.
In addition, the number of temporary and contract workers
employed by Cadence is being reduced. Severance costs resulting
from the restructuring included severance benefits, notice pay,
and out-placement services. Approximately $5.3&nbsp;million of
these costs resulted from the payments to certain participants
in Cadence&#146;s employee stock purchase plan prior to
Tality&#146;s separation from Cadence in October&nbsp;2000. All
terminations and termination benefits were communicated to the
affected employees prior to June 30, 2001. All severance
benefits will be paid out by the end of 2001.

<P align="center">23
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Facilities consolidation charges of $21.4&nbsp;million were
incurred in connection with the downsizing and closing of 16
sites. Closure and downsizing costs included payments required
under lease contracts, less any applicable sublease income after
the properties were abandoned, lease buyout costs, restoration
costs associated with certain lease arrangements, and costs to
maintain facilities during the period after abandonment. To
determine the lease loss, which is the loss after Cadence&#146;s
cost recovery efforts from subleasing a building, certain
assumptions were made related to the (1)&nbsp;time period over
which the relevant building would remain vacant,
(2)&nbsp;sublease terms, and (3) sublease rates, including
common area charges. The lease loss is an estimate under
Statement of Financial Accounting Standards No.&nbsp;5
<I>Accounting for Contingencies </I>and represents the low end
of the range, $10.8&nbsp;million, which will be adjusted in the
future upon triggering events (change in estimate of time to
sublease, actual sublease rates, etc.). Cadence has estimated
that the high end of the lease loss could be $50.4&nbsp;million
if facilities operating lease rental rates continue to decrease
in the applicable markets or if it takes longer than expected to
find a suitable tenant to sublease the facility. Asset-related
costs that were expensed consisted of leasehold improvements for
facilities that were abandoned and whose estimated fair market
value is zero. As of September&nbsp;29, 2001, seven sites had
been vacated and seven sites had been downsized.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the first quarter of 2001, Cadence recorded $1.5&nbsp;million
of restructuring expenses incurred in connection with its
research and development process.

<P align="left">
<B>&nbsp;&nbsp;</B><I>Inventory Write-Off and Other</I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the third quarter of 2001, Cadence recorded a
$12.9&nbsp;million reserve against inventory, which is included
in restructuring, asset impairment, and unusual items in the
Condensed Consolidated Statements of Operations. The
$12.9&nbsp;million reserve was related to excess inventory from
revised sales forecasts.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with its announced restructuring, Cadence recorded
a $5.8 million reserve against inventory in the second quarter
of 2001. Of the $5.8 million, $3.7&nbsp;million related to two
discontinued product lines as part of Cadence&#146;s
restructuring and $2.1&nbsp;million related to excess inventory
of emulation products. The $3.7&nbsp;million related to
inventory and other related costs for two product lines Cadence
will no longer sell. As part of the restructuring, Cadence
examined the business and determined that these products would
not result in future revenue growth. The excess inventory charge
of $2.1&nbsp;million was due to a sudden and significant
decrease in forecasted revenue for emulation products and was
calculated in accordance with Cadence&#146;s policy, which is
based on inventory in excess of 12-month demand. Inventory
purchases and commitments are based on future sales forecasts.
Cadence typically buys and builds inventory levels for certain
key components to mitigate component supply constraints. Based
on Cadence&#146;s current 12-month demand forecast, Cadence does
not anticipate that the excess inventory subject to these
reserves will be used at a later date.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also in connection with its announced restructuring, certain
additional costs have been incurred in order to fulfill Tality
contracts. As a result, a loss provision of $1.1&nbsp;million
was placed against these contracts.

<P align="left">
<B>&nbsp;&nbsp;</B><I>Goodwill Write-Off</I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In relation to the wireless communications business downsizing
within its Tality subsidiary and current decline in business
conditions generally, Cadence restructured certain of its
businesses and realigned resources to reduce costs. As a result,
in the second quarter of 2001, Cadence recorded a charge of
$25.8&nbsp;million related to the impairment of goodwill and
acquired intangibles associated with the acquisition of Diablo
Research Company LLC, or Diablo. Key factors in this write-off
were significant downsizing or reassignment of personnel
directly related to these assets and abandonment most of this
line of business. The charge was determined as the amount by
which the carrying value of the goodwill and intangible assets
associated with Diablo&#146;s acquisition exceeded the fair
value of those assets.

<P align="left">
<B>&nbsp;&nbsp;</B><I>Tality IPO-Related Expense and Separation
Costs</I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the three months ended June&nbsp;30, 2001, Cadence recorded
$1.3&nbsp;million of Tality separation costs primarily related
to legal and consulting fees.

<P align="center">24

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the first quarter of 2001, Cadence wrote off
$2.8&nbsp;million of Tality IPO-related expense as a result of
the postponement of the Tality IPO on October&nbsp;9, 2000.
These expenses consisted of legal and accounting services and
registration statement printing and filing fees and were
incurred primarily during 2000. In addition, Cadence recorded
$0.7&nbsp;million of Tality separation costs in the first
quarter of 2001, related primarily to information systems
separation.

<P align="left">
<B>&nbsp;&nbsp;</B><I>Acquisitions and In-Process Technology</I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the three months ended June&nbsp;30, 2001, Cadence acquired
substantially all of the assets of two companies for an
aggregate price of $10.5&nbsp;million, net of acquisition costs,
of which $4.4&nbsp;million was cash and $6.1&nbsp;million was
shares of Cadence common stock, plus future contingent payments.
The acquisitions were accounted for as a purchase. Upon
consummation of the acquisitions, Cadence immediately charged to
expense $1&nbsp;million representing acquired in-process
technology that had not yet reached technological feasibility
and had no alternative future use.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In February&nbsp;2001, Cadence acquired CadMOS Design
Technology, Inc., a privately-held design tools firm
headquartered in San Jose. CadMOS provides solutions to the
noise problems experienced in ultra-deep submicron processes.
Its noise-analysis solutions are targeted at both digital and
mixed signal designers working on microprocessors, dynamic
random access memory, mixed-signal System-on-a-Chip, and
application-specific integrated circuits. Cadence acquired all
of the outstanding stock of CadMOS and assumed all outstanding
stock options and warrants. The purchase price was
$92.7&nbsp;million and the acquisition was accounted for as a
purchase. The purchase price could increase up to an additional
$12.6&nbsp;million, representing up to 488,970 shares, if
certain predetermined performance factors are achieved over the
next three years. Of the $12.6&nbsp;million, $1.7&nbsp;million
is contingent on continued employment of certain CadMOS
employees. The $12.6&nbsp;million is based on the share price of
Cadence&#146;s common stock at the time of the acquisition. In
connection with the acquisition, Cadence acquired goodwill of
$58.3&nbsp;million, which is being amortized over 5&nbsp;years,
and technology and workforce intangibles of $12.9&nbsp;million,
which are being amortized over 3 to 5 years. The results of
operations of CadMOS and the estimated fair value of the assets
acquired and liabilities assumed are included in Cadence&#146;s
consolidated financial statements from the date of acquisition.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon consummation of the CadMOS acquisition, Cadence immediately
charged to expense $12.1&nbsp;million representing acquired
in-process technology that had not yet reached technological
feasibility and had no alternative future use. The value
assigned to acquired in-process technology was determined by
identifying research projects in areas for which technological
feasibility has not been established. The value was determined
by estimating the costs to develop the acquired in-process
technology into commercially viable products, estimating the
resulting net cash flows from such projects, and discounting the
net cash flows back to their present value. The discount rate
included a factor that took into account the uncertainty
surrounding the successful development of the acquired
in-process technology. The in-process technology is expected to
be commercially viable in 2002. As of September&nbsp;29, 2001,
expenditures to complete the in-process technology have totaled
$0.7&nbsp;million and expenditures to complete the remaining
in-process technology are expected to total approximately
$1.2&nbsp;million. These estimates are subject to change, given
the uncertainties of the development process, and no assurance
can be given that deviations from these estimates will not
occur. Additionally, these projects will require additional
research and development after they have reached a state of
technological and commercial feasibility.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the time of its acquisition by Cadence, CadMOS&#146;
in-process research and development projects were related to the
development of a static timing analysis tool, the development of
advanced fixing capabilities in the noise analysis area, and in
the mixed signal area, the development of a flow to integrate
with Cadence tools and a tool to analyze large
application-specific integrated circuit designs for substrate
noise. The nature of the efforts to complete these projects
related, in varying degrees, to the completion of all planning,
designing, prototyping, verification, and testing activities
necessary to establish that the proposed technologies meet their
design specifications including functional, technical, and
economic performance requirements.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The net cash flows resulting from the projects underway at
CadMOS used to value the purchased research and development were
based on management&#146;s estimates of revenue, cost of
revenue, research and

<P align="center">25

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<DIV align="left">
development costs, selling, general and administrative costs,
and income taxes from such projects. The revenue projections
were based on the potential market size that the projects
address, Cadence&#146;s ability to gain market acceptance in
these segments, and the life cycle of this in-process technology.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Estimated total revenue from the acquired in-process technology
is expected to peak in 2004 and decline rapidly thereafter as
other new products are expected to enter the market. In
addition, a portion of the anticipated revenue had been
attributed to enhancements of the base technology under
development, and has been excluded from net cash flow
calculations. Existing technology was valued at
$3.6&nbsp;million. The net cash flows generated from the
acquired in-process technology were expected to reflect earnings
before interest, taxes, and depreciation of approximately 50% of
the revenue generated from in-process technology. However, there
can be no assurance that these assumptions will prove accurate,
or that Cadence will realize the anticipated benefit of the
acquisition.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The discount of the net cash flows to their present value was
based on the weighted average cost of capital, or WACC. The WACC
calculation produces the average required rate of return of an
investment in an operating enterprise, based on the required
rates of return from investments in various areas of the
enterprise. The rate used to discount the net cash flows from
purchased in-process technology was 28%. The discount rate is
sometimes higher than the WACC due to the inherent uncertainties
in the estimates, including the uncertainty surrounding the
successful development of the acquired in-process technology,
the useful life of such technology, the profitability levels of
such technology, if any, and the uncertainty of technological
advances, all of which were unknown at that time.

<P align="left">
<B>&nbsp;&nbsp;<I>Other Income and Income Taxes</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other income decreased $1.3&nbsp;million in the three months
ended September 29, 2001, when compared to the same periods in
2000, primarily due to decreases in minority interest income and
foreign exchange gains, partially offset by an increase in
interest income. Other income decreased $3.6&nbsp;million in the
nine months ended September&nbsp;29, 2001, when compared to the
same periods in 2000, primarily due to a decrease in foreign
exchange gains and minority interest gains, partially offset by
an increase in interest income and a reduction in investment
losses.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence&#146;s estimated effective tax rate for the three and
nine months ended September&nbsp;29, 2001 was 26.5%, excluding
the effect of amortization of acquired intangibles, amortization
of deferred stock compensation, and unusual items. Cadence will
provide for taxes on the Avant! restitution award at a rate of
40%. The effective tax rate for the three and nine months ended
September&nbsp;30, 2000 was 26.5%.

<P align="left">
<B>Liquidity and Capital Resources</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At September&nbsp;29, 2001, Cadence&#146;s principal sources of
liquidity consisted of $175.9&nbsp;million of cash and cash
equivalents and short-term investments, compared to
$137&nbsp;million at December&nbsp;30, 2000, and two syndicated
senior unsecured credit facilities totaling $360&nbsp;million.
As of September&nbsp;29, 2001, Cadence had no outstanding
borrowings under these credit facilities.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cash provided by operating activities increased
$121.7&nbsp;million to $264 million for the nine months ended
September&nbsp;29, 2001, when compared to the nine months ended
September&nbsp;30, 2000. The increase was due to higher net
income before depreciation and amortization and unusual items.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At September&nbsp;29, 2001, Cadence had net working capital of
$32.5&nbsp;million compared with $65.3&nbsp;million at
December&nbsp;30, 2000. The working capital decrease was driven
primarily by decreases in prepaid expenses and other of $49.8
million, receivables of $27.3&nbsp;million, and an increase in
income tax payable of $34&nbsp;million, partially offset by a
decrease in accounts payable and accrued liabilities of
$46.1&nbsp;million.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to its short-term investments, Cadence&#146;s
primary investing activities consisted of acquisitions,
purchases of property, plant, and equipment, capitalization of
software development costs, and venture capital partnership
investments, which combined represented $181&nbsp;million and
$145.5 million of cash used for investing activities in the nine
months ended September&nbsp;29, 2001 and September&nbsp;30,
2000, respectively.

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence sells put warrants and purchases call options through
private placements. See &#147;Notes to Consolidated Financial
Statements &#150; Put Warrants and Call Options.&#148; At
September&nbsp;29, 2001, Cadence had a maximum potential
obligation related to put warrants to buy back 4.6&nbsp;million
shares of its common stock at an aggregate price of
approximately $105.7&nbsp;million. The put warrants will expire
on various dates through May&nbsp;2002, and Cadence has the
contractual ability to settle the put warrants prior to their
maturity. Cadence has the ability to settle these put warrants
with stock and, therefore, no amount was classified out of
stockholders&#146; equity in the condensed consolidated balance
sheets.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its overall investment strategy, Cadence is a limited
partner in a venture capital fund and is committed to invest up
to $100&nbsp;million. As of September&nbsp;29, 2001, Cadence had
contributed approximately $76.9&nbsp;million to this
partnership, which is reflected in other assets in the
accompanying condensed consolidated balance sheets.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;29, 2000, Cadence entered into two syndicated
senior unsecured credit facilities that allowed Cadence to
borrow up to $350&nbsp;million, referred to as the 2000
Facilities. The 2000 Facilities replaced a prior
$355&nbsp;million revolving credit facility consisting of a
$177.5 million two-year revolving credit facility, which was
terminated on September 27, 2000, and a $177.5&nbsp;million
364-day revolving credit facility, which was terminated
immediately prior to consummation of the 2000 Facilities. One of
the new 2000 Facilities is a $100&nbsp;million three-year
revolving credit facility, referred to as the Three-Year
Facility. The other 2000 Facility was a $250&nbsp;million
364-day revolving credit facility convertible into a two-year
term loan, referred to as the 364-Day Facility. The Three-Year
Facility terminates on September&nbsp;29, 2003. The 364-Day
Facility was extended and increased on September&nbsp;28, 2001.
On September&nbsp;28, 2001, the 364-Day Facility was increased
to $260&nbsp;million and will terminate on September&nbsp;27,
2002, at which time the 364-Day Facility may be converted to a
one-year term loan with a maturity date of September&nbsp;29,
2003, or, at the request of Cadence and with the consent of
members of the bank group that wish to do so, the termination
date of the 364-Day Facility may be extended for one additional
364-day period with respect to the portion of the 364-Day
Facility that a consenting bank holds. For both of the 2000
Facilities, Cadence has the option to pay interest based on
LIBOR plus a spread of between 1.25% and 1.50%, based on a
pricing grid tied to a financial covenant, or the higher of
(i)&nbsp;the Federal Funds Rate plus 0.50% or (ii)&nbsp;the
prime rate. As a result, Cadence&#146;s interest expenses
associated with this borrowing will vary with market rates. In
addition, commitment fees are payable on the unused portion of
the Three-Year Facility at rates between 0.25% and 0.34% based
on a pricing grid tied to a financial covenant and on the unused
portion of the 364-Day Facility at a fixed rate of 0.225%. A
utilization fee of 0.25% is payable on amounts borrowed under
the 364-Day Facility whenever combined borrowings under the two
2000 facilities exceed $118.8&nbsp;million. Cadence may not
borrow under the 364-Day Facility at any time that any portion
of the Three-Year Facility remains unused. The 2000 Facilities
contain certain financial and other covenants. At
September&nbsp;29, 2001, Cadence was in compliance with the
covenants to the 2000 Facilities and there were no borrowings.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence anticipates that current cash and short-term investment
balances, cash flows from operations, and its $360&nbsp;million
revolving credit facilities will be sufficient to meet its
working capital and capital requirements on a short-and
long-term basis.

<P align="left">
<B>New Accounting Standards</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In August&nbsp;2001, the Financial Accounting Standards Board,
or FASB, issued Statement of Financial Accounting Standards, or
SFAS, No.&nbsp;144, &#147;Accounting for the Impairment or
Disposal of Long-Lived Assets.&#148; SFAS No.&nbsp;144 addresses
financial accounting and reporting for the impairment or
disposal of long-lived assets. This statement establishes a
single accounting model, based on the framework established in
Statement 121, for long-lived assets to be disposed of by sale.
This Statement will be effective for fiscal years beginning
after December&nbsp;15, 2001. Cadence has not yet determined the
effect SFAS No.&nbsp;144 will have on its consolidated financial
position, results of operations, or cash flows.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In August&nbsp;2001, the FASB, issued SFAS, No.&nbsp;143,
&#147;Accounting for Obligations Associated with the Retirement
of Long-Lived Assets.&#148; SFAS No.&nbsp;143 addresses
financial accounting and reporting for the retirement obligation
of an asset. This statement states that companies should
recognize the asset retirement

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<DIV align="left">
cost, at their fair value, as part of the cost of the asset and
classify the accrued amount as a liability in the condensed
consolidated balance sheet. The asset retirement liability is
then accreted to the ultimate payout as interest expense. The
initial measurement of the liability would be subsequently
updated for revised estimates of the discounted cash outflows.
The Statement will be effective for fiscal years beginning after
June&nbsp;15, 2002. Cadence has not yet determined the effect
SFAS No.&nbsp;143 will have on its consolidated financial
position, results of operations, or cash flows.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June&nbsp;2001, the FASB issued SFAS No.&nbsp;141,
&#147;Business Combinations.&#148; SFAS No.&nbsp;141 addresses
financial accounting and reporting for business combinations and
it requires business combinations in the scope of this Statement
to be accounted for using one method, the purchase method. The
provisions of this Statement apply to all business combinations
initiated after June&nbsp;30, 2001. The adoption of this
Statement will not have a material effect of Cadence&#146;s
consolidated financial position, results of operations, or cash
flows.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June&nbsp;2001, the FASB issued SFAS No.&nbsp;142,
&#147;Goodwill and Other Intangible Assets.&#148; SFAS
No.&nbsp;142 addresses financial accounting and reporting for
acquired goodwill and other acquired assets. It addresses how
intangible assets that are acquired individually or with a group
of other assets (but not those acquired in a business
combination) should be accounted for in financial statements
upon their acquisition. This Statement also addresses how
goodwill and other intangible assets should be accounted for
after they have been initially recognized in the financial
statements. With the adoption of this Statement, goodwill is no
longer subject to amortization over its estimated useful life.
Goodwill will be assessed for impairment each year using the
fair-value-based test. This Statement becomes effective
January&nbsp;1, 2002. Cadence is currently assessing the impact
of the discontinued amortization of goodwill and, while Cadence
is not aware of any impairment charges, an analysis will have to
be done upon adoption of this Statement to determine if an
impairment charge is necessary. Cadence has not yet determined
the effect SFAS No.&nbsp;142 will have on its consolidated
financial position, results of operations, or cash flows.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September&nbsp;2000, the Emerging Issues Task Force, or EITF,
published their consensus on EITF Issue No.&nbsp;00-19,
&#147;Accounting for Derivative Financial Instruments Indexed
to, and Potentially Settled in, a Company&#146;s Own
Stock,&#148; which was taken up to address implementation of the
EITF&#146;s March&nbsp;2000 final consensus of EITF Issue
No.&nbsp;00-7, &#147;Application of EITF Issue No.&nbsp;96-13 to
Equity Derivative Instruments That Contain Certain Provisions
That Require Net Cash Settlement If Certain Events Outside the
Control of the Issuer Occur.&#148; The final consensus in Issue
No.&nbsp;00-7 generally stated that equity derivative contracts
that contain provisions that implicitly or explicitly require
net cash settlement outside of the control of the company must
be treated as assets and liabilities and carried at fair value
with changes in fair value recognized in earnings rather than
equity instruments carried at original cost and reported as part
of permanent equity. This interpretation became effective
June&nbsp;30, 2001 and did not have a material effect on
Cadence&#146;s consolidated financial position, results of
operations, or cash flows.

<P align="left">
<B>Factors That May Affect Future Results</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following risk factors and other information included in
this Quarterly Report on Form&nbsp;10-Q should be carefully
considered. The risks and uncertainties described below are not
the only ones Cadence faces. Additional risks and uncertainties
not currently known to Cadence or that Cadence currently deem
immaterial also may impair Cadence&#146;s business operations.
If any of the following risks actually occur, Cadence&#146;s
business, operating results, and financial condition could be
materially harmed. Unless specifically noted, references to
Cadence in the discussion below are references to Cadence and
its subsidiaries, including Tality Corporation and its
subsidiaries.

<P align="left">
<B><I>Cadence is subject to the cyclical nature of the
integrated circuit industry and the electronics systems
industry, and the current downturn or any future downturns may
reduce its revenue</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Purchases of Cadence&#146;s products and services are highly
dependent upon the commencement of new design projects by
integrated circuit manufacturers and electronics systems
companies. The integrated circuit industry is highly cyclical
and is characterized by constant and rapid technological change,
rapid product obsolescence and price erosion, evolving
standards, short product life cycles, and wide fluctuations in
product supply and demand. The integrated circuit and
electronics systems industries have experienced significant

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<DIV align="left">
downturns, often connected with, or in anticipation of, maturing
product cycles of both these companies&#146; and their
customers&#146; products and a decline in general economic
conditions. These downturns have been characterized by
diminished product demand, production over capacity, high
inventory levels and accelerated erosion of average selling
prices. During these downturns, the number of new design
projects may decrease. A number of integrated circuit
manufacturers and electronics systems companies have announced
significant slowdowns of demand and production, inventory
write-offs and/or reductions in spending on research and
development. Cadence expects continued weakness in the
communications businesses of the electronics systems industry
for the foreseeable future. The current slowdown and any future
downturns may reduce Cadence&#146;s revenue and harm its results
of operations.
</DIV>

<P align="left">
<B><I>Cadence has reorganized its design services group as a
separate company, which may impact its financial results</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since 1995, Cadence has operated an electronics design services
group. On July&nbsp;17, 2000, Cadence announced its plan to
separate its design services group into a separate company named
Tality Corporation focused on providing design solutions and
proprietary technology to electronics product companies and
integrated circuit manufacturers, and announced the planned
initial public offering of the separate company. The separation
was substantially completed on October&nbsp;4, 2000. On
October&nbsp;9, 2000, Cadence announced that it had postponed
Tality&#146;s initial public offering due to unfavorable market
conditions. On April 17, 2001, Tality withdrew the registration
statement for its initial public offering. Cadence currently
intends to consider undertaking an initial public offering for
Tality when market conditions become favorable. As a result of a
reorganization of the Tality entities during the end of the
second quarter and beginning of the third quarter of 2001,
Tality now operates as an indirect wholly-owned subsidiary of
Cadence. Cadence&#146;s expenses in the design services business
increased substantially in connection with Tality&#146;s
separation from Cadence and Tality&#146;s reorganization, and
its expenses may continue to increase. Tality&#146;s revenue
over prior periods has declined in 2001, and may not increase in
the near term, or at all, and its separation and reorganization
may prove more expensive than Cadence anticipates. If Tality
fails to increase its revenue to offset its expenses, or if
Tality cannot reduce its expenses sufficiently, Tality will
continue to experience losses.

<P align="left">
<B><I>Cadence has agreed to grant certain rights and provide
certain services to Tality on terms that are more favorable to
Tality than terms that would be offered to an unrelated
party</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the separation of Tality, Cadence entered
into a number of agreements governing its business relationships
with Tality and Cadence&#146;s provision of certain services to
Tality, including provision of certain facilities, and
accounting, finance, legal, human resources, and other
administrative services, on terms that are more favorable to
Tality than terms that would be offered to an unrelated entity.
As a result, Cadence is obligated to provide certain services to
Tality for the periods defined in the various agreements, some
of which have long or unspecified terms. Continued provision of
such services after Tality&#146;s separation and after a
potential future initial public offering may impact
Cadence&#146;s financial results.

<P align="left">
<B><I>Cadence has historically suffered losses in its
electronics design and methodology services business and may
continue to do so in the future</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The market for electronics design and methodology services is
relatively new and rapidly evolving. Cadence has historically
suffered losses in its services business. Cadence&#146;s or
Tality&#146;s failure to succeed in these electronics design and
methodology services businesses may seriously harm
Cadence&#146;s business, operating results, and financial
condition.

<P align="left">
<B><I>The success of Cadence&#146;s electronic design and
methodology services businesses depend on many factors that are
beyond its control</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to be successful with its electronics design and
methodology services, Cadence must overcome several factors that
are beyond its control, including the following:
<P>

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<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp; </TD>
	<TD align="left">
	<I>Cadence&#146;s cost of services personnel is high and reduces
	gross margin.</I> Gross margin represents the difference between
	the amount of revenue from the sale of services and
	Cadence&#146;s cost of providing those services. Cadence must
	pay high salaries to attract and retain professional services
	personnel.</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD></TD>
	<TD align="left">
	This results in a lower gross margin than the gross margin in
	Cadence&#146;s software business. In addition, the high cost of
	training new services personnel or not fully utilizing these
	personnel can significantly lower gross margin.</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp; </TD>
	<TD align="left">
	<I>A substantial portion of these services contracts are
	fixed-price contracts.</I> This means that the customer pays a
	fixed price that is agreed upon at the time of contract
	execution, regardless of how much time or how many resources
	Cadence must actually devote to successfully complete the
	contract. Although Cadence is moving towards more time-based
	contracts, there can be no guarantee that this shift will occur.
	If Cadence&#146;s cost in performing the services consistently
	and significantly exceeds the amount the customer has agreed to
	pay, it could seriously harm Cadence&#146;s business, operating
	results, and financial condition.</TD>
</TR>

</TABLE>

<P align="left">
<B><I>Cadence&#146;s failure to respond quickly to technological
developments could make its products uncompetitive and
obsolete</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The industries in which Cadence competes experience rapid
technology developments, changes in industry standards, changes
in customer requirements and frequent new product introductions
and improvements. Currently, the electronics design industry is
experiencing several revolutionary trends:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The size of features such as wires, transistors, and contacts on
	chips is shrinking due to advances in semiconductor
	manufacturing processes. Process feature sizes refer to the
	width of the transistors and the width and spacing of the
	interconnect on the chip. Feature size is normally identified by
	the headline transistor length, which is shrinking from 0.25
	microns to 0.13 microns and smaller. This is commonly referred
	to in the semiconductor industry as the migration to deep
	submicron and it represents a major challenge for all levels of
	the semiconductor industry from chip design and design
	automation to design of manufacturing equipment and the
	manufacturing process itself. Shrinkage of transistor length to
	such infinitesimal proportions (for reference, the diameter of
	the period at the end of this sentence is approximately 400
	microns) is challenging fundamental laws of physics and
	chemistry.</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The ability to design very large chips, in particular
	integration of entire electronic systems onto a single chip
	instead of a circuit board (a process that is referred to in the
	industry as &#147;system-on-a-chip&#148;), increases the
	complexity of managing a design that at the lowest level is
	represented by billions of shapes on the fabrication mask. In
	addition, systems typically incorporate microprocessors and
	digital signal processors that are programmed with software,
	requiring simultaneous design of the silicon chip and the
	related embedded software on the chip.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If Cadence is unable to respond quickly and successfully to
these developments and changes, Cadence may lose its competitive
position and its products or technologies may become
uncompetitive or obsolete. In order to compete successfully,
Cadence must develop or acquire new products and improve its
existing products and processes on a schedule that keeps pace
with technological developments in its industries. Cadence must
also be able to support a range of changing computer software,
hardware platforms and customer preferences. There is no
guarantee that Cadence will be successful in this regard.

<P align="left">
<B><I>Cadence&#146;s failure to obtain software or other
intellectual property licenses or adequately protect its
proprietary rights could seriously harm its business</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence&#146;s success depends, in part, upon its proprietary
technology. Many of Cadence&#146;s products include software or
other intellectual property licensed from third parties, and
Cadence may have to seek new or renew existing licenses for this
software and other intellectual property in the future.
Cadence&#146;s design services business also requires it to
license software or other intellectual property from third
parties. Cadence&#146;s failure to obtain for its use software
or other intellectual property licenses or other intellectual
property rights on favorable terms, or the need to engage in
litigation over these licenses or rights, could seriously harm
Cadence&#146;s business, operating results, and financial
condition.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also, Cadence generally relies on patents, copyrights,
trademarks and trade secret laws to establish and protect its
proprietary rights in technology and products. Despite
precautions Cadence may take to protect its intellectual
property, Cadence cannot assure you that third parties will not
try to challenge, invalidate, or

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<DIV align="left">
circumvent these patents. Cadence also cannot assure you that
the rights granted under its patents will provide it with any
competitive advantages, patents will be issued on any of its
pending applications, or future patents will be sufficiently
broad to protect Cadence&#146;s technology. Furthermore, the
laws of foreign countries may not protect Cadence&#146;s
proprietary rights in those countries to the same extent as U.S.
law protects these rights in the United States.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence cannot assure you that its reliance on licenses from or
to third parties, or that patent, copyright, trademark, and
trade secret protections, will be enough to be successful and
profitable in the industries in which Cadence competes.

<P align="left">
<B><I>Intellectual property infringement by or against Cadence
could seriously harm its business</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There are numerous patents in the electronics design automation,
or EDA, industry and new patents are being issued at a rapid
rate. It is not always economically practicable to determine in
advance whether a product or any of its components infringes the
patent rights of others. As a result, from time to time, Cadence
may be forced to respond to or prosecute intellectual property
infringement claims to protect its rights or defend a
customer&#146;s rights. These claims, regardless of merit, could
consume valuable management time, result in costly litigation,
or cause product shipment delays, all of which could seriously
harm Cadence&#146;s business, operating results, and financial
condition. In settling these claims, Cadence may be required to
enter into royalty or licensing agreements with the third
parties claiming infringement. These royalty or licensing
agreements, if available, may not have terms acceptable to
Cadence. Being forced to enter into a license agreement with
unfavorable terms could seriously harm Cadence&#146;s business,
operating results, and financial condition. Any potential
intellectual property litigation could force us to do one or
more of the following:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Pay damages to the party claiming infringement;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Stop licensing, or providing services that use, the challenged
	intellectual property;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Obtain a license from the owner of the infringed intellectual
	property to sell or technology, which license may use the
	relevant not be available on reasonable terms, or at all; or</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Redesign the challenged technology, which could be
	time-consuming and costly.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If Cadence was forced to take any of these actions, it&#146;s
business and results of operations may be harmed.

<P align="left">
<B><I>Cadence obtains key components for its hardware products
from a limited number of suppliers</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence depends on several suppliers for certain key components
and board assemblies used in its hardware-based verification
products. Cadence&#146;s inability to develop alternative
sources or to obtain sufficient quantities of these components
or board assemblies could result in delays or reductions in
product shipments. In particular, Cadence currently relies on
Taiwan Semiconductor Manufacturing Corporation for the supply of
key integrated circuits and on IBM for the hardware components
for Cadence&#146;s COBALT&#153; and MERCURYPLUS&#153; products.
Other disruptions in supply may also occur. If there were such a
reduction or interruption, Cadence&#146;s results of operations
would be seriously harmed. Even if Cadence can eventually obtain
these components from alternative sources, a significant delay
in Cadence&#146;s ability to deliver products would result.

<P align="left">
<B><I>Fluctuations in quarterly results of operations could hurt
Cadence&#146;s business and the market price of its stock</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence has experienced, and may continue to experience, varied
quarterly operating results. Various factors affect
Cadence&#146;s quarterly operating results and some of them are
not within Cadence&#146;s control, including the mix of products
and services sold, the mix of licenses used to sell products and
the timing of significant orders for its software products and
services by customers. Quarterly operating results are affected
by the mix of products and services sold because there are
significant differences in margins from the sale of hardware and
software products and services. For example, based on a
three-year average through 2000, Cadence had realized gross
margins on software product sales of approximately 90% but
realized gross margins of approximately 67% on hardware product
sales and approximately 33% on its performance of services. In
the third quarter of 2001, realized gross margins increased to
approximately 93% for software products, decreased to
approximately 58% for hardware products, and decreased to
approximately 16% for services. In addition, Cadence&#146;s
quarterly operating results are affected by the mix of licenses
entered into in

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<DIV align="left">
connection with the sale of software products. Cadence has three
basic licensing models: perpetual, fixed-term, and subscription.
Perpetual and fixed-term licenses recognize a larger portion of
the revenue at the beginning of the license period and
subscription licenses recognize revenue ratably over each
quarter of the term of the license. As Cadence customers
purchase more software products pursuant to subscription
agreements, future operating results may be lower than that of
comparable quarters in which perpetual and fixed-term licenses
were in greater use for software product transactions. Finally,
Cadence&#146;s quarterly operating results are affected by the
timing of significant orders for its software products because a
significant number of contracts for software products are in
excess of $5&nbsp;million. The failure to close a contract for
the sale of one or more orders of Cadence&#146;s software
products could seriously harm its quarterly operating results.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales of Cadence&#146;s hardware products depend, in significant
part, upon the decision of the prospective customer to commence
a project for the design and development of complex computer
chips and systems. These projects often require significant
commitments of time and capital. Cadence&#146;s hardware sales
may be delayed if customers delay commencement of projects.
Cadence has experienced greater delays during 2001 than in the
past and such increase in delays may continue. Lengthy hardware
sales cycles subject Cadence to a number of significant risks
over which Cadence has little or no control, including
insufficient, excess or obsolescent inventory, variations in
inventory valuation and fluctuations in quarterly operating
results.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, Cadence bases its expense budgets partially on its
expectations of future revenue. However, it is difficult to
predict revenue levels or growth. Revenue levels that are below
Cadence&#146;s expectations could seriously hurt Cadence&#146;s
business, operating results, and financial condition. If revenue
or operating results fall short of the levels expected by public
market analysts and investors, the trading price of Cadence
common stock could decline dramatically. Also, because of the
timing of large orders and its customers&#146; buying patterns,
Cadence may not learn of revenue shortfalls, earnings shortfalls
or other failures to meet market expectations until late in a
fiscal quarter, which could cause even more immediate and
serious harm to the trading price of Cadence common stock.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence believes that quarter-to-quarter comparisons of the
results of operations of its services business segments may not
be meaningful. Therefore, stockholders should not view
Cadence&#146;s historical results of operations as reliable
indicators of its future performance. In addition, many of
Cadence&#146;s services engagements are terminable with little
or no advance notice and without penalty. Since a significant
portion of Cadence&#146;s costs is fixed, it may not be able to
reduce its costs in a timely manner in connection with the
unanticipated revenue loss when one or more projects is
terminated.

<P align="left">
<B><I>The lengthy sales cycle of Cadence&#146;s products and
services makes the timing of its revenue difficult to predict
and may cause its operating results to fluctuate
unexpectedly</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence has a lengthy sales cycle that generally extends at
least three to six months. The length of Cadence sales cycle may
cause it&#146;s revenue and operating results to vary
unexpectedly from quarter to quarter. The complexity and expense
associated with Cadence business generally requires a lengthy
customer education and approval process. Consequently, Cadence
may incur substantial expenses and devote significant management
effort and expense to develop potential relationships that do
not result in agreements or revenue and may prevent it from
pursuing other opportunities.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, sales of Cadence&#146;s products and services may
be delayed if customers delay approval or commencement of
projects because of:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Customers&#146; budgetary constraints and internal acceptance
	review procedures;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The timing of customers&#146; budget cycles; and</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The timing of customers&#146; competitive evaluation processes.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If customers experience delays in their approval or project
commencement activities, Cadence may not learn of, and therefore
would not be able to communicate to the public, revenue or
earnings shortfalls until late in a fiscal quarter.

<P align="center">32

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<P align="left">
<B><I>Cadence has recently completed acquisitions, expects to
acquire other companies or businesses, and may not successfully
integrate them</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence has acquired other businesses before and is likely to do
so again. While Cadence expects to analyze carefully all
potential transactions before committing to them, Cadence cannot
assure you that any transaction that is completed will result in
long-term benefits to Cadence or its stockholders, or that
Cadence&#146;s management will be able to manage the acquired
businesses effectively. In addition, growth through acquisition
involves a number of risks. If any of the following events
occurs after Cadence acquires another business, it could
seriously harm Cadence&#146;s business, operating results, and
financial condition:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Difficulties in combining previously separate businesses into a
	single unit;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The substantial diversion of management&#146;s attention from
	day-to-day business when negotiating these transactions and then
	integrating an acquired business;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The discovery after the acquisition has been completed of
	liabilities assumed from the acquired business;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The failure to realize anticipated benefits such as cost savings
	and revenue enhancements;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The failure to retain key personnel of the acquired business;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Difficulties related to assimilating the products of an acquired
	business in, for example, distribution, engineering, and
	customer support areas;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Unanticipated costs;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Adverse effects on existing relationships with suppliers and
	customers; and</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Failure to understand and compete effectively in markets in
	which Cadence have limited previous experience.</TD>
</TR>

</TABLE>

<P align="left">
<B><I>Cadence&#146;s international operations may seriously harm
its financial condition because of several weak foreign
economies and the effect of foreign exchange rate
fluctuations</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence has significant operations outside the United States.
Cadence&#146;s revenue from international operations as a
percentage of total revenue was approximately 52% and 42% for
the three months ended September&nbsp;29, 2001 and
September&nbsp;30, 2000, respectively. Cadence&#146;s revenue
from international operations as a percentage of total revenue
was approximately 46% and 43% for the nine months ended
September&nbsp;29, 2001 and September&nbsp;30, 2000,
respectively. Cadence also transacts business in various foreign
currencies. Fluctuations in the rate of exchange between the
U.S. dollar and the currencies of countries other than the
United States in which Cadence conducts business could seriously
harm its business, operating results, and financial condition.
For example, if there is an increase in the rate at which a
foreign currency exchanges into U.S. dollars, it will take more
of the foreign currency to equal a specified amount of U.S.
dollars than before the rate increase. If Cadence prices its
products and services in the foreign currency, it will receive
less in U.S. dollars than it did before the rate increase went
into effect. If Cadence prices its products and services in U.S.
dollars, an increase in the exchange rate will result in an
increase in the price for Cadence&#146;s products and services
compared to those products of its competitors that are priced in
local currency. This could result in Cadence&#146;s prices being
uncompetitive in markets where business is transacted in the
local currency.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Exposure to foreign currency transaction risk can arise when
transactions are conducted in a currency different from the
functional currency of a Cadence subsidiary. A subsidiary&#146;s
functional currency is the currency in which it primarily
conducts its operations, including product pricing, expenses and
borrowings. Cadence uses foreign currency forward exchange
contracts and purchases foreign currency put options to help
protect against currency exchange risks. These forward contracts
and put options allow Cadence to buy or sell specific foreign
currencies at specific prices on specific dates. Increases or
decreases in the value of Cadence&#146;s foreign currency
transactions are partially offset by gains and losses on these
forward contracts and put options. Although Cadence attempts to
reduce the impact of foreign currency fluctuations, significant
exchange rate movements may hurt Cadence&#146;s results of
operations as expressed in U.S. dollars.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Foreign currency exchange risk occurs for some of Cadence&#146;s
foreign operations whose functional currency is the local
currency. The primary effect of foreign currency translation on
Cadence&#146;s results of operations is a reduction in revenue
from a strengthening U.S. dollar, offset by a smaller reduction
in expenses.

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<DIV align="left">
Exchange rate gains and losses on the translation into U.S.
dollars of amounts denominated in foreign currencies are
included as a separate component of stockholders&#146; equity.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence expects that revenue from its international operations
will continue to account for a significant portion of its total
revenue.

<P align="left">
<B><I>Cadence&#146;s international operations are subject to a
number of risks</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A significant portion of Cadence&#146;s total revenue is derived
from its international operations. Cadence&#146;s international
operations may be subject to a number of risks, including:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The adoption and expansion of government trade restrictions;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Volatile foreign exchange rates and currency conversion risks;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Limitations on repatriation of earnings;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Reduced protection of intellectual property rights in some
	countries;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Recessions in foreign economies;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Longer receivables collection periods and greater difficulty in
	collecting accounts receivable;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Difficulties in managing foreign operations;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Political and economic instability, including civil strife and
	war;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Retaliation for U.S. government economic policies and military
	actions internationally;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Unexpected changes in regulatory requirements;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Tariffs and other trade barriers; and</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	U.S. government licensing requirements for export which make
	licenses difficult to obtain.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If any of these risks were to materially reduce the revenues
generated by Cadence&#146;s international operations, it could
harm Cadence&#146;s business, operating results, and financial
conditions.

<P align="left">
<B><I>Failure to obtain export licenses could harm
Cadence&#146;s business</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence must comply with U.S. Department of Commerce regulations
in shipping its software products and other technologies outside
the U.S. The U.S. Department of Commerce may enforce these
regulations more strictly or scrutinize applications for
licenses more strictly subsequent to the September 11, 2001
terrorist attacks on the United States. Although Cadence has not
had any significant difficulty complying with these regulations
so far, any significant future difficulty in complying could
harm Cadence&#146;s business, operating results, and financial
condition.

<P align="left">
<B><I>Cadence&#146;s inability to compete in its industries
could seriously harm its business</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The EDA market and the commercial electronics design and
methodology services industries are highly competitive. If
Cadence is unable to compete successfully in these industries,
it could seriously harm Cadence&#146;s business, operating
results, and financial condition. To compete in these
industries, Cadence must identify and develop innovative and
cost competitive electronic design automation software products
and market them in a timely manner. It must also gain industry
acceptance for its design and methodology services and offer
better strategic concepts, technical solutions, prices and
response time, or a combination of these factors, than those of
other design companies and the internal design departments of
electronics manufacturers. Cadence cannot assure you that it
will be able to compete successfully in these industries.
Factors that could affect Cadence&#146;s ability to succeed
include:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The development of competitive EDA products and design and
	methodology services could result in a shift of customer
	preferences away from Cadence&#146;s products and services and
	significantly decrease revenue;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The electronics design and methodology services industries are
	relatively new and electronics design companies and
	manufacturers are only beginning to purchase these services from
	outside vendors;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	The pace of the technology change demands continuous
	technological development to meet the requirements of
	next-generation design challenges; and</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	There are a significant number of current and potential
	competitors in the EDA industry and the cost of entry is low.</TD>
</TR>

</TABLE>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the EDA products industry, Cadence currently competes with
three large companies, Avant! Corporation, Mentor Graphics
Corporation, and Synopsys,&nbsp;Inc., and many smaller
companies. Cadence also competes with manufacturers of
electronic devices that have developed or have the capability to
develop their own EDA products. Many manufacturers of electronic
devices may be reluctant to purchase services from independent
vendors such as Cadence because they wish to promote their own
internal design departments. In the electronics design and
methodology services industries, Cadence competes with numerous
electronic design and consulting companies as well as with the
internal design capabilities of electronics manufacturers. Other
electronics companies and management consulting firms continue
to enter the electronic design and methodology services
industries.

<P align="left">
<B><I>Cadence&#146;s failure to attract, train, motivate, and
retain key employees may harm its business</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Competition for highly skilled employees is very intense.
Cadence&#146;s business depends on the efforts and abilities of
its senior management, its research and development staff, and a
number of other key management, sales, support, technical, and
services personnel. The high cost of training new personnel, not
fully utilizing these personnel, or losing trained personnel to
competing employers could reduce Cadence&#146;s gross margins
and harm it&#146;s business and operating results. Competition
for these personnel is intense, particularly in geographic areas
recognized as high technology centers such as the Silicon Valley
area, where Cadence principal offices are located, and the other
locations where Cadence maintain facilities. To attract and
retain individuals with the requisite expertise, Cadence may be
required to grant large numbers of stock options or other
stock-based incentive awards, which may be dilutive to existing
stockholders. Cadence may also be required to pay significant
base salaries and cash bonuses, which could harm it&#146;s
operating results. Cadence employs a significant number of
non-U.S. citizens. Since the terrorist attacks of
September&nbsp;11, 2001, it may be more difficult for potential
employees who are not U.S. citizens to obtain work visas or for
current employees who are not U.S. citizens to obtain renewals
or extensions of their current visas. If Cadence do not succeed
in hiring and retaining candidates with appropriate
qualifications, it will not be able to grow it&#146;s business
and it&#146;s operating results will suffer. Cadence&#146;s
failure to attract, train, motivate, and retain key employees
would impair its development of new products, its ability to
provide design and methodology services and the management of
its businesses. This would seriously harm Cadence&#146;s
business, operating results, and financial condition.

<P align="left">
<B><I>If Cadence becomes subject to unfair hiring claims,
Cadence could be prevented from hiring needed personnel, incur
liability for damages and incur substantial costs in defending
itself</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Companies in Cadence&#146;s industry whose employees accept
positions with competitors frequently claim that these
competitors have engaged in unfair hiring practices or that the
employment of these persons would involve the disclosure or use
of trade secrets. These claims could prevent us from hiring
personnel or cause us to incur liability for damages. Cadence
could also incur substantial costs in defending itself or its
employees against these claims, regardless of their merits.
Defending Cadence from these claims could also divert the
attention of Cadence&#146;s management away from its operations.

<P align="left">
<B><I>Errors or defects in Cadence designs could expose it to
liability and harm its reputation</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence&#146;s customers use its products and services in
designing and developing products that involve a high degree of
technological complexity, each of which has its own
specifications and is based on various industry standards.
Because of the complexity of the systems and products with which
Cadence works, some of its products and designs can be
adequately tested only when put to full use in the marketplace.
As a result, its customers or their end users may discover
errors or defects in Cadence&#146;s software or the systems
Cadence designs, or the products or systems incorporating its
design and intellectual property may not operate as expected.
Errors or defects could result in:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Loss of current customers and loss of, or delay in, revenue and
	loss of market share;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Failure to attract new customers or achieve market acceptance;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Diversion of development resources to resolving the problem;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Increased service costs; and</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Liability for damages.</TD>
</TR>

</TABLE>

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<P align="left">
<B><I>Cadence relies on a continuous power supply to conduct its
operations, and California&#146;s current energy crisis could
disrupt Cadence&#146;s operations and increase its
expenses.</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
California is in the midst of an energy crisis that could
disrupt Cadence&#146;s operations and increase its expenses. In
the event of an acute power shortage, that is, when power
reserves for the State of California fall below 1.5%, California
has on some occasions implemented, and may in the future
continue to implement, rolling blackouts throughout California.
Cadence currently has backup generators or alternate sources of
power for critical operations in the event of a blackout. If,
however, blackouts interrupt Cadence&#146;s power supply, or the
power supply of its service providers, Cadence may be
temporarily unable to continue operations at its facilities. Any
such interruption in Cadence&#146;s ability to continue
operations at its facilities could damage its reputation, harm
its ability to retain existing customers and to obtain new
customers, and could result in lost revenue, any of which could
substantially harm Cadence&#146;s business and results of
operations. Cadence&#146;s current insurance does not provide
coverage for any damages Cadence incurs or its customers may
suffer as a result of any interruption in Cadence&#146;s power
supply.

<P align="left">
<B><I>Anti-takeover defenses in Cadence&#146;s charter, by-laws,
and under Delaware law could prevent an acquisition of Cadence
or limit the price that investors might be willing to pay for
Cadence common stock</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Provisions of the Delaware General Corporation Law that apply to
Cadence and its Certificate of Incorporation could make it
difficult for another company to acquire control of Cadence. For
example:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Section&nbsp;203 of the Delaware General Corporation Law
	generally prohibits a Delaware corporation from engaging in any
	business combination with a person owning 15% or more of its
	voting stock, or who is affiliated with the corporation and
	owned 15% or more of its voting stock at any time within three
	years prior to the proposed business combination, for a period
	of three years from the date the person became a 15% owner,
	unless specified conditions are met.</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Cadence&#146;s Certificate of Incorporation allows
	Cadence&#146;s Board of Directors to issue, at any time and
	without stockholder approval, preferred stock with such terms as
	it may determine. No shares of preferred stock are currently
	outstanding. However, the rights of holders of any Cadence
	preferred stock that may be issued in the future may be superior
	to the rights of holders of its common stock.</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Cadence has a rights plan, commonly known as a &#147;poison
	pill,&#148; which would make it difficult for someone to acquire
	Cadence without the approval of Cadence&#146;s Board of
	Directors.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All or any one of these factors could limit the price that
certain investors would be willing to pay for shares of Cadence
common stock and could delay, prevent or allow Cadence&#146;s
Board of Directors to resist an acquisition of Cadence, even if
the proposed transaction was favored by a majority of
Cadence&#146;s independent stockholders.

<P align="left">
<B><I>Cadence&#146;s inability to deal effectively with the
conversion to the euro may negatively impact its marketing and
pricing strategies</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;1, 1999, 11 member countries of the European
Union adopted the euro as their common legal currency and
established fixed conversion rates between their sovereign
currencies and the euro. Transactions can be made in either the
sovereign currencies or the euro until January&nbsp;1, 2002,
when the euro must be used exclusively. Currently, only
electronic transactions may be conducted using the euro. Cadence
is in the process of upgrading its internal systems and believes
that its financial institution vendors are capable of handling
the euro conversion and Cadence is in the process of examining
current marketing and pricing policies and strategies that may
be affected by conversion to the euro. The cost of this effort
is not expected to materially harm Cadence&#146;s results of
operations or financial condition. However, Cadence cannot
assure you that all issues related to the euro conversion have
been identified and that any additional issues would not
materially harm Cadence&#146;s results of operations or
financial condition. For example, the conversion to the euro may
have competitive implications on Cadence&#146;s pricing and
marketing strategies and Cadence may be at risk to the extent
its principal European suppliers and customers are unable to
deal effectively with the impact of the euro conversion.

<P align="center">36

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<!-- link2 "Item 3. Quantitative and Qualitative Disclosures About Market Risk" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="left">
<B>Item&nbsp;3. Quantitative and Qualitative Disclosures About
Market Risk</B>

<P align="left">
<B>Disclosures about Market Risk</B>

<P align="left">
<B>&nbsp;&nbsp;<I>Interest Rate Risk</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence&#146;s exposure to market risk for changes in interest
rates relates primarily to its investment portfolio and
long-term debt obligations. While Cadence is exposed with
respect to interest rate fluctuations in many of the
world&#146;s leading industrialized countries, Cadence&#146;s
interest income and expense is most sensitive to fluctuations in
the general level of U.S. interest rates. In this regard,
changes in U.S. interest rates affect the interest earned on
Cadence&#146;s cash and cash equivalents, short-term and
long-term investments, and interest paid on its long-term debt
obligations as well as costs associated with foreign currency
hedges.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence invests in high quality credit issuers and, by policy,
limits the amount of its credit exposure to any one issuer. As
stated in its policy, Cadence&#146;s first priority is to reduce
the risk of principal loss. Consequently, Cadence seeks to
preserve its invested funds by limiting default risk, market
risk, and reinvestment risk. Cadence mitigates default risk by
investing in only high quality credit securities that it
believes to be low risk and by positioning its portfolio to
respond appropriately to a significant reduction in a credit
rating of any investment issuer or guarantor. The portfolio
includes only marketable securities with active secondary or
resale markets to ensure portfolio liquidity.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;29, 2000, Cadence entered into two syndicated
senior unsecured credit facilities that allowed Cadence to
borrow up to $350&nbsp;million, referred to as the 2000
Facilities. The 2000 Facilities replaced a prior
$355&nbsp;million revolving credit facility consisting of a
$177.5 million two-year revolving credit facility, which was
terminated on September&nbsp;27, 2000, and a $177.5&nbsp;million
364-day revolving credit facility, which was terminated
immediately prior to consummation of the 2000 Facilities. One of
the new 2000 Facilities is a $100&nbsp;million three-year
revolving credit facility, referred to as the Three-Year
Facility. The other 2000 Facility was a $250&nbsp;million
364-day revolving credit facility convertible into a two-year
term loan, referred to as the 364-Day Facility. The Three-Year
Facility terminates on September&nbsp;29, 2003. The 364-Day
Facility was extended and increased on September&nbsp;28, 2001.
On September&nbsp;28, 2001, the 364-Day Facility was increased
to $260&nbsp;million and will terminate on September 27, 2002,
at which time the 364-Day Facility may be converted to a
one-year term loan with a maturity date of September&nbsp;29,
2003, or, at the request of Cadence and with the consent of
members of the bank group that wish to do so, the termination
date of the 364-Day Facility may be extended for one additional
364-day period with respect to the portion of the 364-Day
Facility that a consenting bank holds. For both of the 2000
Facilities, Cadence has the option to pay interest based on
LIBOR plus a spread of between 1.25% and 1.50%, based on a
pricing grid tied to a financial covenant, or the higher of
(i)&nbsp;the Federal Funds Rate plus 0.50% or (ii)&nbsp;the
prime rate. As a result, Cadence&#146;s interest expenses
associated with this borrowing will vary with market rates. In
addition, commitment fees are payable on the unused portion of
the Three-Year Facility at rates between 0.25% and 0.34% based
on a pricing grid tied to a financial covenant and on the unused
portion of the 364-Day Facility at a fixed rate of 0.225%. A
utilization fee of 0.25% is payable on amounts borrowed under
the 364-Day Facility whenever combined borrowings under the two
2000 Facilities exceed $118.8&nbsp;million. Cadence may not
borrow under the 364-Day Facility at any time that any portion
of the Three-Year Facility remains unused. The 2000 Facilities
contain certain financial and other covenants. At
September&nbsp;29, 2001, Cadence was in compliance with the
covenants to the 2000 Facilities and there were no borrowings
outstanding.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below presents the carrying value and related weighted
average interest rates for Cadence&#146;s interest bearing
instruments. All highly liquid investments with an original
maturity of three months or less at the date of purchase are
considered to be cash equivalents; investments with original
maturities between three and 12&nbsp;months are considered to be
short-term investments. Investments with original maturities
greater than

<P align="center">37

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<DIV align="left">
12&nbsp;months are considered long-term investments. As of
September&nbsp;29, 2001, all of Cadence&#146;s investments have
maturities of less than 12&nbsp;months. The carrying value
approximated fair value at September&nbsp;29, 2001.
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Carrying</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Average</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Value</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Interest Rate</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">(In millions)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest Bearing Instruments:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash&nbsp;&#150; variable rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">57.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.51%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash equivalents&nbsp;&#150; variable rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.30%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Short-term investments&nbsp;&#150; fixed rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.04%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash&nbsp;&#150; fixed rate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.67%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total interest bearing instruments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.85%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B>&nbsp;&nbsp;<I>Interest Rate Swap Risk</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October&nbsp;1998, Cadence entered into a 4.8% fixed interest
rate-swap in connection with its accounts receivable financing
program to modify the interest rate characteristics of the
receivables sold to a financing institution on a non-recourse
basis. As of September&nbsp;29, 2001, the notional amount
payable was $2.2&nbsp;million that will be amortized through
October&nbsp;2001. The estimated fair value at
September&nbsp;29, 2001 was negligible.

<P align="left">
<B>&nbsp;&nbsp;<I>Foreign Currency Risk</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence&#146;s operations include transactions in foreign
currencies and, as such, Cadence benefits from a weaker dollar
and is adversely affected by a stronger dollar relative to major
currencies worldwide. Accordingly, the primary effect of foreign
currency transactions on Cadence&#146;s results of operations is
a reduction in revenue from a strengthening U.S. dollar, offset
by a smaller reduction in expenses.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence enters into foreign currency forward exchange contracts
and purchases foreign currency put options with financial
institutions primarily to protect against currency exchange
risks associated with existing assets and liabilities and
probable but not firmly committed transactions, respectively.
Forward contracts are not accounted for as hedges and,
therefore, the unrealized gains and losses are recognized in
other income, net in advance of the actual foreign currency cash
flows with the fair value of these forward contracts being
recorded as accrued liabilities.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence purchases put options to hedge the currency exchange
risks associated with probable but not firmly committed
transactions. Probable but not firmly committed transactions
consist of revenue from Cadence&#146;s products and maintenance
contracts in a currency other than the functional currency.
These transactions are made through Cadence&#146;s subsidiaries
in Ireland and Japan. The premium costs of the put options are
recorded in other current assets while the gains and losses are
deferred and recognized in income in the same period as the
hedged transaction. Gains and losses on accounting hedges
realized before the settlement date of the related hedged
transaction are also generally deferred and recognized in income
in the same period as the hedged transaction. Cadence does not
use forward contracts and put options for trading purposes.
Cadence&#146;s ultimate realized gain or loss with respect to
currency fluctuations will depend on the currency exchange rates
and other factors in effect as the forward contracts and put
options mature.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below provides information as of September&nbsp;29,
2001 about Cadence&#146;s forward contracts. As of
September&nbsp;29, 2001, there were no put options outstanding.
The information is provided in U.S. dollar equivalent amounts.
The table presents the notional amounts, at contract exchange
rates, and the weighted

<P align="center">38

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
average contractual foreign currency exchange rates. These
forward contracts mature prior to December&nbsp;13, 2001.
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Notional</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Weighted Average</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Amount</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Contract Rate</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">(In millions)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Forward Contracts:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Japanese yen
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">120.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Euro
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.89</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">British pound sterling
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.44</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Swedish krona
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.43</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Canadian dollars
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.56</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Hong Kong dollars
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.80</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Singapore dollars
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.74</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Estimated fair value
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.03</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
While Cadence actively manages its foreign currency risks on an
ongoing basis, there can be no assurance that Cadence&#146;s
foreign currency hedging activities will substantially offset
the impact of fluctuations in currency exchange rates on its
results of operations, cash flows, and financial position. On a
net basis, foreign currency fluctuations did not have a material
impact on Cadence&#146;s consolidated results of operations and
financial position during the quarter ended September&nbsp;29,
2001. The realized gain (loss)&nbsp;on the forward contracts as
they matured was not material to the consolidated operations of
Cadence.

<P align="left">
<B>&nbsp;&nbsp;<I>Equity Price Risk</I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence repurchases shares of its common stock under its stock
repurchase program. Repurchased shares will be used for general
corporate purposes including the share issuance requirements of
Cadence&#146;s employee stock option and purchase plans and
acquisitions. As part of these repurchase programs, Cadence has
purchased and will purchase call options or has sold and will
sell put warrants. The put warrants, if exercised and settled by
physical delivery of shares, would entitle the holder to sell
shares of Cadence common stock to Cadence at a specified price.
Similarly, the call options entitle Cadence to buy shares of
Cadence common stock at a specified price. Cadence has the
option to elect &#147;net share settlement&#148;, rather than
physical settlement, of put warrants that are exercised; that
is, Cadence has the right to settle the exercised put warrants
with shares of Cadence common stock valued at the difference
between the exercise price and the fair value of the stock at
the date of exercise. These transactions may result in sales of
a large number of shares and consequent decline in the market
price of Cadence common stock. Cadence&#146;s stock repurchase
program includes the following characteristics:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Call options allow Cadence to buy shares of its common stock on
	a specified day at a specified price. If the market price of the
	stock is greater than the exercise price of a call option,
	Cadence will typically exercise the option and receive shares of
	its stock. If the market price of the common stock is less than
	the exercise price of a call option, Cadence typically will not
	exercise the option.</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Call option issuers may accumulate a substantial number of
	shares of Cadence common stock in anticipation of Cadence&#146;s
	exercising its call option and may dispose of these shares if
	and when Cadence fails to exercise its call option. This could
	cause the market price of Cadence common stock to fall.</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Depending on the exercise price of the put warrants and the
	market price of Cadence common stock at the time of exercise,
	&#147;net share settlement&#148; of the put warrants with
	Cadence common stock could cause Cadence to issue a substantial
	number of shares to the holder of the put warrant. The holder
	may sell these shares in the open market, which could cause the
	price of Cadence common stock to fall.</TD>
</TR>

</TABLE>

<P align="center">39

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="2%"></TD>
	<TD width="95%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149; &nbsp;</TD>
	<TD align="left">
	Put warrant holders may accumulate a substantial number of
	shares of Cadence common stock in anticipation of exercising
	their put warrants and may dispose of these shares if and when
	they exercise their put warrants and Cadence issues shares in
	settlement of their put warrants. This could also cause the
	market price of Cadence common stock to fall.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below provides information as of September&nbsp;29,
2001 about Cadence&#146;s outstanding put warrants and call
options. The table presents the contract amounts and the
weighted average strike prices. The put warrants and call
options expire on various dates through May&nbsp;2002, and
Cadence has the contractual ability to settle the options prior
to their maturity.

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2001</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">2002</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Estimated</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Maturity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Maturity</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Fair Value</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="6"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="6" align="center" nowrap><B><FONT size="2">(Shares and contract amounts in millions)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Put Warrants:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Shares
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Weighted average strike price
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26.20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21.11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Contract amount
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Call Options:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Shares
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Weighted average strike price
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26.45</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21.10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Contract amount
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">40
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "PART II. OTHER INFORMATION" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="left">
<B>PART&nbsp;II.&nbsp;&nbsp;OTHER INFORMATION</B>

<!-- link2 "Item 1. Legal Proceedings" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="left">
<B>Item&nbsp;1.&nbsp;&nbsp;Legal Proceedings</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From time to time Cadence is involved in various disputes and
litigation matters that arise in the ordinary course of
business. These include disputes and lawsuits related to
intellectual property, mergers and acquisitions, licensing,
contract law, distribution arrangements, and employee relations
matters.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cadence filed a complaint in the U.S. District Court for the
Northern District of California on December&nbsp;6, 1995 against
Avant! Corporation and certain of its employees for
misappropriation of trade secrets, copyright infringement,
conspiracy, and other illegal acts.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;16, 1996, Avant! filed various counterclaims
against Cadence and Joseph B. Costello, Cadence&#146;s former
President and Chief Executive Officer, and with leave of the
court, on January&nbsp;29, 1998, filed a second amended
counterclaim. The second amended counterclaim alleges, inter
alia, that Cadence and Mr.&nbsp;Costello had cooperated with the
Santa Clara County, California, District Attorney and initiated
and pursued its complaint against Avant! for anti-competitive
reasons, engaged in wrongful activity in an attempt to
manipulate Avant!&#146;s stock price, and utilized certain
pricing policies and other acts to unfairly compete against
Avant! in the marketplace. The second amended counterclaim also
alleges that certain Cadence insiders engaged in illegal insider
trading with respect to Avant!&#146;s stock. Cadence and
Mr.&nbsp;Costello believe that they have meritorious defenses to
Avant!&#146;s claims, and each intends to defend such action
vigorously. By an order dated July&nbsp;13, 1996, the court
bifurcated Avant!&#146;s counterclaim from Cadence&#146;s
complaint and stayed the counterclaim pending resolution of
Cadence&#146;s complaint. The counterclaim remains stayed.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In an order issued on December&nbsp;19, 1997, as modified on
January&nbsp;26, 1998, the District Court entered a preliminary
injunction barring Avant! from any further infringement of
Cadence&#146;s copyrights in DESIGN FRAMEWORK II&#174; software,
or selling, licensing or copying such product derived from
DESIGN FRAMEWORK II, including, but not limited to,
Avant!&#146;s ArcCell products. On December&nbsp;7, 1998, the
District Court issued a further preliminary injunction, which
enjoined Avant! from selling its Aquarius product line. Cadence
posted a $10&nbsp;million bond in connection with the issuance
of the preliminary injunction. On July&nbsp;30, 1999, the U.S.
Court of Appeals for the Ninth Circuit affirmed the preliminary
injunction.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By an order dated July&nbsp;22, 1997, the District Court stayed
most activity in the case pending in that court and ordered
Avant! to post a $5&nbsp;million bond in light of related
criminal proceedings pending against Avant! and several of its
executives.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;7, 1999, the District Court ruled on the
parties&#146; Motions for Summary Adjudication, and granted in
part, and denied in part, each party&#146;s motion regarding the
scope of a June&nbsp;6, 1994 Release Agreement between the
parties. The court held that Cadence&#146;s copyright
infringement claim against Avant! is not barred by the release
and that Cadence may proceed on that claim. The court also held
that Cadence&#146;s trade secret claim based on Avant!&#146;s
use of Cadence&#146;s DESIGN FRAMEWORK II source code is barred
by the release. On May&nbsp;15, 2001, the Ninth Circuit heard
oral arguments by both parties on their appeals from the
District Court&#146;s order. On June&nbsp;11, 2001, the Ninth
Circuit certified a question of California law to the California
Supreme Court. The trial date was vacated pending a decision on
the appeal. On October&nbsp;31, 2001, the California Supreme
Court agreed to accept such certification.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In February&nbsp;1998, Aptix Corporation and Meta
Systems,&nbsp;Inc. filed a lawsuit against Quickturn Design
Systems,&nbsp;Inc. in the U.S. District Court for the Northern
District of California. In this lawsuit, entitled Aptix
Corporation and Meta Systems,&nbsp;Inc. v. Quickturn Design
Systems, Civil Action No.&nbsp;C 98-00762, Aptix and Meta
Systems alleged that Quickturn infringed a U.S. patent owned by
Aptix and licensed to Meta. Quickturn filed a counterclaim
requesting the District Court to declare the Aptix patent
invalid in view of the prior art and unenforceable based on
inequitable conduct during the prosecution of the patent. In
June&nbsp;2000, the District Court entered judgment in favor of
Quickturn, dismissing the complaint and declaring the patent
unenforceable. The Court also granted summary judgment to Aptix
denying Quickturn&#146;s abuse of process counterclaim, and
Quickturn filed an appeal brief on June&nbsp;30, 2000. On
September&nbsp;8, 2000 the Court ordered Aptix to pay
$4.2&nbsp;million to Quickturn as reimbursement to Quickturn of
the attorneys&#146; fees and costs it incurred in the
litigation. Aptix has appealed the District&#146;s Court&#146;s
judgment and, in the meantime, has agreed

<P align="center">41

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
to post a $2&nbsp;million bond to secure the judgment. On
June&nbsp;8, 2001, the U.S. Court of Appeals for the Federal
Circuit affirmed the District Court&#146;s dismissal of
Quickturn&#146;s abuse of process counterclaim. On
November&nbsp;5, 2001, the Federal Circuit affirmed the District
Court&#146;s dismissal of Aptix&#146;s and Meta&#146;s complaint
and the award of attorneys fees and costs, but vacated the
District Court&#146;s judgment of unenforceability.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;7, 1999, in a suit captioned Mentor Graphics
Corporation, et. al. v. Lobo, et. al., Delaware Chancery Court,
New Castle County, Civ. Action No.&nbsp;16843-NC (&#147;Mentor
II&#148;), Mentor filed and served an amended complaint
asserting claims against Cadence, Quickturn Design
Systems,&nbsp;Inc. and the Quickturn Board of Directors for
declaratory and injunctive relief for various alleged breaches
of fiduciary duty purportedly owned by Quickturn and its Board
of Directors to Quickturn&#146;s shareholders in connection with
the merger between Quickturn and Cadence. Mentor further alleged
that Cadence aided and abetted Quickturn and its Board of
Directors in those purported breaches. Mentor has not prosecuted
the matter since January&nbsp;1999. In May&nbsp;2000, Mentor
advised the Delaware Chancery Court of its objection to the
settlement of a companion shareholder action brought on behalf
of certain Quickturn shareholders, and sought an award of
attorneys&#146; fees related to its prosecution of Mentor II as
well as the prior related action, to which Cadence was not a
party. In an order dated August&nbsp;17, 2001, the Chancery
Court denied Mentor&#146;s fee application.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On April&nbsp;30, 1999, Cadence and several of its officers and
directors were named as defendants in a lawsuit filed in the
U.S. District Court for the Northern District of California,
entitled Spett v. Cadence Design Systems, et al., civil action
no.&nbsp;C 99-2082. The action was brought on behalf of a class
of stockholders who purchased Cadence common stock between
November&nbsp;4, 1998 and April&nbsp;20, 1999, and alleges
violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934. The lawsuit arises out of Cadence&#146;s
announcement of its first quarter 1999 financial results. On
September&nbsp;18, 2000 the District Court granted
Cadence&#146;s Motion to Dismiss Plaintiffs&#146; Claims with
leave to amend. To date, no amended complaint has been filed.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In early 1999, Cadence entered into negotiations with Intelect
Communications, Inc., and Intelect&#146;s wholly-owned
subsidiary, DNA Enterprises, Inc., with respect to a potential
purchase of substantially all the assets of DNA. The transaction
was not consummated and, in July&nbsp;1999, Intelect and DNA
filed suit against Cadence in a Texas state court alleging
breach of contract, fraud, negligent misrepresentation and
breach of fiduciary duty, seeking unspecified compensatory and
punitive damages. Cadence has answered, denying liability, and
discovery has concluded. In February&nbsp;2001, Cadence filed a
motion for partial summary judgment. The Court has taken the
motion under submission but has not yet issued a ruling. A trial
date has been scheduled for April&nbsp;2002. Cadence believes
that it has defenses to, and it disputes, the allegations made
by Intelect and DNA, including the allegation that a purchase
contract was entered into, and intends to defend the action
vigorously.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;21, 1999, Mentor filed suit against Quickturn,
which action is pending in the U.S. District Court for the
Northern District of California, Civil Action No.&nbsp;C
99-5464. Mentor has alleged that Quickturn&#146;s MERCURY&#153;
and MERCURYPLUS&#153; hardware emulation systems infringe U.S.
Patent Nos. 5,777,489 and 5,790,832, allegedly assigned to
Mentor. At Quickturn&#146;s request, Cadence was added as a
party defendant. Cadence has filed a counterclaim for
declaratory judgment of invalidity of these patents.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March&nbsp;24, 2000, Mentor and Meta and several founders of
Meta filed suit against Quickturn and Cadence and a former
Quickturn employee in the U.S. District Court for the Northern
District of California, Civil Action No.&nbsp;C 00-01030. The
suit alleges patent infringement of a U.S. Patent allegedly
assigned to Mentor, misappropriation of trade secrets and breach
of confidence, and seeks unspecified damages, injunctive relief
and the assignment to Mentor of a patent previously issued to
Quickturn. Cadence intends to vigorously defend itself against
these claims, and has filed a counterclaim for declaratory
judgment of invalidity of not only U.S. Patent
No.&nbsp;5,754,827 but also of U.S. Patent Nos. 5,999,725 and
6,057,706, allegedly assigned to Mentor. Following a motion by
Cadence, the former Quickturn employee was dismissed as a party
to the action.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;11, 2000, Mentor filed a complaint against
Quickturn and Cadence in the U.S. District Court for the
Northern District of California, Civil Action
No.&nbsp;C-00-03291, accusing Quickturn and Cadence of
infringing U.S. Patent No.&nbsp;5,574,388, purportedly owned by
Mentor and seeking unspecified damages and

<P align="center">42

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<DIV align="left">
injunctive relief. Quickturn and Cadence believe the complaint
filed by Mentor is without substance. Cadence and Quickturn are
vigorously defending the claim, and have filed counterclaims for
declaratory judgment of invalidity and non-infringement of these
patents. On November&nbsp;3, 2000, Mentor filed a motion for
preliminary injunction, asking the Court to prohibit the sale of
Quickturn&#146;s MERCURYPLUS emulation systems prior to trial of
this action. The Court denied the motion for preliminary
injunction on August&nbsp;30, 2001. The parties have agreed to
consolidate this action with Civil Action Nos. C99-5464 and C
00-01030, described above, for purposes of discovery and
pre-trial motions. A trial date has been set for October&nbsp;7,
2002.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;2, 2000, Mentor and Meta filed a complaint for
declaratory judgment against Quickturn and Cadence in the U.S.
District Court for the District of Oregon (Case
No.&nbsp;C-00-1489) seeking a ruling that Mentor&#146;s proposed
design verification approach (in which chip designers would use
U.S.-based computer terminals to operate SimExpress emulation
systems located overseas) will not infringe Quickturn&#146;s
patents and will not violate the permanent injunction entered by
the Oregon District Court on July&nbsp;7, 1999 in Civil Action
No.&nbsp;C-96-00342. In January&nbsp;2001, Quickturn and Cadence
filed a Motion to Dismiss the action, based on lack of subject
matter jurisdiction. On May&nbsp;1, 2001, the Court
provisionally granted Quickturn&#146;s motion to dismiss.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On February&nbsp;25, 2000, Cadence and several of its officers
were named as defendants in a lawsuit filed in the U.S. District
Court for the Northern District of California, entitled Maxick
v. Cadence Design Systems,&nbsp;Inc., File No.&nbsp;C 00
0658PJH. The action was brought on behalf of a class of
shareholders of OrCAD,&nbsp;Inc., and alleges violations of
Section&nbsp;14(d)(7) of the Securities Exchange Act of 1934, as
amended, and Rule&nbsp;14d-10 thereunder. The lawsuit arises out
of Cadence&#146;s acquisition of OrCAD, which was completed in
August&nbsp;1999. Cadence&#146;s Motion to Dismiss
plaintiffs&#146; claims was denied. Discovery is continuing and
trial is set for April&nbsp;29, 2002. The defendants believe the
complaint is without merit and intend to continue their vigorous
defense of the allegations.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;22, 2000, a former design services customer,
Uniden Corporation, filed an action for fraud, negligent
misrepresentation and breach of contract in the State Court of
Texas against Cadence and other corporate defendants. Uniden
seeks compensatory and punitive damages in an unspecified
amount. The suit was filed after Cadence demanded payment of
approximately $1 million for design services rendered to Uniden.
Cadence since has filed a counterclaim to recover the
approximate $1&nbsp;million owed for services rendered. The
parties agreed to dismiss voluntarily the actions pending in the
State Court of Texas and to re-file in the State Court of
California, County of Orange. Uniden refiled its Complaint on
July&nbsp;2, 2001 in Orange County, California. Cadence filed
its answer and counterclaim on September&nbsp;12, 2001.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;28, 2000, a former design services customer,
Scanz Communications, filed an action for various causes of
action in the Los Angeles Superior Court of California against
Cadence and Tality, seeking compensatory and punitive damages in
an unspecified amount. The suit was filed after Cadence demanded
payment of $4,657,556.17 for design services rendered to Scanz.
Following demurrers by Cadence that were sustained in part,
Scanz&#146;s remaining causes of action are for fraud, breach of
contract, intentional interference with contract, negligent
misrepresentation, and unfair business practices. Defendants
timely filed their answer to Scanz&#146;s Second Amended
Complaint on October&nbsp;10, 2001.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;7, 2001 Cadence filed a cross-complaint against
Scanz alleging breach of contract and unjust enrichment, and
seeking declaratory relief. On July&nbsp;12, 2001, Scanz filed
an answer to Cadence&#146;s cross-complaint denying all
allegations. Cadence intends to vigorously defend the claims
alleged by Scanz.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Management believes that the ultimate resolution of the disputes
and litigation matters discussed above will not have a material
adverse effect on Cadence&#146;s business, operating results or
financial condition. However, were an unfavorable ruling to
occur in any specific period, there exists the possibility of a
material adverse impact on the results of operations for such
period.

<!-- link2 "Item 2. Changes in Securities and Use of Proceeds" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="left">
<B>Item&nbsp;2.&nbsp;&nbsp;Changes in Securities and Use of
Proceeds</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None.

<P align="center">43

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<!-- link2 "Item 3. Defaults Upon Senior Securities" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="left">
<B>Item&nbsp;3.&nbsp;&nbsp;Defaults Upon Senior Securities</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None.

<!-- link2 "Item 4. Submission of Matters to a Vote of Security Holders" -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="left">
<B>Item&nbsp;4.&nbsp;&nbsp;Submission of Matters to a Vote of
Security Holders</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None.

<!-- link2 "Item 5. Other Information" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="left">
<B>Item&nbsp;5.&nbsp;&nbsp;Other Information</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None.

<!-- link2 "Item 6. Exhibits and Reports on Form 8-K" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="left">
<B>Item&nbsp;6.&nbsp;&nbsp;Exhibits and Reports on
Form&nbsp;8-K</B>

<P align="left">
(a)&nbsp; The following exhibits are filed herewith:

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="2">Exhibit Title</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.59
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Executive Separation, Release and Consulting
	Agreement, dated as of August&nbsp;31, 2001 between Cadence
	Design Systems, Inc., Tality Corporation and Robert P.
	Wiederhold.
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.60
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Amendment to Credit Agreement, dated
	September&nbsp;28, 2001, among Cadence Design Systems, Inc.,
	Bank One, N.A., Key Bank National Association, UBS AG and ABN
	AMRO Bank N.V.
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.61
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Credit Agreement, dated
	September&nbsp;28, 2001, among Cadence Design Systems, Inc.,
	Bank One, N.A., Key Bank National Association, UBS AG and ABN
	AMRO Bank N.V.
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
(b)&nbsp; Reports on Form&nbsp;8-K:

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None.

<P align="center">44
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B>SIGNATURES</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="36%"></TD>
	<TD width="64%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<B>CADENCE DESIGN SYSTEMS, INC.</B></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<B>(Registrant)</B></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<FONT size="2">DATE:&nbsp;November&nbsp;12,
	2001<HR size="1" noshade>
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">By:&nbsp;/s/ H. RAYMOND BINGHAM<BR>
	<HR size="1" noshade>H. Raymond Bingham<BR>
	President, Chief Executive Officer, and Director
	</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<FONT size="2">DATE:&nbsp;November&nbsp;12,
	2001<HR size="1" noshade>
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">By:&nbsp;/s/ WILLIAM PORTER<BR>
	<HR size="1" noshade>William Porter<BR>
	Senior Vice President<BR>
	and Chief Financial Officer
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">45

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B>Index to Exhibits</B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="2">Exhibit Title</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.59
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Executive Separation, Release and Consulting
	Agreement, dated as of August&nbsp;31, 2001 between Cadence
	Design Systems, Inc., Tality Corporation and Robert P.
	Wiederhold.
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.60
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">First Amendment to Credit Agreement, dated
	September&nbsp;28, 2001, among Cadence Design Systems, Inc.,
	Bank One, N.A., Key Bank National Association, UBS AG and ABN
	AMRO Bank N.V.
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">10.61
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Amended and Restated Credit Agreement, dated
	September&nbsp;28, 2001, among Cadence Design Systems, Inc.,
	Bank One, N.A., Key Bank National Association, UBS AG and ABN
	AMRO Bank N.V.
	</FONT></TD>
</TR>

</TABLE>
</CENTER>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.59
<SEQUENCE>3
<FILENAME>f76986ex10-59.txt
<DESCRIPTION>EXHIBIT 10.59
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.59



This offer given to Executive on August 29, 2001
                                    This offer is valid until September 19, 2001

             EXECUTIVE SEPARATION, RELEASE AND CONSULTING AGREEMENT

         This Executive Separation, Release and Consulting Agreement (the
"Agreement") is entered into between Robert P. Wiederhold (the "Executive"), on
the one hand, and Cadence Design Systems, Inc., a Delaware corporation
("Cadence") and Tality Corporation, a Delaware corporation ("Tality"), on the
other hand, (collectively, the "Company"), as of this ___ day of _________,
2001.

         WHEREAS, the Executive desires to resign his employment as President
and Chief Executive Officer of Tality; and

         WHEREAS, Cadence and Executive entered into that certain Tality
Corporation 2000 Equity Incentive Plan Stock Option Agreement with Consent dated
as of July 13, 2000 (the "Tality Option Agreement"); and

         WHEREAS, Cadence and Executive desire to amend the Tality Option
Agreement as more particularly set forth herein; and

         WHEREAS, the Executive and the Company desire to reach an agreement
concerning the circumstances under which the Executive's full-time employment
relationship with the Company will terminate; and

         WHEREAS, the Company desires to be relieved of any and all duties,
obligations, and/or liabilities, if any exist, with respect to Executive, other
than those obligations and duties which are expressly stated in herein;

         NOW THEREFORE, in consideration of the foregoing recitals, the mutual
promises contained herein, and for other good and valuable consideration, the



                                       1
<PAGE>
receipt and adequacy of which are hereby acknowledged, the Executive and the
Company agree as follows:

1.       Full-Time Employment.

         Executive will cease his full-time employment as President and Chief
         Executive Officer of Tality on August 31, 2001, at the close of
         business.

2.       Part-Time Employment Period.

         a. From September 1, 2001 through September 1, 2002, Executive shall
         continue as a part-time employee of the Company for a one-year term
         (the "Part-Time Employment Period"). Employee's employment with the
         Company shall terminate at the end of the Part-Time Employment Period.
         Executive recognizes that he is committing to remain as a part-time
         employee with the Company through the end of the Part-Time Employment
         Period and he agrees not to voluntarily terminate his employment with
         the Company during the Part-Time Employment Period. Likewise, the
         Company may not terminate Executive's employment during such period
         except for cause. Cause shall exist if the Executive: (1) materially
         breaches this Agreement or the Employee Proprietary Information and
         Inventions Agreement, which is referenced in Section 11 hereof; (2)
         fails to perform his duties after receipt of written notice of such
         failure and a reasonable opportunity to cure; (3) commits any breach of
         fiduciary duty or act of theft, misappropriation, embezzlement,
         intentional fraud or other violation of the law or similar conduct
         involving the Company or any affiliate; (4) receives a conviction or
         enters a plea of Nolo Contendere or the equivalent in respect of a



                                       2
<PAGE>

         felony involving an act of dishonesty, moral turpitude, deceit or
         fraud; or (5) willfully or negligently causes any damage of a material
         nature to the business or property of the Company or any affiliate. If
         the Company terminates Executive without cause during the Part-Time
         Employment Period, or his employment terminates as a result of
         Executive's death or permanent disability, he (or his estate) shall
         continue to receive the same pay and benefits as if though his
         employment had continued through the end of the Part-Time Employment
         Period.

         b. During the Part-Time Employment Period, Executive shall be available
         to consult to the Company, and/or the Board of Directors of Tality or
         Cadence as necessary. During the Part-Time Employment Period, Executive
         shall report to Ray Bingham (or his successor(s)) and shall, in
         addition to providing general advice and consultation to the Company
         and its Board(s), perform other duties, including but not limited to,
         facilitating the transfer of customer relationships to members of the
         management team, participating in creating strategic direction for
         Tality, assist with litigation, claims, customer and/or supplier issues
         when requested by the Board or management of the Company to do so, and
         participate as a member of the Tality Board. Executive's performance of
         his duties during this period shall not require him to work more than a
         maximum of twenty (20) hours per week.

         c. In consideration for such employment, Executive shall be paid a
         monthly salary of $29,166.66, less taxes and standard withholdings
         required by law to be withheld, and deductions requested by Executive.


                                       3
<PAGE>

         Such compensation will be paid in accordance with the Company's normal
         payroll schedule.

         d. So long as Executive remains a part-time employee of the Company
         through September 1, 2002 and does not in any way breach this
         Agreement, Executive shall receive a bonus in the amount of $167,000,
         less taxes and withholdings required by law to be withheld, and
         deductions requested by Executive, on or about September 1, 2002.

         e. Executive shall continue to receive medical, dental and/or vision
         insurance coverage which the Executive elected and which the Executive
         continues to pay for under the Cadence Composition plan through the end
         of the Part-Time Employment Period, or until he secures such benefits
         through other means, after which time the Executive will become
         eligible to continue such coverage pursuant to the terms of COBRA at
         prevailing rates. All other employee benefits, including but not
         limited to the Employee Stock Purchase Plan, 401(k) contribution, life,
         dependent life and disability insurance and Midwest Legal Services
         likewise will terminate at the end of the Part-Time Employment Period.
         Executive's funds invested in the Company's Non Qualified Deferred
         Compensation Plan (the "Plan"), if any shall be treated in accordance
         with the terms of the Plan.

         f. Executive's Company stock options that were previously granted to
         Executive shall continue to vest during the Part-Time Employment Period
         in accordance with the Stock Option Plan(s) and Stock Option
         Agreement(s) under which the options were granted, so long as Executive



                                       4
<PAGE>

         has executed all necessary stock option agreements on or before August
         31, 2001. Those options will cease vesting at the end of the Part-Time
         Employment Period, and Executive will have the period of time following
         his Termination Date that is provided in the applicable stock option
         agreement(s) to exercise the vested portions, if any.

         g. No Acceleration of Tality Options on Change in Control. Executive
         hereby acknowledges and agrees that Section 11 (b) of the "Plan" (as
         that term is defined in the Tality Option Agreement) shall not apply to
         the options granted to Executive under the Tality Option Agreement (the
         "Tality Options"). For the avoidance of doubt, but without limiting the
         generality of the foregoing, Executive hereby acknowledges and agrees
         that the Tality Options shall not vest or accelerate upon a "Change in
         Control" (as that term is defined in the Plan).

         h. Executive will be free to accept other employment or consulting
         engagements during the Part-Time Employment Period, so long as such
         other employment or consulting engagement does not violate paragraph 12
         herein.

3.       2001 Bonus

         Executive shall receive a bonus in the amount of $250,000, less taxes
         and withholdings required by law to be withheld, and amounts requested
         by him to be deducted, on or about February 15, 2002, so long as
         Executive continues in his part-time employment capacity with the
         Company through that date and has not in any way breached this
         Agreement.

4.       Computer



                                       5
<PAGE>

         Executive shall be given all right, title and interest in the IBM
         Thinkpad, monitor, docking station, keyboard and mouse which was
         provided to him for business use by the Company during the year
         2000.Executive agrees, however, to delete all proprietary and
         confidential information belonging to the Company from the computer
         when requested to do so, and agrees to allow a representative of the
         Company to review the files on the computer upon request to ensure that
         all such information has been deleted.

5.       Business Expense

         Executive shall be reimbursed for all reasonable and necessary business
         expenses incurred during his full and part-time employment with the
         Company. Such expenses must be approved by Ray Bingham, or an
         individual designated by Mr. Bingham to approve such expenses, and must
         be submitted for reimbursement with appropriate documentation not more
         than ninety (90) days following the date on which the expense was
         incurred, and prior to the termination of his employment with the
         Company.

6.       DSL

         The Company will continue to pay for the Executive's DSL line at his
         residence through the end of the Part-Time Employment Period, at which
         time such payments on behalf of Executive shall cease.

7.       Executive acknowledges and agrees that he is not entitled to any of the
         benefits provided in that Tality Corporation Employment Agreement
         between he and Tality that was entered into on July 14, 2000, and that
         this Agreement supercedes the Tality Corporation Employment Agreement.



                                       6
<PAGE>

8.       During the Part-Time Employment Period, and following his termination
         of employment, Executive shall fully cooperate with the Company in all
         matters relating to his employment, the winding up of his pending work
         on behalf of the Company and the orderly transfer of any such pending
         work to other employees of the Company as may be designated by the
         Company.

9.       The Executive agrees not to make any statement, written or oral, or
         otherwise engage in any communication which disparages the Company or
         any of the Company's employees, directors, or representatives,
         products, or business practices.

10.      General Release by Executive

                  (a) The Executive agrees that the payments and benefits
         provided herein are in full satisfaction of all obligations of the
         Company to the Executive arising out of or in connection with the
         Executive's employment including, without limitation, all salary,
         bonuses, accrued vacation, sick pay, and two weeks salary as standard
         termination notice period, and that the benefit of continued stock
         vesting constitutes consideration for the covenants and releases of the
         Executive as set forth herein. The Executive acknowledges that the
         Executive has no claims against the Company based on the Executive's
         employment by the Company or the Executive's separation therefrom and
         irrevocably, fully and finally releases the Company, its parent,
         subsidiaries and affiliates, and its current and former directors,
         officers, agents, attorneys, and employees ("Releasees") from all
         causes of action, claims, suits, demands or other obligations or
         liabilities, whether known or unknown, that Executive ever



                                       7
<PAGE>
         had, or now has, including but not limited to, any claims that may be
         alleged to arise out of or in connection with the Executive's
         employment with the Company, or separation therefrom, including, not by
         way of limitation, any claims for wages, bonuses, and any claims that
         any terms of the Executive's employment with the Company or any
         circumstances of the Executive's separation were wrongful, in breach of
         any obligation of the Company or in violation of any rights,
         contractual, statutory or otherwise, of the Executive, including but
         not limited to rights arising under Title VII of the Civil Rights Act
         of 1964, as amended, the California Fair Employment and Housing Act, as
         amended, the California Labor Code, the Age Discrimination in
         Employment Act of 1967, as amended, the Americans with Disabilities
         Act, the Equal Pay Act, the Fair Labor Standards Act, as amended, the
         Executive Retirement Income and Security Act of 1974, as amended,
         (except for Executive's rights under COBRA and Executive's rights to
         the money in Executive's 401(k) plan account and deferred compensation
         plan account(s)), and any other local, state, or federal law, or law of
         any country, governing discrimination in employment, the payment of
         wages or benefits, or any other aspect of employment (collectively,
         "Claims").

          IN THIS REGARD THE EXECUTIVE WAIVES ANY RIGHTS CONFERRED BY CALIFORNIA
         CIVIL CODE SECTION 1542 WHICH PROVIDES AS FOLLOWS:

         "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
         NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR WHICH IF KNOWN BY HIM MUST
         HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."



                                       8
<PAGE>

                  (b) The release set forth in section (a) above does not and
         shall not extend to any obligations of the Company incurred under this
         Agreement or under the Indemnification Agreement which was signed by
         Executive on or about July 14, 2001 and is attached hereto as Exhibit
         A.

                  (c) The Executive acknowledges that he understands that he may
         take twenty-one (21) days to consider this Agreement and that he has
         been advised that he should consult with an attorney, if he desires to
         do so, prior to executing this Agreement. The Executive further
         acknowledges that he understands that he may revoke this Agreement
         within seven (7) days of his execution of this document and that the
         consideration to be paid to the Executive pursuant to this Agreement
         will be paid only after that seven (7) day revocation period.

11.      Executive acknowledges and incorporates herein by reference his
         continuing obligations under the Employee Proprietary Information and
         Inventions Agreement executed by Executive on July 14, 2000, a copy of
         which is attached hereto as Exhibit B.

12.      As President and CEO of Tality and as a Senior Executive and Officer of
         Cadence, Executive has obtained extensive and valuable knowledge and
         information concerning the business of the Company (including
         confidential information relating to the Company and its operations,
         assets, contracts, customers, personnel, plans, marketing plans,
         research and development plans and prospects). The Executive and the
         Company agree that it would be virtually impossible for Executive to
         work as an employee, consultant or advisor to a company in the
         electronic design automation



                                       9
<PAGE>

         industry without inevitably disclosing confidential and proprietary
         information belonging to the Company. Accordingly, the Executive agrees
         that, during the Part-Time Employment Period he will not, directly or
         indirectly, provide services on behalf of any competing corporation,
         limited liability company, partnership, or other competing entity or
         person, specifically including but not limited to Avant! Corporation,
         Synopsys Inc., Mentor Graphics Corporation, Simplex Solutions, Inc.,
         Magma Design Automation, Inc., or any subsidiary, affiliate, division,
         distributor or partial or complete successor thereof, whether as an
         employee, consultant, independent contractor, agent, sole proprietor,
         partner, joint venture, corporate officer or director; nor shall
         Executive acquire by reason of purchase during the term of his
         employment with the Company the ownership of more than one percent (1%)
         of the outstanding equity interest in any such competing entity. For
         purposes of this Section 12, a "competing" entity is one that is
         engaged in the research, design, development, marketing and/or sale of
         electronic design automation software and related products, including
         products containing hardware, software and both hardware and/or
         software. For purposes of this Section 12 a "competing" entity is also
         one that derives a substantial portion of its business from design
         services and/or intellectual property sales and/or licensing relating
         to semiconductors, systems and/or design methodologies.

13.      During the Term of Executive's employment with the Company, Executive
         agrees that he will not, except with the written advance approval of
         Ray Bingham (or his successor(s)), voluntarily or



                                       10
<PAGE>

         involuntarily, for any reason whatsoever, directly or indirectly,
         individually or on behalf of persons not now parties to this Agreement,
         or as a partner, stockholder, director, officer, principal, agent,
         employee or in any other capacity or relationship, for his own account
         or for the benefit of any other person or entity: (a) encourage,
         induce, attempt to induce, solicit or attempt to solicit anyone who is
         employed at that time, or was employed during the previous one (1)
         year, by the Company or any affiliate to leave his or her employment
         with the Company or any affiliate; or (b) interfere or attempt to
         interfere with the relationship or prospective relationship of the
         Company or any affiliate with any former, present or future client,
         customer, joint venture partner, or financial backer of the Company or
         any affiliate; or (c) solicit, divert or accept business, in any line
         or area of business engaged in by the Company or any affiliate, from
         any former, present or future client, customer or joint venture partner
         of the Company or any affiliate (other than on behalf of the Company).
         This paragraph shall supercede paragraph five (5) of the Employee
         Proprietary Information and Inventions Agreement executed by Executive
         on July 14, 2000, a copy of which is attached hereto as Exhibit B.

14.      During the six (6) months following Executive's employment with the
         Company, Executive agrees that he will not, except with the advance
         written approval of the the Chairman of the Board of Tality,
         voluntarily or involuntarily, for any reason whatsoever,



                                       11
<PAGE>

         directly or indirectly, individually or on behalf of persons not now
         parties to this Agreement, or as a partner, stockholder, director,
         officer, principal, agent, employee or in any other capacity or
         relationship, for his own account or for the benefit of any other
         person or entity: (a) encourage, induce, attempt to induce, solicit or
         attempt to solicit anyone who is employed at that time, or was employed
         during the previous one (1) year, by Tality or any affiliate to leave
         his or her employment with Tality or any affiliate; or (b) interfere or
         attempt to interfere with the relationship or prospective relationship
         of Tality or any affiliate with any former, present or future client,
         customer, joint venture partner, or financial backer of Tality or any
         affiliate; or (c) solicit, divert or accept business, in any line or
         area of business engaged in by Tality or any affiliate, from any
         former, present or future client, customer or joint venture partner of
         Tality or any affiliate. This paragraph shall supercede paragraph five
         (5) of the Employee Proprietary Information and Inventions Agreement
         executed by Executive on July 14, 2000, a copy of which is attached
         hereto as Exhibit B.

15.      Notwithstanding the language in paragraph 24 herein, the parties hereto
         agree that damages would be an inadequate remedy for the Company in the
         event of a breach or threatened breach of Section 8, 11, 12, 13, 14 or
         19 of this Agreement by Executive, and in the event of any such breach
         or threatened breach, the Company may, either with or without pursuing
         any potential damage remedies, obtain and enforce an injunction
         prohibiting Executive from violating this



                                       12
<PAGE>

         Agreement and requiring Executive to comply with the terms of this
         Agreement.16.Executive represents and acknowledges that the Executive's
         decision to enter into this Agreement has been made voluntarily,
         knowingly, and without coercion of any kind.

17.      Executive represents and warrants that there has been no assignment or
         other transfer of any interest in any Claim, which Executive may have
         against the Releasees.

18.      Executive agrees that if the Executive hereafter commences, joins in,
         or in any manner seeks relief through any suit, claim, demand, charge,
         complaint or otherwise, arising out of, based upon, or relating to any
         of the Claims released hereunder or in any manner asserts against the
         Releasees any of the Claims released hereunder, then the Executive will
         pay to the Releasees, in addition to any other damages caused thereby,
         all reasonable attorneys' fees incurred by the Releasees in defending
         or otherwise responding to said suit or Claim.

19.      Executive acknowledges that during his employment he has had access to
         confidential and/or proprietary information of the Company and of third
         parties and acknowledges the Executive's obligation by agreement and/or
         at common law to continue to hold such information in confidence and
         neither disclose and/or use such information, notwithstanding the
         termination of his employment, and that he has returned to the Company
         all copies and records in any form of such information to Ron
         Kirchenbauer, or will do so prior to his termination date. Executive
         further agrees to return all other property (including but not limited
         to computers, phones,



                                       13
<PAGE>

         fax machines, and printers) to Ron Kirchenbauer by September 1, 2001,
         except for as provided for in paragraph 4.

20.      This Agreement shall be governed and enforced in accordance with the
         laws of the State of California, excluding its conflict of laws rules.


21.      In the event that any part of this Agreement is found to be void or
         unenforceable then (a) such provision or part thereof shall, with
         respect to such circumstances and in such jurisdiction, be deemed
         amended to conform to applicable laws so as to be valid and enforceable
         to the fullest possible extent, (b) the invalidity or unenforceability
         of such provision or part thereof under such circumstances and in such
         jurisdiction shall not affect the validity or enforceability of such
         provision or part thereof under any other circumstances or in any other
         jurisdiction, and (c) such invalidity or enforceability of such
         provision or part thereof shall not affect the validity or
         enforceability of the remainder of such provision or the validity or
         enforceability of any other provision of this Agreement as each
         provision is separable from every other provision. If for any reason a
         court of competent jurisdiction or arbitrator finds any provision of
         this Agreement to be unenforceable, the provision shall be deemed
         amended as necessary to conform to applicable laws or regulations, or
         if it cannot be so amended without materially altering the intention of
         the parties, the remainder of the Agreement shall continue in full
         force and effect as if the offending provision were not contained
         herein.

22.      Neither party shall, by mere lapse of time, without giving notice or
         taking other action hereunder be deemed to have waived any breach by
         the other



                                       14
<PAGE>

         party of any of the provisions of this Agreement. Further, the waiver
         by either party of a particular breach of this Agreement by the other
         shall neither be construed as, nor constitute, a continuing waiver of
         such breach or of other breaches by the same or any other provision of
         this Agreement.

23.      The Company shall have the right to assign its rights and obligations
         under this Agreement to an entity that acquires substantially all of
         the assets of the Company. The rights and obligations of the Company
         under this Agreement shall inure to the benefit and shall be binding
         upon the successors and assigns of the Company. Executive shall not
         have any right to assign his obligations under this Agreement and shall
         only be entitled to assign his rights under this Agreement by will or
         the laws of descent and distribution.

24.      The Company and Executive agree that any dispute regarding the
         interpretation or enforcement of this Agreement or any dispute arising
         out of Executive's employment or the termination of that employment
         with the Company, except for disputes regarding the interpretation of
         those sections referred to in Paragraph 14 and disputes involving the
         protection of the Company's intellectual property, shall be decided by
         confidential, final and binding arbitration conducted by Judicial
         Arbitration and Mediation Services ("JAMS") under the then-existing
         JAMS rules, rather than by litigation in court, trial by jury,
         administrative proceeding, or in any other forum.

25.      The parties hereto acknowledge that each has read this Agreement,
         understands it, and agrees to be bound by its terms. The parties
         further agree that this Agreement, including the agreements referenced
         herein and attached as Exhibits hereto, constitute the complete and
         exclusive statement



                                       15
<PAGE>

         of the agreement between the parties and supersede any and all prior or
         contemporaneous understandings, agreements, representations,
         conditions, covenants, proposals, and all other communications between
         the parties, whether written or oral, relating to the subject matter
         hereof.

26.      This Agreement and the terms and conditions of the matters addressed in
         this Agreement may only be amended in writing executed both by the
         Executive and a duly authorized representative of the Company.

In witness whereof, the parties hereto have executed this Executive Termination
and Release Agreement, effective eight (8) days after the date it is signed by
both parties below (the "Effective Date").

ROBERT P. WIEDERHOLD                   CADENCE DESIGN SYSTEMS, INC.


By:                                    By:
   ---------------------------            ------------------------------------
                                          H. Raymond Bingham
Date:                                     President & Chief Executive
     -------------------------            Officer

                                        Date:
                                             ---------------------------------


                                                      TALITY CORPORATION

                                        Date:
                                             ---------------------------------
                                              H. Raymond Bingham
                                              Chairman of the Board


                                        Date:
                                             ---------------------------------



                                       16

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.60
<SEQUENCE>4
<FILENAME>f76986ex10-60.txt
<DESCRIPTION>EXHIBIT 10.60
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.60


                      FIRST AMENDMENT TO CREDIT AGREEMENT


        THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
September 28, 2001, is made among Cadence Design Systems, Inc., a Delaware
corporation (the "Borrower"), the financial institutions listed on the signature
pages hereof under the heading "BANKS" (each a "Bank" and, collectively, the
"Banks"), Bank One, N.A., KeyBank National Association and UBS AG, Stamford
Branch, as co-agents, and ABN AMRO Bank N.V., as administrative agent for the
Banks (in such capacity, the "Agent").

        The Borrower, the Banks and the Agent are parties to that certain Credit
Agreement, dated as of September 29, 2000, (as amended, restated, supplemented
and otherwise modified from time to time, the "Credit Agreement"). The Borrower
has requested that the Majority Banks agree to certain amendments to the Credit
Agreement to permit certain investments in Telos Venture Partners II, L.P., in
addition to the investments presently permitted in Telos Venture Partners, L.P.
The Majority Banks have agreed to such request, subject to the terms and
conditions hereof.

        Accordingly, the parties hereto agree as follows:

        SECTION 1 Definitions; Interpretation.

        (a)     Terms Defined in Credit Agreement. All capitalized terms used in
this Amendment (including in the Recitals hereof) and not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.

        (b)     Interpretation. The rules of interpretation set forth in Section
1.03 of the Credit Agreement shall be applicable to this Amendment and are
incorporated herein by this reference.

        SECTION 2 Amendments to the Credit Agreement.

        (a)     Amendments. The Credit Agreement shall be amended as follows,
effective as of the date of satisfaction of the conditions set forth in Section
3 (the "Effective Date"):

        (i)     The defined term "Tality IPO" in Section 1.01 of the Credit
Agreement shall be amended and restated in its entirety as follows:

                ""Tality IPO" means the initial public offering of the
        Borrower's design-services operation pursuant to terms and conditions
        substantially consistent with those disclosed in the Borrower's Form S-1
        filed with the Securities Exchange Commission on July 17, 2000
        (registration number 333-41552)."

        (ii)    The defined term "Venture Fund" in Section 1.01 of the Credit
Agreement shall be amended and restated in its entirety as follows:



<PAGE>
                ""Venture Fund" means, collectively, Telos Venture Partners,
        L.P. and Telos Venture Partners II, L.P."

        (iii)   Subsection 9.04(e)(vi) of Credit Agreement shall be amended and
restated in its entirety as follows:


                "(vi) investments in the Venture Funds, so long as the aggregate
        unrecovered investment made therein (not counting recoveries fairly
        characterized as income) does not exceed $150,000,000."

        (b)     References Within Credit Agreement. Each reference in the Credit
Agreement to "this Agreement" and the words "hereof," "herein," "hereunder," or
words of like import, shall mean and be a reference to the Credit Agreement as
amended by this Amendment.

        SECTION 3 Conditions of Effectiveness. The effectiveness of this
Amendment shall be subject to the satisfaction of each of the following
conditions precedent:

        (a)     Executed Amendment. The Agent shall have received an executed
counterpart of this Amendment from the Borrower and the Majority Banks.

        (b)     Representations and Warranties; No Default. On the Effective
Date, after giving effect to the amendment of the Credit Agreement contemplated
hereby:

        (i)     the representations and warranties contained in Section 4 hereof
shall be true and correct on and as of the Effective Date as though made on and
as of such date; and

        (ii)    no Default shall have occurred and be continuing.

        (c)     Additional Documents. The Agent shall have received, in form and
substance satisfactory to it, such additional approvals, opinions, documents and
other information as the Agent or any Bank (through the Agent) may reasonably
request.

        SECTION 4 Representations and Warranties of the Borrower. To induce the
Majority Banks to enter into this Amendment, the Borrower hereby confirms and
restates, as of the date hereof, the representations and warranties made by it
in Section 8.01 of the Credit Agreement and in the other Loan Documents. For the
purposes of this Section 4, (i) each reference in Section 8.01 of the Credit
Agreement to "this Agreement," and the words "hereof," "herein," "hereunder," or
words of like import in such Section, shall mean and be a reference to the
Credit Agreement as amended by this Amendment, and each reference in such
Section to "the Loan Documents" shall mean and be a reference to the Loan
Documents as amended as contemplated hereby, (ii) the representation and
warranty set forth in Section 8.01(p) of the Credit Agreement shall be deemed
instead to refer to the last day of the most recent fiscal quarter and fiscal
year for which financial statements have then been delivered, (iii) any
representations and warranties which relate solely to an earlier date shall not
be deemed confirmed and restated as of the date hereof (provided that such
representations and warranties shall be true, correct and complete as of such
earlier date), and (iv) the preceding clause (i) shall take into account any
amendments to the Schedules and other disclosures made in writing by the
Borrower to the Agent and the Banks after the Closing Date and approved by the
Agent and the Majority Banks.



                                       2.
<PAGE>

        SECTION 5 Miscellaneous.

        (a)     Notice. The Agent shall notify the Borrower and the Banks of the
occurrence of the Effective Date.

        (b)     Credit Agreement Otherwise Not Affected. Except as expressly
amended pursuant hereto, the Credit Agreement shall remain unchanged and in full
force and effect and is hereby ratified and confirmed in all respects. The
Banks' and the Agent's execution and delivery of, or acceptance of, this
Amendment and any other documents and instruments in connection herewith
(collectively, the "Amendment Documents") shall not be deemed to create a course
of dealing or otherwise create any express or implied duty by any of them to
provide any other or further amendments, consents or waivers in the future.

        (c)     No Reliance By Borrower. The Borrower hereby acknowledges and
confirms to the Agent and the Banks that the Borrower is executing this
Amendment and the other Amendment Documents on the basis of its own
investigation and for its own reasons without reliance upon any agreement,
representation, understanding or communication by or on behalf of any other
Person.

        (d)     Costs and Expenses. The Borrower agrees to pay to the Agent on
demand the reasonable out-of-pocket costs and expenses of the Agent, and the
reasonable fees and disbursements of counsel to the Agent, in connection with
the negotiation, preparation, execution and delivery of this Amendment and any
other documents to be delivered in connection herewith.

        (e)     Binding Effect. This Amendment shall be binding upon, inure to
the benefit of and be enforceable by the Borrower, the Agent and each Bank and
their respective successors and assigns.

        (f)     Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.

        (g)     Complete Agreement; Amendments. This Amendment, together with
the other Amendment Documents and the other Loan Documents, contains the entire
and exclusive agreement of the parties hereto and thereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior
commitments, drafts, communications, discussion and understandings, oral or
written, with respect thereto. This Amendment may not be modified, amended or
otherwise altered except in accordance with the terms of Section 12.01 of the
Credit Agreement.

        (h)     Severability. Whenever possible, each provision of this
Amendment shall be interpreted in such manner as to be effective and valid under
all applicable laws and regulations. If, however, any provision of this
Amendment shall be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only to
the extent of such prohibition or



                                       3.
<PAGE>

invalidity without affecting the remaining provisions of this Amendment, or the
validity or effectiveness of such provision in any other jurisdiction.

        (i)     Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.

        (j)     Interpretation. This Amendment and the other Amendment Documents
are the result of negotiations between and have been reviewed by counsel to the
Agent, the Borrower and other parties, and are the product of all parties
hereto. Accordingly, this Amendment and the other Amendment Documents shall not
be construed against any of the Banks or the Agent merely because of the Agent's
or any Bank's involvement in the preparation thereof.

        (k)     Loan Documents. This Amendment and the other Amendment Documents
shall constitute Loan Documents.



                            [SIGNATURE PAGES FOLLOW.]



                                       4.
<PAGE>

        IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, as of the date first above written.



                                       THE BORROWER

                                       CADENCE DESIGN SYSTEMS, INC.

                                       By
                                         --------------------------------------
                                         Name:
                                         Title:



                                       5.
<PAGE>

                                       THE AGENT

                                       ABN AMRO BANK N.V., AS AGENT

                                       By
                                         --------------------------------------
                                         Name:
                                         Title:


                                       By
                                         --------------------------------------
                                         Name:
                                         title:




                                       6.
<PAGE>

                                       THE BANKS

                                       ABN AMRO BANK N.V., AS A BANK

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:




                                       7.
<PAGE>

                                       BANK OF AMERICA, N.A.

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:





                                       8.
<PAGE>

                                       BANK ONE, N.A.

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:





                                       9.
<PAGE>

                                       KEYBANK NATIONAL ASSOCIATION

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:





                                      10.
<PAGE>

                                       UBS AG, STAMFORD BRANCH

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:

                                       By
                                         --------------------------------------
                                           Name:
                                           Title:





                                      11.
<PAGE>

                                       BARCLAYS BANK PLC

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:







                                      12.
<PAGE>

                                       THE INDUSTRIAL BANK OF JAPAN, LIMITED

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:





                                      13.
<PAGE>

                                       FLEET NATIONAL BANK

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:





                                      14.
<PAGE>

                                       MELLON BANK, N.A.

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:





                                      15.
<PAGE>

                                       THE BANK OF NOVA SCOTIA

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:





                                      16.
<PAGE>

                                       BANK HAPOALIM B.M.

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:





                                      17.
<PAGE>

                                       WELLS FARGO BANK,
                                       NATIONAL ASSOCIATION

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:





                                      18.
<PAGE>

                                       THE FUJI BANK LIMITED

                                       By
                                         --------------------------------------
                                          Name:
                                          Title:



                                      19.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.61
<SEQUENCE>5
<FILENAME>f76986ex10-61.txt
<DESCRIPTION>EXHIBIT 10.61
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.61



--------------------------------------------------------------------------------




                          CADENCE DESIGN SYSTEMS, INC.

                        ---------------------------------



                                  $260,000,000

                  AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT

                         Dated as of September 28, 2001

                        ---------------------------------


                               ABN AMRO BANK N.V.,

                       as Agent and as Sole Lead Arranger

                              FLEET NATIONAL BANK,

                           as Sole-Syndication Agent,

                        KEYBANK NATIONAL ASSOCIATION, AND

                            UBS AG, STAMFORD BRANCH,

                           as Co-Documentation Agents

--------------------------------------------------------------------------------


<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                    Page
                                                                                    ----
<S>                                                                                 <C>
ARTICLE I DEFINITIONS ................................................................1

SECTION 1.01    Certain Defined Terms.................................................1
SECTION 1.02    Accounting Principles................................................14
                (a)     Accounting Terms.............................................14
                (b)     GAAP Changes.................................................14
                (c)     "Fiscal Year" and "Fiscal Quarter"...........................14
SECTION 1.03    Interpretation.......................................................14

ARTICLE II THE LOANS ................................................................16

SECTION 2.01    Amounts and Terms of Commitments.....................................16
                (a)     The Revolving Credit.........................................16
                (b)     The Term Loans...............................................16
SECTION 2.02    Borrowing Procedure..................................................16
                (a)     Notice to the Agent..........................................16
                (b)     Notice to the Banks..........................................16
SECTION 2.03    Non-Receipt of Funds.................................................17
SECTION 2.04    Lending Offices......................................................17
SECTION 2.05    Evidence of Indebtedness.............................................17
SECTION 2.06    Minimum Amounts......................................................18
SECTION 2.07    Required Notice......................................................18

ARTICLE III INTEREST AND FEES; CONVERSION OR CONTINUATION............................18

SECTION 3.01    Interest.............................................................18
                (a)     Interest Rate................................................18
                (b)     Interest Periods.............................................18
                (c)     Interest Payment Dates.......................................19
                (d)     Notice to the Borrower and the Banks.........................19
SECTION 3.02    Default Rate of Interest.............................................20
SECTION 3.03    Fees.................................................................20
                (a)     Revolving Commitment Fees....................................20
                (b)     Utilization Fees.............................................20
                (c)     Agency Fee...................................................21
                (d)     Fees Nonrefundable...........................................21
SECTION 3.04    Computations.........................................................21
SECTION 3.05    Conversion or Continuation...........................................21
                (a)     Election.....................................................21
                (b)     Automatic Conversion.........................................21
                (c)     Notice to the Agent..........................................21
                (d)     Notice to the Banks..........................................22
</TABLE>



                                       i.

<PAGE>
<TABLE>
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SECTION 3.06    Replacement of Reference Banks.......................................22
SECTION 3.07    Highest Lawful Rate..................................................22

ARTICLE IV REDUCTION OF REVOLVING COMMITMENTS; REPAYMENT; PREPAYMENT.................22

SECTION 4.01    Reduction or Termination of the Revolving Commitments................22
                (a)     Optional Reduction or Termination............................22
                (b)     Mandatory Termination........................................22
                (c)     Extension of Revolving Termination Date......................22
                (d)     [Intentionally Omitted.].....................................23
                (e)     Notice.......................................................23
                (f)     Adjustment of Revolving Commitment Fee and Utilization
                        Fee; No Reinstatement........................................23
SECTION 4.02    Repayment of Loans...................................................23
                (a)     Revolving Loans..............................................23
                (b)     Term Loans...................................................23
SECTION 4.03    Prepayments..........................................................23
                (a)     Optional Prepayments.........................................23
                (b)     [Intentionally Omitted.].....................................24
                (c)     Notice; Application..........................................24

ARTICLE V YIELD PROTECTION AND ILLEGALITY............................................24

SECTION 5.01    Inability to Determine Rates.........................................24
SECTION 5.02    Funding Losses.......................................................24
SECTION 5.03    Regulatory Changes...................................................25
                (a)     Increased Costs..............................................25
                (b)     Capital Requirements.........................................25
                (c)     Requests.....................................................25
SECTION 5.04    Illegality...........................................................25
SECTION 5.05    Funding Assumptions..................................................26
SECTION 5.06    Obligation to Mitigate...............................................26
SECTION 5.07    Substitution of Banks................................................26

ARTICLE VI PAYMENTS .................................................................27

SECTION 6.01    Pro Rata Treatment...................................................27
SECTION 6.02    Payments.............................................................27
                (a)     Payments.....................................................27
                (b)     Application..................................................27
                (c)     Extension....................................................27
SECTION 6.03    Taxes................................................................27
                (a)     No Reduction of Payments.....................................27
                (b)     Deduction or Withholding; Tax Receipts.......................28
                (c)     Indemnity....................................................28
</TABLE>



                                      ii.
<PAGE>

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                (d)     Forms W-8BEN and W-8ECI......................................28
                (e)     Mitigation...................................................28
SECTION 6.04    Non-Receipt of Funds.................................................29
SECTION 6.05    Sharing of Payments..................................................29

ARTICLE VII CONDITIONS PRECEDENT.....................................................29

SECTION 7.01    Conditions Precedent to the Initial Loans............................29
                (a)     Fees and Expenses............................................29
                (b)     Loan Documents...............................................29
                (c)     Certificate of Responsible Officer...........................30
                (d)     Corporate Documents..........................................30
                (e)     Legal Opinion................................................30
                (f)     Compliance Certificate.......................................30
                (g)     Material Adverse Effect......................................30
                (h)     Payment to Departing Banks...................................30
SECTION 7.02    Conditions Precedent to All Loans....................................30
                (a)     Notice.......................................................30
                (b)     Representations and Warranties; No Default...................31
                (c)     Additional Documents.........................................31

ARTICLE VIII REPRESENTATIONS AND WARRANTIES..........................................31

SECTION 8.01    Representations and Warranties.......................................31
                (a)     Organization and Powers......................................31
                (b)     Authorization; No Conflict...................................31
                (c)     Binding Obligation...........................................32
                (d)     Consents.....................................................32
                (e)     No Defaults..................................................32
                (f)     Title to Properties; Liens...................................32
                (g)     Litigation...................................................32
                (h)     Compliance with Environmental Laws...........................32
                (i)     Governmental Regulation......................................32
                (j)     ERISA........................................................33
                (k)     Subsidiaries.................................................33
                (l)     Margin Regulations...........................................33
                (m)     Taxes........................................................33
                (n)     Patents and Other Rights.....................................34
                (o)     Insurance....................................................34
                (p)     Financial Statements.........................................34
                (q)     Liabilities..................................................34
                (r)     Labor Disputes, Etc..........................................34
                (s)     Solvency.....................................................34
                (t)     Disclosure...................................................34
</TABLE>



                                      iii.
<PAGE>
<TABLE>
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ARTICLE IX COVENANTS ................................................................35

SECTION 9.01    Reporting Covenants..................................................35
                (a)     Financial Statements and Other Reports.......................35
                (b)     Additional Information.......................................36
SECTION 9.02    Financial Covenants..................................................37
                (a)     Minimum Consolidated EBITDA..................................37
                (b)     [Intentionally omitted.].....................................37
                (c)     Minimum Fixed Charge Coverage Ratio..........................37
                (d)     Minimum Current Ratio........................................37
                (e)     Maximum Funded Debt to EBITDA Ratio..........................37
SECTION 9.03    Additional Affirmative Covenants.....................................38
                (a)     Preservation of Existence, Etc...............................38
                (b)     Payment of Obligations.......................................38
                (c)     Maintenance of Insurance.....................................38
                (d)     Keeping of Records and Books of Account......................38
                (e)     Inspection Rights............................................38
                (f)     Compliance with Laws, Etc....................................39
                (g)     Maintenance of Properties, Etc...............................39
                (h)     Licenses.....................................................39
                (i)     Action Under Environmental Laws..............................39
                (j)     Use of Proceeds..............................................39
                (k)     Further Assurances and Additional Acts.......................39
SECTION 9.04    Negative Covenants...................................................40
                (a)     Liens; Negative Pledges......................................40
                (b)     Change in Nature of Business.................................40
                (c)     Restrictions on Fundamental Changes..........................40
                (d)     Sales of Assets..............................................40
                (e)     Loans and Investments........................................41
                (f)     Transactions with Related Parties............................43
                (g)     Hazardous Substances.........................................43
                (h)     Accounting Changes...........................................43

ARTICLE X EVENTS OF DEFAULT..........................................................43

SECTION 10.01   Events of Default....................................................43
                (a)     Payments.....................................................43
                (b)     Representations and Warranties...............................44
                (c)     Failure by Borrower to Perform Certain Covenants.............44
                (d)     Failure by Borrower to Perform Other Covenants...............44
                (e)     Insolvency; Voluntary Proceedings............................44
                (f)     Involuntary Proceedings......................................44
                (g)     Default Under Other Indebtedness.............................44
                (h)     Judgments....................................................45
                (i)     ERISA........................................................45
                (j)     Dissolution, Etc.............................................45
</TABLE>



                                      iv.
<PAGE>
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                (k)     Subordination Provisions.....................................46
                (l)     Mergers and Acquisitions.....................................46
SECTION 10.02   Effect of Event of Default...........................................46
ARTICLE XI THE AGENT ................................................................46

SECTION 11.01   Authorization and Action.............................................46
SECTION 11.02   Limitation on Liability of Agent; Notices; Closing...................47
                (a)     Limitation on Liability of Agent.............................47
                (b)     Notices......................................................47
                (c)     Closing......................................................48
SECTION 11.03   Agent and Affiliates.................................................48
SECTION 11.04   Notice of Defaults...................................................48
SECTION 11.05   Non-Reliance on Agent................................................48
SECTION 11.06   Indemnification......................................................49
SECTION 11.07   Delegation of Duties.................................................49
SECTION 11.08   Successor Agent......................................................49
SECTION 11.09   Co-Agents............................................................49

ARTICLE XII MISCELLANEOUS............................................................50

SECTION 12.01   Amendments and Waivers...............................................50
SECTION 12.02   Notices..............................................................51
                (a)     Notices......................................................51
                (b)     Facsimile and Telephonic Notice..............................51
SECTION 12.03   No Waiver; Cumulative Remedies.......................................51
SECTION 12.04   Costs and Expenses; Indemnification..................................51
                (a)     Costs and Expenses...........................................52
                (b)     Indemnification..............................................52
                (c)     Other Charges................................................52
SECTION 12.05   Right of Set-Off.....................................................53
SECTION 12.06   Survival.............................................................53
SECTION 12.07   Obligations Several..................................................53
SECTION 12.08   Benefits of Agreement................................................53
SECTION 12.09   Binding Effect; Assignment...........................................53
                (a)     Binding Effect...............................................54
                (b)     Assignment...................................................54
SECTION 12.10   Governing Law........................................................56
SECTION 12.11   Submission to Jurisdiction...........................................56
                (a)     Submission to Jurisdiction...................................56
                (b)     No Limitation................................................56
SECTION 12.12   Waiver of Jury Trial.................................................56
SECTION 12.13   Limitation on Liability..............................................56
SECTION 12.14   Confidentiality......................................................57
SECTION 12.15   Entire Agreement.....................................................57
SECTION 12.16   Severability.........................................................57
</TABLE>



                                       v.
<PAGE>
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SECTION 12.17   Counterparts.........................................................57
SECTION 12.18   Effect of Amendment..................................................58
SECTION 12.19   Certain Transitional Matters.........................................58
</TABLE>


SCHEDULES            ANNEXES

Attachment A         Permitted Receivables Purchase Facility
Annex 1              Pricing Grid

Schedule 1           Revolving Commitments and Pro Rata Shares
Schedule 2           Borrower's Account; Lending Offices; Addresses for Notices
Schedule 8.01(a)     Organization and Powers
Schedule 8.01(g)     Litigation
Schedule 8.01(h)     Environmental Matters
Schedule 8.01(k)     Subsidiaries
Schedule 9.04(a)     Existing Liens
Schedule 9.04(e)     Existing Investments

EXHIBITS

Exhibit A            Form of Revolving Note
Exhibit B            Form of Term Note
Exhibit C            Form of Notice of Borrowing
Exhibit D            Form of Compliance Certificate

Exhibit E            Form of Opinion of Counsel to the Borrower
Exhibit F            Form of Assignment and Acceptance



                                      vi.
<PAGE>
                  AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT

                  THIS AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT (this
"Agreement"), dated as of September 28, 2001, is made among Cadence Design
Systems, Inc., a Delaware corporation (the "Borrower"), the financial
institutions listed on the signature pages of this Agreement under the heading
"BANKS" (each a "Bank" and, collectively, the "Banks"), Fleet National Bank as
sole-syndication agent hereunder, KeyBank National Association and UBS AG,
Stamford Branch, as co-documentation agents hereunder, and ABN AMRO Bank N.V.,
as administrative agent for the Banks hereunder (in such capacity, the "Agent").

                  The Borrower has requested the Banks to make revolving loans
to the Borrower in an aggregate principal amount of up to $260,000,000 at any
time outstanding. The Banks are severally willing to make such loans to the
Borrower upon the terms and subject to the conditions set forth in this
Agreement.

                  NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

                  SECTION 1.01 Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:

                  "ABN AMRO" means ABN AMRO Bank N.V.

                  "Affiliate" means any Person which, directly or indirectly,
controls, is controlled by or is under common control with another Person. For
purposes of the foregoing, "control," "controlled by" and "under common control
with" with respect to any Person shall mean the possession, directly or
indirectly, of the power (i) to vote 10% or more of the securities having
ordinary voting power of the election of directors of such Person, or (ii) to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.

                  "Agent" has the meaning set forth in the recitals to this
Agreement.

                  "Agent's Account" means the account of the Agent set forth on
Schedule 2 or such other account as the Agent from time to time shall designate
in a written notice to the Borrower and the Banks.

                  "Alchemy" means Alchemy Semiconductor, Inc.

                  "Applicable Fee Amount" means (i) with respect to the
commitment fee payable hereunder, the amount set forth opposite the indicated
Level below the heading "Commitment Fee" in the pricing grid set forth on Annex
I in accordance with the parameters for calculations of such amount also set
forth on Annex I; and (ii) with respect to the utilization fee payable
hereunder, the amount set forth opposite the indicated Level below the heading
"Utilization Fee"



                                       1.
<PAGE>
in the pricing grid set forth on Annex I in accordance with the parameters for
calculations of such amount also set forth on Annex I.

                  "Applicable Margin" means (i) with respect to Base Rate Loans,
0% per annum; and (ii) with respect to Eurodollar Rate Loans, the amount set
forth opposite the indicated Level below the heading "Eurodollar Rate Spread" in
the pricing grid set forth on Annex I in accordance with the parameters for
calculations of such amounts also set forth on Annex I.

                  "Assignment and Acceptance" has the meaning set forth in
Section 11.02(a).

                  "Bank" and "Banks" each has the meaning set forth in the
recitals to this Agreement.

                  "Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy."

                  "Base Rate" means for any day the higher of: (i) the Federal
Funds Rate, plus 1/2 of 1% per annum, and (ii) the prime commercial lending rate
of ABN AMRO as announced from time to time at its Chicago, Illinois, office.
Each change in the interest rate on the Loans or other Obligations bearing
interest at the Base Rate based on a change in the Base Rate shall be effective
as of the effective date of such change in the Base Rate.

                  "Base Rate Loan" means a Loan bearing interest at a rate
determined by reference to the Base Rate.

                  "Borrower" has the meaning set forth in the recitals to this
Agreement.

                  "Borrower's Account" means the account of the Borrower set
forth on Schedule 2, or such other account as the Borrower from time to time
shall designate in a written notice to the Agent.

                  "Borrowing" means a borrowing consisting of simultaneous Loans
made at any one time by the Borrower from the Banks pursuant to Article II.

                  "Business Day" means a day (i) other than Saturday or Sunday,
(ii) on which commercial banks are open for business in Chicago, Illinois and
New York, New York, and (iii) if the applicable Business Day relates to any
Eurodollar Rate Loan, that is a Eurodollar Business Day.

                  "Capital Lease" means, for any Person, any lease of property
(whether real, personal or mixed) which, in accordance with GAAP, would, at the
time a determination is made, be required to be recorded as a capital lease in
respect of which such Person is liable as lessee.

                  "Closing Date" means the date on which all conditions
precedent set forth in Section 7.01 are satisfied or waived by all Banks (or, in
the case of Section 7.01(a), waived by the Person entitled to receive such
payment).



                                       2.
<PAGE>
                  "Compliance Certificate" means a certificate of a Responsible
Officer of the Borrower, in substantially the form of Exhibit D, with such
changes thereto as the Agent or any Bank may from time to time reasonably
request.

                  "Consolidated Cash Flow" means, as of any date of
determination for the 12-month period ended on such date, Consolidated Net
Income for such period plus depreciation expense, amortization expense and other
non-cash expenses (including write-offs of acquired in-process research and
development costs) which were deducted in determining Consolidated Net Income,
of the Borrower and its Subsidiaries on a consolidated basis, as determined in
accordance with GAAP.

                  "Consolidated EBITDA" means, as of any date of determination
for the 12-month period ended on such date, Consolidated Net Income plus
Consolidated Interest Expense plus income tax expense plus depreciation expense,
amortization expense and all other non-cash expenses (including write-offs of
acquired in-process research and development costs) which were deducted in
determining Consolidated Net Income, plus the quarterly increase in product
license subscription bookings for any quarter included in such 12 month period
ending on or prior to December 30, 2000, to the extent not included or reflected
in Consolidated Net Income, in each case, of the Borrower and its Subsidiaries
on a consolidated basis, as determined in accordance with GAAP.

                  "Consolidated Interest Expense" means, for any period,
interest expense (including that attributable to Capital Leases) of the Borrower
and its Subsidiaries on a consolidated basis, including all commissions,
discounts and other fees and charges owed with respect to standby letters of
credit, as determined in accordance with GAAP.

                  "Consolidated Net Income" means, for any period, the net
income of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period, as determined in accordance with
GAAP.

                  "Consolidated Tangible Net Worth" means, as of any date of
determination, Consolidated Total Assets minus Consolidated Total Liabilities;
provided, however, that there shall be excluded from Consolidated Total Assets
the following: (i) all assets which would be classified as intangible assets in
accordance with GAAP, including goodwill, organizational expense, research and
development expense, patent applications, patents, trademarks, trade names,
brands, copyrights, trade secrets, customer lists, licenses, franchises and
covenants not to compete; and (ii) all treasury stock.

                  "Consolidated Total Assets" means, as of any date of
determination, the total assets of the Borrower and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.

                  "Consolidated Total Liabilities" means, as of any date of
determination, the total liabilities of the Borrower and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.

                  "Default" means an Event of Default or an event or condition
which with notice or lapse of time or both would constitute an Event of Default.



                                       3.
<PAGE>
                  "Departing Bank" means any "Bank" under and as defined in the
Existing Credit Agreement that will not continue as a Bank under this Agreement.

                  "Dollars" and the sign "$" each means lawful money of the
United States.

                  "Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $5,000,000,000, (ii) a commercial bank organized
under the laws of any other country which is a member of the OECD, or a
political subdivision of any such country, and having a combined capital and
surplus of at least $5,000,000,000, provided that such bank is acting through a
branch or agency located in the United States and licensed by the United States
or any state thereof; and (iii) a Person that is primarily engaged in the
business of commercial banking and that is (a) a Subsidiary of a Bank, (b) a
Subsidiary of a Person of which a Bank is a Subsidiary, or (c) a Person of which
a Bank is a Subsidiary.

                  "Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directives, requests, licenses, authorizations
and permits of, and agreements with (including consent decrees), any
Governmental Authorities, in each case relating to or imposing liability or
standards of conduct concerning public health, safety and environmental
protection matters, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Clean Air Act, the Federal Water
Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal
Resource Conservation and Recovery Act, the Toxic Substances Control Act, the
Emergency Planning and Community Right-to-Know Act, the California Hazardous
Waste Control Law, the California Solid Waste Management, Resource Recovery and
Recycling Act, the California Water Code and the California Health and Safety
Code.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, including (unless the context otherwise requires) any rules or regulations
promulgated thereunder.

                  "ERISA Affiliate" means any trade or business (whether or not
incorporated) which is under common control with the Borrower within the meaning
of Section 4001(a)(14) of ERISA and Sections 414(b), (c) and (m) of the Internal
Revenue Code.

                  "Eurodollar Business Day" means a Business Day on which
dealings in Dollar deposits are carried on in the London interbank market.

                  "Eurodollar Rate" means for each Interest Period for each
Eurodollar Rate Loan the rate per annum (rounded upward, if necessary, to the
nearest 1/100 of 1%) determined by the Agent pursuant to the following formula:

         Eurodollar Rate =                  Interbank Rate
                           ------------------------------------------------
                                  100% - Eurodollar Reserve Percentage

The Eurodollar Rate shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.



                                       4.
<PAGE>
                  "Eurodollar Rate Loan" means a Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.

                  "Eurodollar Reference Bank" means ABN AMRO, subject to the
provisions of Section 3.06.

                  "Eurodollar Reserve Percentage" means the maximum reserve
requirement percentage (including any ordinary, supplemental, marginal and
emergency reserves), if any, as determined by the Agent, then applicable under
Regulation D in respect of Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities") of a member bank in the Federal Reserve System with
deposits exceeding $1,000,000,000.

                  "Event of Default" has the meaning set forth in Section 10.01.

                  "Existing Credit Agreement" means that certain $250,000,000
364-Day Credit Agreement, dated as of September 29, 2000, among the Borrower,
the lenders party thereto and ABN AMRO, as administrative agent, as amended.

                  "FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.

                  "Fee Letter" means the fee letter dated September 4, 2001 by
and between the Borrower and the Agent.

                  "Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100 of 1%), as determined by the
Agent, equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for any day of determination (or if such day of
determination is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.

                  "Fixed Charge Coverage Ratio" has the meaning specified in
Section 9.02(c).

                  "Funded Debt" of any Person means, without duplication, (a)
all interest-bearing Indebtedness of such Person (whether on- or off-balance
sheet), (b) all obligations of such Person in respect of any letter of credit,
and (c) all obligations of such Person with respect to leases which are or
should be capitalized on the balance sheet of such Person in accordance with
GAAP. Notwithstanding the foregoing, for purposes of Section 9.02(c) and Section
9.02(e), Funded Debt shall not include (i) any Indebtedness which is
subordinated to the Obligations on terms and conditions satisfactory to the
Agent and the Majority Banks in their reasonable discretion and for which no
principal payment is due before the 366th day after the Term Loan Maturity Date,
or (ii) any obligations of such Person under any Permitted Receivables Purchase
Facility.

                  "FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its principal
functions.


                                       5.
<PAGE>
                  "GAAP" means generally accepted accounting principles in the
U.S. as in effect from time to time.

                  "Governmental Authority" means any federal, state, local or
other governmental department, commission, board, bureau, agency, central bank,
court, tribunal or other instrumentality or authority, domestic or foreign,
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

                  "Guaranty Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any property constituting
direct or indirect security therefor, or (ii) to advance or provide funds (a)
for the payment or discharge of any such primary obligation, or (b) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, (iv) in connection with any synthetic lease or other
similar off balance sheet lease transaction, or (v) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof.

                  "Hazardous Substances" means any toxic or hazardous
substances, materials, wastes, contaminants or pollutants, including asbestos,
PCBs, petroleum products and byproducts, and any substances defined or listed as
"hazardous substances," "hazardous materials," "hazardous wastes" or "toxic
substances" (or similarly identified), regulated under or forming the basis for
liability under any applicable Environmental Law.

                  "IRS" means the Internal Revenue Service, or any successor
thereto.

                  "Indebtedness" means, for any Person: (i) all indebtedness or
other obligations of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses; (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property); (iv)
all obligations under Capital Leases; (v) all reimbursement or other obligations
of such Person under or in respect of letters of credit and bankers acceptances,
and all net obligations in respect of Rate Contracts; (vi) all reimbursement or
other obligations of such Person in respect of any bank guaranties, shipside
bonds, surety bonds and similar instruments issued for the account of such
Person or as to which such Person is otherwise liable for reimbursement of
drawings or payments; (vii) all Guaranty Obligations; (viii) all indebtedness in
respect of any synthetic lease or other similar off balance sheet lease
transaction; and (ix) all indebtedness of another Person secured by any Lien
upon or in property owned by the Person for whom Indebtedness is being
determined, whether or not such Person has assumed or become liable for the
payment of such indebtedness of such other Person. For all



                                       6.
<PAGE>
purposes of this Agreement, the Indebtedness of any Person shall include all
recourse Indebtedness of any partnership or joint venture or limited liability
company in which such Person is a general partner or a joint venturer or a
member.

                  "Insolvency Proceeding" means (i) any case, action or
proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (ii) any general assignment for the benefit
of creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any substantial
portion of its creditors, in each case undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code.

                  "Interbank Rate" means the rate per annum determined by the
Agent, on the basis of quotations furnished to it by the Eurodollar Reference
Bank, to be the average (rounded upward, if necessary, to the nearest 1/16 of
1%) of the rates at which deposits in Dollars are offered to the Eurodollar
Reference Bank by prime banks in the London interbank market at approximately
11:00 A.M. (London time), two Eurodollar Business Days before the first day of
such Interest Period, in an amount substantially equal to the proposed
Eurodollar Rate Loan to be made, continued or converted by the Eurodollar
Reference Bank and for a period of time comparable to such Interest Period.

                  "Interest Payment Date" means a date specified for the payment
of interest pursuant to Section 3.01(c).

                  "Interest Period" means, with respect to any Eurodollar Rate
Loan, the period determined in accordance with Section 3.01(b) applicable
thereto.

                  "Internal Revenue Code" means the Internal Revenue Code of
1986, including (unless the context otherwise requires) any rules or regulations
promulgated thereunder.

                  "Lending Office" has the meaning set forth in Section 2.04.

                  "Lien" means any mortgage, deed of trust, pledge, security
interest, assignment, deposit arrangement, charge or encumbrance, lien
(statutory or other), or other preferential arrangement (including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing or any agreement
to give any security interest).

                  "Loan Documents" means this Agreement, the Notes, the Fee
Letter and all other certificates, documents, agreements and instruments
delivered to the Agent and the Banks under or in connection with this Agreement.

                  "Loans" means the Revolving Loans and the Term Loans.

                  "Majority Banks" means at any time Banks holding at least 51%
of the then aggregate unpaid principal amount of the loans, or, if no such
principal amount is then outstanding, Banks having at least 51% of the aggregate
Revolving Commitments.



                                       7.
<PAGE>
                  "Material Adverse Effect" means any event, matter, condition
or circumstance which has or would reasonably be expected to have a material
adverse effect on the business, properties, results of operations or condition
(financial or otherwise) of the Borrower and its Subsidiaries taken as a whole.

                  "Material Subsidiary" means any Subsidiary the total assets of
which constitute 20% or more of Consolidated Total Assets, measured as of the
last day of the then most recent fiscal quarter.

                  "Minimum Amount" has the meaning set forth in Section 2.06.

                  "Multiemployer Plan" means a "multiemployer plan" as defined
in Sections 3(37) and 4001(a)(3) of ERISA.

                  "Multi-Year Commitments" means the commitments of the lenders
party to the Multi-Year Credit Agreement to make loans to the Borrower, as
provided therein.

                  "Multi-Year Credit Agreement" means that certain Credit
Agreement dated as of September 29, 2000, as amended pursuant to that certain
First Amendment to Credit Agreement dated as of September 28, 2001, among the
Borrower, the lenders party thereto and ABN AMRO, as administrative agent, as
the same may be amended, restated, supplemented or otherwise modified in
accordance with its terms.

                  "Net Cash Proceeds" means when used in respect of any issuance
of any debt or equity securities of the Borrower or any Subsidiary, the gross
proceeds received by the Borrower or such Subsidiary from such issuance less all
direct costs and expenses incurred or to be incurred, and all federal, state,
local and foreign taxes assessed or to be assessed, in connection therewith.

                  "Notes" means the Revolving Notes and the Term Notes.

                  "Notice" means a Notice of Borrowing, a Notice of Conversion
or Continuation or a Notice of Prepayment.

                  "Notice of Borrowing" has the meaning set forth in Section
2.02(a).

                  "Notice of Conversion or Continuation" has the meaning set
forth in Section 3.05(c).

                  "Notice of Prepayment" has the meaning set forth in Section
4.03.

                  "Obligations" means the indebtedness, liabilities and other
obligations of the Borrower to the Agent or any Bank under or in connection with
the Loan Documents, including all Loans, all interest accrued thereon, all fees
due under this Agreement and all other amounts payable by the Borrower to the
Agent or any Bank thereunder or in connection therewith, whether now or
hereafter existing or arising, and whether due or to become due, absolute or
contingent, liquidated or unliquidated, determined or undetermined.



                                       8.
<PAGE>
                  "OECD" means the Organization for Economic Cooperation and
Development.

                  "Operating Lease" means, for any Person, any lease of any
property of any kind by that Person as lessee which is not a Capital Lease.

                  "PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.

                  "Pension Plan" means any employee pension benefit plan covered
by Title IV of ERISA (other than a Multiemployer Plan) that is maintained for
employees of the Borrower or any ERISA Affiliate or with regard to which the
Borrower or an ERISA Affiliate is a contributing sponsor within the meaning of
Sections 4001(a)(13) or 4069 of ERISA.

                  "Permitted Investments" means, in respect of the Borrower or
any Subsidiary, short-term investment grade debt securities of any type
authorized from time to time under an investment policy for short-term cash
investments approved by the Borrower's board of directors or such Subsidiary's
board of directors, as the case may be.

                  "Permitted Liens" means:

                           (i) Liens in favor of the Banks or the Agent for the
         benefit of the Banks to secure the Obligations;

                           (ii) the existing Liens listed in Schedule 9.04(a);

                           (iii) Liens for taxes, fees, assessments or other
         governmental charges or levies, either not delinquent or being
         contested in good faith by appropriate proceedings and which are
         adequately reserved for in accordance with GAAP;

                           (iv) Liens of materialmen, mechanics, warehousemen,
         carriers or employees or other like Liens arising in the ordinary
         course of business and securing obligations either not delinquent or
         being contested in good faith by appropriate proceedings which are
         adequately reserved for in accordance with GAAP and which do not in the
         aggregate materially impair the use or value of the property or risk
         the loss or forfeiture of title thereto;

                           (v) Liens consisting of deposits or pledges to secure
         the payment of worker's compensation, unemployment insurance or other
         social security benefits or obligations, or to secure the performance
         of bids, trade contracts, leases (other than Capital Leases), public or
         statutory obligations, surety or appeal bonds or other obligations of a
         like nature incurred in the ordinary course of business (other than for
         indebtedness or any Liens arising under ERISA);

                           (vi) easements, rights of way, servitudes or zoning
         or building restrictions and other minor encumbrances on real property
         and irregularities in the title to such property which do not in the
         aggregate materially impair the use or value of such property or risk
         the loss or forfeiture of title thereto;



                                       9.
<PAGE>

                           (vii) statutory landlord's Liens under leases to
         which the Borrower or any of its Subsidiaries is a party;

                           (viii) Liens arising solely by virtue of any
         statutory or common law provision relating to banker's liens, rights of
         set-off or similar rights and remedies as to deposit accounts or other
         funds maintained with a creditor depository institution; provided that
         (i) such deposit account is not a dedicated cash collateral account and
         is not subject to restrictions against access by the Borrower in excess
         of those set forth by regulations promulgated by the FRB, and (ii) such
         deposit account is not intended by the Borrower or any Subsidiary to
         provide collateral to the depository institution;

                           (ix) Liens (a) upon or in any property acquired or
         held by the Borrower or any of its Subsidiaries to secure the purchase
         price of such property or Indebtedness incurred solely for the purpose
         of financing the acquisition of such property, or (b) existing on such
         property at the time of its acquisition, provided that the Lien is
         confined solely to the property so acquired and improvements thereon;

                           (x) Liens on assets of Persons which become
         Subsidiaries of the Borrower after the date hereof, provided that such
         Liens existed at the time any such Persons became Subsidiaries of the
         Borrower and were not created in anticipation thereof;

                           (xi) Liens on Receivables and Receivables Related
         Assets in connection with any Permitted Receivables Purchase Facility;

                           (xii) Leases or subleases and licenses and
         sublicenses granted to others in the ordinary course of business and
         not interfering in any material respect with the business of the
         Borrower and any interest or title of a lessor or licensor under any
         lease or license;

                           (xiii) Liens on equipment leased by the Borrower
         pursuant to an operating lease in the ordinary course of business
         (including proceeds thereof and accessions thereto) incurred solely for
         the purpose of financing the lease of such equipment (including Liens
         arising from UCC financing statements regarding leases permitted by
         this Agreement);

                           (xiv) Liens arising from judgments, decrees or
         attachments to the extent and only so long as such judgment, decree or
         attachment has not caused or resulted in an Event of Default;

                           (xv) Liens in favor of customs and revenue
         authorities arising as a matter of law to secure payment of customs
         duties in connection with the importation of goods;

                           (xvi) Liens incurred in connection with the
         extension, renewal, refunding, refinancing, modification, amendment or
         restatement of the Indebtedness secured by Liens of the type described
         in clauses (i) through (xv) above, provided that any extension, renewal
         or replacement Lien shall be limited to the property encumbered



                                      10.
<PAGE>
         by the existing Lien, the principal amount of Indebtedness being
         extended, renewed or refinanced does not increase and such Lien
         otherwise remains a Permitted Lien under clauses (i) through (xv)
         above; and

                           (xvii) Liens not otherwise permitted hereunder
         securing Indebtedness in an aggregate principal amount not to exceed
         15% of Consolidated Tangible Net Worth, measured as of the last day of
         the then most recent fiscal quarter, at any time outstanding.

                  "Permitted Receivables Purchase Facility" shall mean any
receivables sales, financing or securitization programs now or hereafter entered
into by the Borrower or any of its Subsidiaries, in each case for the purpose of
financing Receivables, including, without limitation, the facilities identified
on Attachment A hereto, in each case, as amended, restated or supplemented from
time to time.

                  "Person" means an individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization or
any other entity of whatever nature or any Governmental Authority.

                  "Plan" means any employee pension benefit plan as defined in
Section 3(2) of ERISA (including any Multiemployer Plan) and any employee
welfare benefit plan, as defined in Section 3(1) of ERISA (including any plan
providing benefits to former employees or their survivors).

                  "Premises" means any and all real property, including all
buildings and improvements now or hereafter located thereon and all
appurtenances thereto, now or hereafter owned, leased, occupied or used by the
Borrower and its Subsidiaries.

                  "Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of such Bank's Revolving Commitment divided by the combined
Revolving Commitments of all Banks (or, if all Revolving Commitments have been
terminated, the aggregate principal amount of such Bank's Loans divided by the
aggregate principal amount of the Loans then held by all Banks). The initial Pro
Rata Share of each Bank is set forth opposite such Bank's name in Schedule 1
under the heading "Pro Rata Share."

                  "Rate Contracts" means interest rate swaps, caps, floors and
collars, currency swaps, or other similar financial products designed to provide
protection against fluctuations in interest, currency or exchange rates.

                  "Receivables" means any rights to payment for license fees,
whether in the form of accounts receivable, general intangibles, instruments,
chattel paper or otherwise.

                  "Receivables Related Assets" means (a) any rights arising
under the documentation governing or relating to Receivables which are the
subject of a Permitted Receivables Purchase Facility, including, without
limitation, rights in respect of Liens securing such Receivables, (b) any
proceeds of such Receivables and any lockboxes or accounts in which such
proceeds are deposited, (c) spread accounts and other similar accounts, and any
amounts on deposit therein, established in connection with any Permitted
Receivables Purchase Facility,



                                      11.
<PAGE>
(d) any warranty, indemnity, dilution and other intercompany claim arising out
of any Permitted Receivables Purchase Facility, and (e) other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with factoring or asset securitization
transactions involving Receivables.

                  "Regulation D" means Regulation D of the FRB.

                  "Regulatory Change" has the meaning set forth in Section 5.03.

                  "Related Person" has the meaning set forth in Section 11.06.

                  "Required Notice Date" has the meaning set forth in Section
2.07.

                  "Responsible Officer" means, with respect to any Person, the
chief executive officer, the president, the chief financial officer, the vice
president of corporate finance, the treasurer or the controller of such Person,
or any other senior officer of such Person having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants, the chief financial officer, the treasurer or the controller of any
such Person, or any other senior officer of such Person involved principally in
the financial administration or controllership function of such Person and
having substantially the same authority and responsibility.

                  "Revolving Commitment," as to each Bank, has the meaning
specified in subsection 2.01(a).

                  "Revolving Loan" has the meaning specified in subsection
2.01(a).

                  "Revolving Note" means a promissory note substantially in the
form of Exhibit A.

                  "Revolving Termination Date" means the earlier to occur of:
(a) the date which is 364 calendar days after the Closing Date, as such date may
be extended in accordance with subsection 4.01(c); and (b) the date on which the
Revolving Commitments terminate in accordance with the provisions of this
Agreement.

                  "SEC" means the Securities and Exchange Commission, or any
successor thereto.

                  "Seely Avenue Campus" means the real property, taken either in
whole or any part thereof, consisting of approximately 50.5 acres of land and 10
buildings that total approximately 778,000 square feet and is located on both
the east and west sides of Seely Avenue, in San Jose, California. Specific
street addresses for the property are: 535, 545, 555, 575 River Oaks Parkway,
2655 Seely Avenue (which consists of five buildings and entitled land for a
sixth building), and 2670 Seely Avenue.

                  "Solvent" means, as to any Person at any time, that (i) the
fair value of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for purposes
of Section 101(31) of the Bankruptcy Code; (ii) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability



                                      12.
<PAGE>

to pay as such debts and liabilities mature; and (iii) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's property would constitute unreasonably
small capital.

                  "SpinCircuit" means SpinCircuit, Inc.

                  "Subsidiary" means, as to any Person, any corporation,
association, partnership, joint venture or other business entity of which more
than 50% of the voting stock or other equity interest is owned directly or
indirectly by such Person or one or more of the other Subsidiaries of such
Person or a combination thereof. Unless the context otherwise clearly requires,
references to a "Subsidiary" shall mean a Subsidiary of the Borrower.

                  "Swap Termination Value" means, in respect of any one or more
Rate Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Rate Contracts, (i) for any date on or after
the date such Rate Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (ii) for any
date prior to the date referenced in clause (i), the amount(s) determined as the
mark-to-market value(s) for such Rate Contracts, as determined by the Borrower
based upon one or more mid-market or other readily available quotations provided
by any recognized dealer in such Rate Contracts (which may include any Bank).

                  "Tality IPO" means the initial public offering of the
Borrower's design-services operation pursuant to terms and conditions
substantially consistent with those disclosed in the Borrower's Form S-1 filed
with the Securities Exchange Commission on July 17, 2000 (registration number
333-41552).

                  "Taxes" has the meaning set forth in Section 6.03.

                  "Term Loan" has the meaning specified in subsection 2.01(b).

                  "Term Loan Maturity Date" means September 29, 2003.

                  "Term Loan Commitment" has the meaning set forth in Section
2.01(b).

                  "Term Note" means a promissory note substantially in the form
of Exhibit B.

                  "Termination Event" means any of the following:

                           (i) with respect to a Pension Plan, a reportable
         event described in Section 4043 of ERISA and the regulations issued
         thereunder (other than a reportable event not subject to the provisions
         for 30-day notice to the PBGC under such regulations);

                           (ii) the withdrawal of the Borrower or an ERISA
         Affiliate from a Pension Plan during a plan year in which the
         withdrawing employer was a "substantial employer" as defined in Section
         4001(a)(2) or 4062(e) of ERISA;



                                      13.
<PAGE>
                           (iii) the taking of any actions (including the filing
         of a notice of intent to terminate) by the Borrower, an ERISA
         Affiliate, the PBGC, a Plan Administrator, or any other Person to
         terminate a Pension Plan or the treatment of a Plan amendment as a
         termination of a Pension Plan under Section 4041 of ERISA;

                           (iv) any other event or condition which might
         constitute grounds under Section 4042 of ERISA for the termination of,
         or the appointment of a trustee to administer, any Pension Plan; or

                           (v) the complete or partial withdrawal of the
         Borrower or an ERISA Affiliate from a Multiemployer Plan.

                  "UCC" means the Uniform Commercial Code of the jurisdiction
the law of which governs the Loan Document in which such term is used or the
attachment, perfection or priority of the Lien on any collateral.

                  "Unfunded Accrued Benefits" means the excess of a Pension
Plan's accrued benefits, as defined in Section 3(23) of ERISA, over the current
value of that Plan's assets, as defined in Section 3(26) of ERISA.

                  "United States" and "U.S." each means the United States of
America.

                  "Venture Funds" means, collectively, Telos Venture Partners,
L.P. and Telos Venture Partners II, L.P.

         SECTION 1.02 Accounting Principles.

                  (a) Accounting Terms. Unless otherwise defined or the
context otherwise requires, all accounting terms not expressly defined herein
shall be construed, and all accounting determinations and computations required
under the Loan Documents shall be made, in accordance with GAAP, consistently
applied.

                  (b) GAAP Changes. If GAAP shall have been modified after
the Closing Date and the application of such modified GAAP shall have a material
effect on any financial computations hereunder (including the computations
required for the purpose of determining compliance with the covenants set forth
in Section 9.02), then such computations shall be made and the financial
statements, certificates and reports due hereunder shall be prepared, and all
accounting terms not otherwise defined herein shall be construed, in accordance
with GAAP, as in effect prior to such modification, unless and until the
Majority Banks and the Borrower shall have agreed upon the terms of the
application of such modified GAAP which agreement shall not be unreasonably
withheld.

                  (c) "Fiscal Year" and "Fiscal Quarter". References herein to
"fiscal year" and "fiscal quarter" refer to such fiscal periods of the Borrower.

                  SECTION 1.03 Interpretation. In the Loan Documents, except to
the extent the context otherwise requires:



                                      14.
<PAGE>

                           (i) Any reference to an Article, a Section, a
         Schedule or an Exhibit is a reference to an article or section thereof,
         or a schedule or an exhibit thereto, respectively, and to a subsection
         or a clause is, unless otherwise stated, a reference to a subsection or
         a clause of the Section or subsection in which the reference appears.

                           (ii) The words "hereof," "herein," "hereto,"
         "hereunder" and the like mean and refer to this Agreement or any other
         Loan Document as a whole and not merely to the specific Article,
         Section, subsection, paragraph or clause in which the respective word
         appears.

                           (iii) The meaning of defined terms shall be equally
         applicable to both the singular and plural forms of the terms defined.

                           (iv) The words "including," "includes" and "include"
         shall be deemed to be followed by the words "without limitation."

                           (v) References to agreements and other contractual
         instruments shall be deemed to include all subsequent amendments and
         other modifications thereto, but only to the extent such amendments and
         other modifications are not prohibited by the terms of the Loan
         Documents.

                           (vi) References to statutes or regulations are to be
         construed as including all statutory and regulatory provisions
         consolidating, amending or replacing the statute or regulation referred
         to.

                           (vii) Any table of contents, captions and headings
         are for convenience of reference only and shall not affect the
         construction of this Agreement or any other Loan Document.

                           (viii) In the computation of periods of time from a
         specified date to a later specified date, the word "from" means "from
         and including"; the words "to" and "until" each mean "to but
         excluding"; and the word "through" means "to and including."

                           (ix) The use of a word of any gender shall include
         each of the masculine, feminine and neuter genders.

                           (x) This Agreement and the other Loan Documents are
         the result of negotiations among the Agent, the Borrower and the other
         parties, have been reviewed by counsel to the Agent, the Borrower and
         such other parties, and are the products of all parties. Accordingly,
         they shall not be construed against the Banks or the Agent merely
         because of the Agent's or Banks' involvement in their preparation.



                                      15.
<PAGE>
                                   ARTICLE II
                                    THE LOANS

         SECTION 2.01 Amounts and Terms of Commitments.

                  (a) The Revolving Credit. Each Bank severally agrees, on
the terms and conditions set forth herein, to make loans to the Borrower (each
such loan, a "Revolving Loan") from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date, in an aggregate
amount not to exceed at any time outstanding the amount set forth opposite such
Bank's name on Schedule 1 under the heading "Revolving Commitment" (such amount,
as the same may be reduced under Section 4.01 or reduced or increased as a
result of one or more assignments under Section 12.09, such Bank's "Revolving
Commitment"); provided, however, that, after giving effect to any Borrowing of
Revolving Loans, the aggregate principal amount of all outstanding Revolving
Loans shall not at any time exceed the combined Revolving Commitments; and
provided further that no Borrowings of Revolving Loans shall be permitted
hereunder at any time that any portion of the Multi-Year Commitments remains
unused. Within the limits of each Bank's Revolving Commitment, and subject to
the other terms and conditions hereof, the Borrower may borrow under this
subsection 2.01(a), prepay under Section 4.03 and reborrow under this subsection
2.01(a).

                  (b) The Term Loans. Each Bank severally agrees, on the
terms and conditions set forth herein, to make a single term loan (each a "Term
Loan" and, collectively, the "Term Loans") to the Borrower on the Revolving
Termination Date in a principal amount up to but not exceeding such Bank's
Revolving Commitment (the "Term Loan Commitment"); provided, however, that no
Borrowings of Term Loans shall be permitted hereunder at any time that any
portion of the Multi-Year Commitments remain unused. No Term Loans shall be made
after the Revolving Termination Date, and any portion of the Revolving
Commitments not borrowed as Term Loans on the Revolving Termination Date may not
be borrowed thereafter. Any amount of the Term Loans repaid may not be
reborrowed.

         SECTION 2.02 Borrowing Procedure.

                  (a) Notice to the Agent. Each Borrowing shall be made on a
Business Day upon written or telephonic notice (in the latter case to be
confirmed promptly in writing) from the Borrower to the Agent, which notice
shall be received by the Agent not later than 2:00 P.M. (New York City time) on
the Required Notice Date. Each such notice, except as provided in Section 5.01
and 5.04, shall be irrevocable and binding on the Borrower, shall be in
substantially the form of Exhibit C (a "Notice of Borrowing") and shall specify
whether the Borrowing consists of Base Rate Loans or Eurodollar Rate Loans, and
whether such Borrowing shall be of Revolving Loans or Term Loans, and shall
contain the other information required thereby.

                  (b) Notice to the Banks. The Agent shall give each Bank prompt
notice by telephone (confirmed promptly in writing) or by facsimile of each
Borrowing, specifying the information contained in the Borrower's Notice and
such Bank's Pro Rata Share of the Borrowing. On the date of each Borrowing, each
Bank shall make available such Bank's Pro Rata Share of such Borrowing, in same
day or immediately available funds, to the Agent for the Agent's Account, not
later than 3:00 P.M. (New York City time). Upon fulfillment of the



                                      16.
<PAGE>

applicable conditions set forth in Article VII and after receipt by the Agent of
any such funds, and unless other payment instructions are provided by the
Borrower, the Agent shall make such funds available to the Borrower by crediting
the Borrower's Account with same day or immediately available funds on such
Borrowing date.

                  SECTION 2.03 Non-Receipt of Funds. Unless the Agent shall have
received notice from a Bank prior to the date of any Borrowing that such Bank
shall not make available to the Agent such Bank's Pro Rata Share of such
Borrowing, the Agent may assume that such Bank has made such portion available
to the Agent on the date of such Borrowing in accordance with Section 2.02(b)
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent such Bank
shall not have so made such Pro Rata Share available to the Agent, and the Agent
in such circumstances shall have made available to the Borrower such amount,
such Bank agrees to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, at the Federal Funds Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Bank's Loan as
part of such Borrowing for purposes of this Agreement. If such amount is not
made available by such Bank to the Agent on the Business Day following the
Borrowing date, the Agent shall notify the Borrower of such failure to fund and,
upon demand by the Agent, the Borrower shall pay such amount to the Agent for
the Agent's Account, together with interest thereon for each day elapsed since
the date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.

                  SECTION 2.04 Lending Offices. The Loans made by each Bank may
be made from and maintained at such offices of such Bank (each a "Lending
Office") as such Bank may from time to time designate (whether or not such
office is specified on Schedule 2). A Bank shall not elect a Lending Office
that, at the time of making such election, increases the amounts which would
have been payable by the Borrower to such Bank under this Agreement in the
absence of such election. With respect to Eurodollar Rate Loans made from and
maintained at any Bank's non-U.S. offices, the obligation of the Borrower to
repay such Eurodollar Rate Loans shall nevertheless be to such Bank and shall,
for all purposes of this Agreement (including for purposes of the definition of
the term "Majority Banks") be deemed made or maintained by it, for the account
of any such office.

                  SECTION 2.05 Evidence of Indebtedness. The Loans made by each
Bank shall be evidenced by one or more loan accounts maintained by such Bank in
accordance with its usual practices. The loan accounts maintained by the Agent
and each such Bank shall be rebuttable presumptive evidence of the amount of the
Loans made by such Bank to the Borrower and the interest and payments thereon.
Any failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Loans. At the request of any Bank, as additional
evidence of the Indebtedness of the Borrower to such Bank resulting from the
Loans made by such Bank, the Borrower shall execute and deliver for account of
such Bank pursuant to Article VII Notes setting forth such Bank's Revolving
Commitment as the maximum principal amount thereof and, if the Term Loans are
borrowed on the Revolving Termination Date under subsection 2.01(b), Notes
setting forth the principal amount of the Term Loans so made by such Bank.



                                      17.
<PAGE>
                  SECTION 2.06 Minimum Amounts. Any Borrowing, conversion,
continuation, Revolving Commitment reduction or prepayment of Loans hereunder
shall be in an aggregate amount determined as follows (each such specified
amount a "Minimum Amount"): (i) any Borrowing or partial prepayment of Base Rate
Loans shall be in the amount of $250,000 or a greater amount which is an
integral multiple of $50,000; (ii) any Borrowing, continuation or partial
prepayment of, or conversion into, Eurodollar Rate Loans shall be in the amount
of $2,000,000 or a greater amount which is an integral multiple of $100,000; and
(iii) any partial Revolving Commitment reduction under Section 4.01(a) shall be
in the amount of $5,000,000 or a greater amount which is an integral multiple of
$5,000,000.

                  SECTION 2.07 Required Notice. Any Notice hereunder shall be
given not later than the date determined as follows (each such specified date a
"Required Notice Date"): (i) any Notice with respect to a Borrowing of, or
conversion into, Base Rate Loans shall be given not later than the date of the
proposed borrowing or conversion; (ii) any Notice with respect to any Borrowing
or continuation of, or conversion into, Eurodollar Rate Loans shall be given at
least three Eurodollar Business Days prior to the date of the proposed
Borrowing, conversion or continuation; (iii) any Notice with respect to any
prepayment under Section 4.03(a) shall be given at least one Business Day prior
to the date of the proposed prepayment, in the case of Base Rate Loans, and at
least three Eurodollar Business Days prior to the date of the proposed
prepayment, in the case of Eurodollar Rate Loans; and (iv) any Notice with
respect to any Revolving Commitment reduction or termination under Section
4.01(a) shall be given at least five Business Days prior to the proposed
reduction or termination date.

                                   ARTICLE III
                  INTEREST AND FEES; CONVERSION OR CONTINUATION

         SECTION 3.01 Interest.

                  (a) Interest Rate. Subject to Section 3.02, the Borrower
shall pay interest on the unpaid principal amount of each Loan from the date of
such Loan until such principal amount shall be paid in full, at the following
rates:

                           (i) during such periods as such Loan is a Base Rate
         Loan, at a rate per annum equal at all times to the Base Rate plus the
         Applicable Margin; and

                           (ii) during such periods as such Loan is a Eurodollar
         Rate Loan, at a rate per annum equal at all times during each Interest
         Period for such Eurodollar Rate Loan to the Eurodollar Rate for such
         Interest Period plus the Applicable Margin.

                  (b) Interest Periods. The initial and each subsequent
Interest Period for Eurodollar Rate Loans shall be a period of one, two, three
or six months. The determination of Interest Periods shall be subject to the
following provisions:

                                    (A) in the case of immediately successive
                  Interest Periods, each successive Interest Period shall
                  commence on the day on which the next preceding Interest
                  Period expires;



                                      18.
<PAGE>

                                    (B) if any Interest Period pertaining to an
                  Eurodollar Rate Loan would otherwise end on a day which is not
                  a Business Day, that Interest Period shall be extended to the
                  next succeeding Business Day unless the result of such
                  extension would be to carry such Interest Period into another
                  calendar month, in which event such Interest Period shall end
                  on the immediately preceding Business Day;

                                    (C) no Interest Period shall extend beyond
                  (1) the Revolving Termination Date with respect to any
                  Revolving Loan, and (2) the Term Loan Maturity Date with
                  respect to any Term Loan;

                                    (D) any Interest Period pertaining to a
                  Eurodollar Rate Loan that begins on the last Business Day of a
                  calendar month (or on a day for which there is no numerically
                  corresponding day in the ending calendar month of such
                  Interest Period) shall end on the last Business Day of the
                  ending calendar month of such Interest Period;

                                    (E) there shall be no more than ten Interest
                  Periods in effect at any one time.

                  (c) Interest Payment Dates. Subject to Section 3.02, interest
on the Loans shall be payable in arrears at the following times:

                           (i) interest on each Base Rate Loan shall be payable
         quarterly in arrears on the last Business Day in each calendar quarter,
         on the date of any prepayment or conversion of any such Base Rate Loan,
         and at maturity;

                           (ii) interest on each Eurodollar Rate Loan shall be
         payable on the last day of each Interest Period for such Eurodollar
         Rate Loan, provided that (a) in the case of any such Interest Period
         which is greater than three months, interest on such Eurodollar Rate
         Loan shall be payable on each date that is three months, or any
         integral multiple thereof, after the beginning of such Interest Period,
         and on the last day of such Interest Period, and (b) if any prepayment,
         conversion, or continuation is effected other than on the last day of
         such Interest Period, accrued interest on such Eurodollar Rate Loan
         shall be due on such prepayment, conversion or continuation date as to
         the principal amount of such Eurodollar Rate Loan prepaid, converted or
         continued plus all amounts required under Section 5.02.

                  (d) Notice to the Borrower and the Banks. Each
determination by the Agent hereunder of a rate of interest and of any change
therein, including any changes in (i) the Applicable Margin, (ii) the Base Rate
during any periods in which Base Rate Loans shall be outstanding, and (iii) the
Eurodollar Reserve Percentage (if any) during any periods in which Eurodollar
Rate Loans shall be outstanding, in the absence of manifest error, shall be
conclusive and binding on the parties hereto and shall be promptly notified by
the Agent to the Borrower and the Banks. Such notice shall set forth in
reasonable detail the basis for any such determination or change. The failure of
the Agent to give any such notice specified in this subsection shall not affect
the Borrower's obligation to pay such interest or fees.




                                      19.
<PAGE>

                  SECTION 3.02 Default Rate of Interest. Notwithstanding Section
3.01, in the event that any amount of principal of or interest on any Loan, or
any other amount payable hereunder or under the Loan Documents, is not paid in
full when due (whether at stated maturity, by acceleration or otherwise), the
Borrower shall pay interest on such unpaid principal, interest or other amount,
from the date such amount becomes due until the date such amount is paid in
full, and after as well as before any entry of judgment to the extent permitted
by law, payable on demand, at a rate per annum equal at all times to the Base
Rate plus 2% plus the Applicable Margin in respect of Base Rate Loans.

         SECTION 3.03 Fees.

                  (a) Revolving Commitment Fees. The Borrower agrees to pay
to the Agent for the account of each Bank a commitment fee on the average daily
unused portion of such Bank's Revolving Commitment as in effect from time to
time from the Closing Date until the Revolving Termination Date at a rate per
annum equal to the Applicable Fee Amount, payable quarterly in arrears on the
last Business Day of each calendar quarter (commencing on the first such date
after the Closing Date), and on the earlier of the date such Revolving
Commitment is terminated hereunder and the Revolving Termination Date.

                  (b) Utilization Fees. The Company shall pay to the Agent for
the account of each Bank a utilization fee on the actual daily utilized portion
of such Bank's Revolving Commitment or Term Loan Commitment, computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter
based upon the actual daily utilization for that quarter, as calculated by the
Agent, at a rate per annum equal to the Applicable Fee Amount for each day
during such quarter on which utilization of the combined Revolving Commitments
or Term Loan Commitment under this Agreement plus the utilization of the
combined "Revolving Commitments" under and as defined in the Multi-Year Credit
Agreement equals or exceeds 33% of the combined Revolving Commitments or Term
Loan Commitments under this Agreement plus the combined "Revolving Commitments"
under the Multi-Year Credit Agreement at the close of the Agent's business on
such day (or the close of the Agent's business on the next preceding Business
Day in the case of a Saturday or Sunday or other day not a Business Day). For
purposes of calculating utilization under this Agreement and under the
Multi-Year Credit Agreement, the Revolving Commitments and Term Loan Commitment
under this Agreement and the "Revolving Commitments" under and as defined in the
Multi-Year Agreement, respectively, shall be deemed utilized to the extent of
the aggregate principal amount of the Loans then outstanding hereunder and
thereunder. Such utilization fee shall accrue from and after the Closing Date
and shall be due and payable quarterly in arrears on the last Business Day of
each calendar quarter commencing on the first such date following the Closing
Date; provided that, in connection with any termination of Revolving Commitments
under Section 4.01 of this Agreement, the accrued utilization fee calculated for
the period ending on such date shall also be paid on the date of such
termination; provided further that the Applicable Fee Amount shall be payable
only in respect of the amount of the Revolving Commitments or Term Loan
Commitment utilized under this Agreement, and not on the portion of the
"Revolving Commitments" utilized under the Multi-Year Credit Agreement. The
utilization fees provided in this subsection shall accrue at all times after the
above-mentioned Closing Date.



                                      20.
<PAGE>

                  (c) Agency Fee. The Borrower agrees to pay to the Agent for
its own account such fee for administrative agency services rendered by it as
specified in the Fee Letter.

                  (d) Fees Nonrefundable. All fees payable under this Section
3.03 shall be nonrefundable.

                  SECTION 3.04 Computations. All computations of interest based
upon the Base Rate (including interest accruing based upon the Federal Funds
Rate) shall be made on the basis of a year of 365 or 366 days, as the case may
be, for the actual number of days occurring in the period for which such
interest is payable. All computations of Revolving Commitment fee, the
utilization fee and of interest based upon the Eurodollar Rate shall be made on
the basis of a year of 360 days for the actual number of days occurring in the
period for which such Revolving Commitment fee, utilization fee or interest is
payable, which results in more interest being paid than if computed on the basis
of a 365-day year, and in accordance with the pricing grid set forth in Annex 1.

         SECTION 3.05 Conversion or Continuation.

                  (a) Election. The Borrower may elect (i) to convert all or
any part of (A) outstanding Base Rate Loans into Eurodollar Rate Loans, or (B)
outstanding Eurodollar Rate Loans into Base Rate Loans; or (ii) to continue all
or any part of a Loan with one type of interest rate as such; provided, however,
that if the aggregate amount of Eurodollar Rate Loans in respect of any
Borrowing shall have been reduced, by payment, prepayment, or conversion of part
thereof to be less than $2,000,000, such Eurodollar Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Borrower to continue such Loans as, and convert such Loans into,
Eurodollar Rate Loans, as the case may be, shall terminate. The continued or
converted Base Rate and Eurodollar Rate Loans shall be allocated to the Banks
ratably in accordance with their Pro Rata Shares. Any conversion or continuation
of Eurodollar Rate Loans shall be made on the last day of the current Interest
Period for such Eurodollar Rate Loans. No outstanding Loan may be converted into
or continued as a Eurodollar Rate Loan if any Event of Default has occurred and
is continuing.

                  (b) Automatic Conversion. On the last day of any Interest
Period for any Eurodollar Rate Loans, such Eurodollar Rate Loans shall, if not
repaid, automatically convert into Base Rate Loans unless the Borrower shall
have made a timely election to continue such Eurodollar Rate Loans as such for
an additional Interest Period or to convert such Eurodollar Rate Loans, in each
case as provided in subsection (a).

                  (c) Notice to the Agent. The conversion or continuation of
any Loans contemplated by subsection (a) shall be made upon written or
telephonic notice (in the latter case to be confirmed promptly in writing) from
the Borrower to the Agent, which notice shall be received by the Agent not later
than 11:00 A.M. (California time) on the Required Notice Date. Each such notice
(a "Notice of Conversion or Continuation") shall, except as provided in Sections
5.01 and 5.04, be irrevocable and binding on the Borrower, shall refer to this
Agreement and shall specify: (i) the proposed date of the conversion or
continuation, which shall be a Business Day; (ii) the outstanding Loans (or
parts thereof) to be converted into or continued as Base Rate or Eurodollar Rate
Loans; (iii) the aggregate amount of the Loans which are the



                                      21.
<PAGE>

subject of such continuation or conversion, which shall be in a Minimum Amount;
(iv) if the conversion or continuation consists of any Eurodollar Rate Loans,
the duration of the Interest Period with respect thereto; and (v) that no Event
of Default exists hereunder.

                  (d) Notice to the Banks. The Agent shall give each Bank
prompt notice by telephone (confirmed promptly in writing) or by facsimile of
(i) the proposed conversion or continuation of any Loans, specifying the
information contained in the Borrower's Notice and such Bank's Pro Rata Share
thereof or (ii), if timely notice was not received from the Borrower, the
details of any automatic conversion under subsection (b).

                  SECTION 3.06 Replacement of Reference Banks. If the Loans of
the Eurodollar Reference Bank are prepaid in full or its Revolving Commitment
shall terminate (otherwise than on termination of all the Revolving
Commitments), or if the Eurodollar Reference Bank transfers its Loans in full to
an unaffiliated Person or otherwise shall cease to be a Bank hereunder, the
Agent shall, in consultation with the Borrower and with the approval of the
Majority Banks, appoint another similarly situated Bank to replace such Bank as
Eurodollar Reference Bank.

                  SECTION 3.07 Highest Lawful Rate. Anything herein to the
contrary notwithstanding, if during any period for which interest is computed
hereunder, the applicable interest rate, together with all fees, charges and
other payments which are treated as interest under applicable law, as provided
for herein or in any other Loan Document, would exceed the maximum rate of
interest which may be charged, contracted for, reserved, received or collected
by any Bank in connection with this Agreement under applicable law (the "Maximum
Rate"), the Borrower shall not be obligated to pay, and such Bank shall not be
entitled to charge, collect, receive, reserve or take, interest in excess of the
Maximum Rate, and during any such period the interest payable hereunder to such
Bank shall be limited to the Maximum Rate.

                                   ARTICLE IV
                       REDUCTION OF REVOLVING COMMITMENTS;
                              REPAYMENT; PREPAYMENT

         SECTION 4.01 Reduction or Termination of the Revolving Commitments.

                  (a) Optional Reduction or Termination. The Borrower may,
upon prior written notice to the Agent delivered not later than the Required
Notice Date, terminate in whole or reduce ratably in part, as of the date
specified by the Borrower in such notice, any then unused portion of the
Revolving Commitments, provided that each partial reduction shall be in a
Minimum Amount.

                  (b) Mandatory Termination. The Revolving Commitments shall
terminate on the Revolving Termination Date (including such date, if any, that
the Term Loans are made pursuant to subsection 2.01(b), it being understood that
once the Term Loans are made, if at all, the Revolving Commitments of all of the
Banks shall thereupon terminate).

                  (c) Extension of Revolving Termination Date. Notwithstanding
the preceding subsection 4.01(b), the Borrower may give written notice to the
Banks (through the Agent) no more than 60 days and no less than 30 days prior to
the Revolving Termination Date then in effect that it requests that the Agent
and the Banks extend the Revolving Termination Date for an



                                      22.
<PAGE>

additional 364-day period. Each Bank and the Agent may grant or reject such
request in its sole discretion, and the Borrower acknowledges that there is no
commitment or understanding that the Revolving Termination Date will be
extended. If such request is granted by the Agent and one or more of the Banks,
the Revolving Termination Date then in effect shall be so extended in respect of
the Revolving Commitment of each consenting Bank (but not in respect of the
Revolving Commitments of any non-consenting Banks), subject to such changed
terms and payment of such fee (if any) as shall have been agreed upon by the
Borrower, such consenting Banks and the Agent. Any Bank that does not consent in
writing to an extension request delivered by the Borrower under this subsection
4.01(c) by the date which is 10 days prior to the Revolving Termination Date
then in effect shall be deemed to have rejected such extension request in
respect of its Revolving Commitment. The Revolving Commitment of each
non-consenting Bank under this subsection 4.01(c) shall terminate on the
Revolving Termination Date then in effect, subject to such Bank's obligations
under subsection 2.01(b) on such date (if the Term Loans are made on such date).
The parties agree and acknowledge that effective immediately upon any extension
of the Revolving Termination Date pursuant to this subsection 4.01(c), the
obligation to make Loans hereunder of any Bank that has not consented to such
extension shall be terminated, and such Bank shall immediately thereupon
relinquish its rights and be released from its obligations under this Agreement;
provided, however, that such Bank shall not be deemed to have relinquished any
of such rights or be released from any of such obligations to the extent arising
or accruing prior to such time. In no event shall the Revolving Termination Date
be extended beyond the Term Loan Maturity Date.

                  (d) [Intentionally Omitted.]

                  (e) Notice. The Agent shall give each Bank prompt notice
of any termination, reduction or extension of its Revolving Commitments under
this Section 4.01.

                  (f) Adjustment of Revolving Commitment Fee and Utilization
Fee; No Reinstatement. From the effective date of any reduction or termination
prior to the Revolving Termination Date, the Revolving Commitment fee payable
under Section 3.03(a) and the utilization fee payable under Section 3.03(b)
shall be computed on the basis of the Revolving Commitments as so reduced or
terminated. Once reduced or terminated, the Revolving Commitments may not be
increased or otherwise reinstated.

         SECTION 4.02 Repayment of Loans.

                  (a) Revolving Loans. The Borrower shall repay to the Banks in
full on the Revolving Termination Date the aggregate principal amount of the
Revolving Loans outstanding on such date.

                  (b) Term Loans. The Borrower shall repay to the Banks the
aggregate principal amount of the Term Loans on the Term Loan Maturity Date.

         SECTION 4.03 Prepayments.

                  (a) Optional Prepayments. Subject to Section 5.02, the
Borrower may, upon prior written notice to the Agent not later than the Required
Notice Date, prepay the outstanding



                                      23.
<PAGE>

amount of the Loans in whole or ratably in part, without premium or penalty.
Partial prepayments shall be in Minimum Amounts.

                  (b) [Intentionally Omitted.]

                  (c) Notice; Application. The notice given of any prepayment (a
"Notice of Prepayment") shall specify the date and amount of the prepayment and
whether the prepayment is of Base Rate or Eurodollar Rate Loans or a combination
thereof, and if of a combination thereof the amount of the prepayment allocable
to each. Such Notice of Prepayment shall also specify whether the prepayment is
of Revolving Loans or Term Loans. Upon receipt of the Notice of Prepayment the
Agent shall promptly notify each Bank thereof. If the Notice of Prepayment is
given, the Borrower shall make such prepayment and the prepayment amount
specified in such Notice shall be due and payable on the date specified therein,
with accrued interest to such date on the amount prepaid.

                                    ARTICLE V
                         YIELD PROTECTION AND ILLEGALITY

                  SECTION 5.01 Inability to Determine Rates. If the Agent shall
determine that adequate and reasonable means do not exist to ascertain the
Eurodollar Rate, or the Majority Banks shall determine that the Eurodollar Rate
does not accurately reflect the cost to the Banks of making or maintaining
Eurodollar Rate Loans, then the Agent shall give telephonic notice (promptly
confirmed in writing) to the Borrower and each Bank of such determination. Such
notice shall specify the basis for such determination and shall, in the absence
of manifest error, be conclusive and binding for all purposes. Thereafter, the
obligation of the Banks to make or maintain Eurodollar Rate Loans hereunder
shall be suspended until the Agent (upon the instructions of the Majority Banks)
revokes such notice. Upon receipt of such notice, the Borrower may revoke any
Notice then submitted by it. If the Borrower does not revoke such Notice, the
Banks shall make, convert or continue Loans, as proposed by the Borrower, in the
amount specified in the Notice submitted by the Borrower, but such Loans shall
be made, converted or continued as Base Rate Loans instead of Eurodollar Rate
Loans, as the case may be.

                  SECTION 5.02 Funding Losses. In addition to such amounts as
are required to be paid by the Borrower pursuant to Section 5.03, the Borrower
shall compensate each Bank, promptly upon receipt of such Bank's written request
made to the Borrower (with a copy to the Agent), for all losses, costs and
expenses (including any loss or expense incurred by such Bank in obtaining,
liquidating or re-employing deposits or other funds to fund or maintain its
Eurodollar Rate Loans), if any, which such Bank sustains: (I) if the Borrower
repays, converts or prepays any Eurodollar Rate Loan on a date other than the
last day of an Interest Period for such Eurodollar Rate Loan (whether as a
result of an optional prepayment, mandatory prepayment, a payment as a result of
acceleration or otherwise); (II) if the Borrower fails to borrow a Eurodollar
Rate Loan after giving its Notice (other than as a result of the operation of
Section 5.01 or 5.04); (III) if the Borrower fails to convert into or continue a
Eurodollar Rate Loan after giving its Notice (other than as a result of the
operation of Section 5.01 or 5.04); or (IV) if the Borrower fails to prepay a
Eurodollar Rate Loan after giving its Notice. Any such request for compensation
shall set forth the basis for the calculation of requested compensation and
shall, in the absence of manifest error, be conclusive and binding for all
purposes.



                                      24.
<PAGE>

         SECTION 5.03 Regulatory Changes.

                  (a) Increased Costs. If after the date hereof, the
adoption of, or any change in, any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any Governmental Authority charged with the interpretation or administration
thereof (a "Regulatory Change"), or compliance by any Bank (or its Lending
Office) with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority shall impose, modify or deem
applicable any reserve, special deposit or similar requirement (including any
such requirement imposed by the FRB, but excluding with respect to any
Eurodollar Rate Loan any such requirement included in the calculation of the
Eurodollar Rate) against assets of, deposits with or for the account of, or
credit extended by, any Bank's Lending Office or shall impose on any Bank (or
its Lending Office) or on the United States market for the interbank eurodollar
market any other condition affecting its Eurodollar Rate Loans or its obligation
to make Eurodollar Rate Loans, and the result of any of the foregoing is to
increase the cost to such Bank (or its Lending Office) of making or maintaining
any Eurodollar Rate Loan hereunder, or to reduce the amount of any sum received
or receivable by such Bank (or its Lending Office) under this Agreement with
respect thereto, by an amount deemed by such Bank, in good faith and on a
non-discriminatory basis, to be material, then from time to time, within 30 days
after written demand by such Bank (with a copy to the Agent), the Borrower shall
pay to such Bank such additional amounts as shall compensate such Bank for such
increased cost or reduction in respect of its Eurodollar Rate Loans hereunder.

                  (b) Capital Requirements. If any Bank shall have determined in
good faith that any Regulatory Change regarding capital adequacy, or compliance
by such Bank (or any corporation controlling such Bank) with any request,
guideline or directive regarding capital adequacy (whether or not having the
force of law) of any Governmental Authority, has or shall have the effect of
reducing the rate of return on such Bank's or such corporation's capital as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank or such corporation would have achieved but for such adoption, change
or compliance (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy), by an amount deemed, in good faith
and on a non-discriminatory basis, by such Bank to be material, then from time
to time, within 30 days after written demand by such Bank (with a copy to the
Agent) in reasonable detail describing such reduction, the Borrower shall pay to
such Bank such additional amounts as shall compensate such Bank for such
reduction in respect of its obligations hereunder.

                  (c) Requests. Any such request for compensation by a Bank
under this Section 5.03 shall set forth the basis of calculation thereof and
shall, in the absence of manifest error, be conclusive and binding for all
purposes. In determining the amount of such compensation, such Bank may use any
reasonable averaging and attribution methods.

                  SECTION 5.04 Illegality. If any Bank shall determine that it
has become unlawful, as a result of any Regulatory Change, for such Bank to
make, convert into or maintain Eurodollar Rate Loans as contemplated by this
Agreement, such Bank shall promptly give notice of such determination to the
Borrower (through the Agent), and (I) the obligation of such Bank to make or
convert into Eurodollar Rate Loans, as the case may be, shall be suspended until
such Bank gives notice that the circumstances causing such suspension no longer
exist; and (II) each



                                      25.
<PAGE>

of such Bank's outstanding Eurodollar Rate Loans, as the case may be, shall, if
requested by such Bank, be converted into a Base Rate Loan not later than upon
expiration of the Interest Period related to such Eurodollar Rate Loan, or, if
earlier, on such date as may be required by the applicable Regulatory Change, as
shall be specified in such request. Any such determination shall, in the absence
of manifest error, be conclusive and binding for all purposes.

                  SECTION 5.05 Funding Assumptions. Solely for purposes of
calculating amounts payable by the Borrower to the Banks under this Article V,
each Eurodollar Rate Loan made by a Bank (and any related reserve, special
deposit or similar requirement) shall be conclusively deemed to have been funded
at the Interbank Rate used in determining the Eurodollar Rate for such
Eurodollar Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Eurodollar Rate Loan is in fact so funded.

                  SECTION 5.06 Obligation to Mitigate. Each Bank agrees that as
promptly as practicable after it becomes aware of the occurrence of an event
that would entitle it to give notice pursuant to Section 5.03(a), 5.03(b) or
5.04, and in any event if so requested by the Borrower, each Bank shall use
reasonable efforts to make, fund or maintain its affected Eurodollar Rate Loans
through another Lending Office if as a result thereof the increased costs would
be avoided or materially reduced or the illegality would thereby cease to exist;
provided, however, that such Bank shall not be obligated to select an
alternative Lending Office if such Bank determines that (a) as a result of such
selection such Bank would be in violation of any applicable law, regulation,
treaty, or guideline, or would incur additional costs or expenses or (b) such
selection would be inadvisable for regulatory reasons or inconsistent with the
interests of such Bank.

                  SECTION 5.07 Substitution of Banks. Upon the receipt by the
Borrower from any Bank (an "Affected Bank") of a request for compensation under
Section 5.03, a notice under Section 5.04 or a request for payment under Section
6.03, or upon notice to the Agent from any Bank that it shall not consent to a
request by the Borrower for an extension of the Revolving Termination Date
pursuant to subsection 4.01(c), the Borrower may (i) request one more of the
other Banks to acquire and assume all or part of such Affected Bank's Loans and
Revolving Commitment; or (ii) designate an Eligible Assignee satisfactory to the
Borrower to acquire and assume all or part of such Affected Bank's Loans and
Revolving Commitment (in each case, a "Replacement Bank"). Any such designation
of a Replacement Bank under clause (ii) shall be subject to the prior written
consent of the Agent (which consent shall not be unreasonably withheld). In
connection with any such assumption (a) the Replacement Bank shall pay to the
Affected Bank in immediately available funds on the date of the assignment the
principal amount of the Loans made by the Affected Bank hereunder which are
being acquired by the Replacement Bank, and (b) the Borrower shall pay to the
Affected Bank in immediately available funds on the date of the assignment the
interest accrued to the date of the assignment on the Loans which are being
acquired by the Replacement Bank and all other amounts then accrued for the
Affected Bank's account or owed to it hereunder with respect to such Loans,
including any amounts owing under Section 5.02.



                                      26.
<PAGE>

                                   ARTICLE VI
                                    PAYMENTS

                  SECTION 6.01 Pro Rata Treatment. Except as otherwise provided
in this Agreement, each Borrowing hereunder, each Revolving Commitment
reduction, each payment (including each prepayment) by the Borrower on account
of the principal of and interest on the Loans and on account of any Revolving
Commitment fee or utilization fee, and each conversion or continuation of Loans,
shall be made ratably in accordance with the respective Pro Rata Shares of the
Banks.

         SECTION 6.02 Payments.

                  (a) Payments. The Borrower shall make each payment under
the Loan Documents, unconditionally in full without set-off, counterclaim or
other defense, not later than 2:00 P.M. (California time) on the day when due to
the Agent in Dollars and in same day or immediately available funds, to the
Agent's Account. The Agent shall promptly thereafter distribute like funds
relating to the payment of principal or interest, Revolving Commitment fee,
utilization fee or any other amounts payable to the Banks, ratably (except as a
result of the operation of Article V) to the Banks in accordance with their Pro
Rata Shares.

                  (b) Application. (i) Unless the Agent shall receive a
timely election by the Borrower with respect to the application of any principal
payments, each payment of principal by the Borrower shall be applied (a) first,
to the Base Rate Loans then outstanding, and (b) second, to the Eurodollar Rate
Loans.

                  (c) Extension. Whenever any payment hereunder shall be
stated to be due, or whenever any Interest Payment Date or any other date
specified hereunder would otherwise occur, on a day other than a Business Day,
then, except as otherwise provided herein, such payment shall be made, and such
Interest Payment Date or other date shall occur, on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest, Revolving Commitment fee or utilization fee
hereunder.

         SECTION 6.03 Taxes.

                  (a) No Reduction of Payments. The Borrower shall pay all
amounts of principal, interest, fees and other amounts due under the Loan
Documents free and clear of, and without reduction for or on account of, any
present and future taxes, levies, imposts, duties, fees, assessments, charges,
deductions or withholdings and all liabilities with respect thereto excluding,
in the case of each Bank and the Agent, income and franchise taxes imposed on it
by the jurisdiction under the laws of which such Bank or the Agent is organized
or in which its principal executive offices may be located or any political
subdivision or taxing authority thereof or therein or by the jurisdiction of
such Bank's Lending Office and any political subdivision or taxing authority
thereof or therein (all such nonexcluded taxes, levies, imposts, duties, fees,
assessments, charges, deductions, withholdings and liabilities being hereinafter
referred to as "Taxes"). If any Taxes shall be required by law to be deducted or
withheld from any payment, the Borrower shall increase the amount paid so that
the respective Bank or the Agent receives when due (and is entitled to retain),
after deduction or withholding for or on account of such



                                      27.
<PAGE>

Taxes (including deductions or withholdings applicable to additional sums
payable under this Section 6.03), the full amount of the payment provided for in
the Loan Documents.

                  (b) Deduction or Withholding; Tax Receipts. If the
Borrower makes any payment hereunder in respect of which it is required by law
to make any deduction or withholding, it shall pay the full amount to be
deducted or withheld to the relevant taxation or other authority within the time
allowed for such payment under applicable law and promptly thereafter shall
furnish to the Agent (for itself or for redelivery to the Bank to or for the
account of which such payment was made) an original or certified copy of a
receipt evidencing payment thereof, together with such other information and
documents as the Agent or any Bank (through the Agent) may reasonably request.

                  (c) Indemnity. If any Bank or the Agent is required by law to
make any payment on account of Taxes, or any liability in respect of any Tax is
imposed, levied or assessed against any Bank or the Agent, the Borrower shall
indemnify the Agent and the Banks for and against such payment or liability,
together with any incremental taxes, interest or penalties, and all costs and
expenses, payable or incurred in connection therewith, including Taxes imposed
on amounts payable under this Section 6.03. A certificate of the Agent or any
Bank as to the amount of any such payment shall, in the absence of manifest
error, be conclusive and binding for all PURPOSES. If any Bank shall obtain a
credit with respect to all or part of any tax paid or indemnified by the
Borrower pursuant to this Section 6.03, then, to the extent such items have not
previously been taken into account in computing the amount of any payment
pursuant to this sentence or the amount of indemnification payable under this
Section 6.03, such Bank shall promptly pay to the Borrower an amount equal to
the amount of such credit, reduced by the amount of any prior payments by such
Bank to, or for the benefit of, the Borrower arising from the same claim. All
computations required hereunder shall be made by such Bank, acting reasonably
and in good faith and the results of such computations shall be delivered to the
Borrower. At the request and expense of the Borrower the accuracy of such
computations shall be verified by such Bank's independent accounts.

                  (d) Forms W-8BEN and W-8ECI. Each Bank that is incorporated
under the laws of any jurisdiction outside the United States agrees to deliver
to the Agent and the Borrower on or prior to the Closing Date, and in a timely
fashion thereafter, Internal Revenue Service Form W-8BEN, Form W-8ECI or such
other documents and forms of the I.R.S., duly executed and completed by such
Bank, as are required under United States law to establish such Bank's status
for United States withholding tax purposes.

                  (e) Mitigation. Each Bank agrees that as promptly as
practicable after it becomes aware of the occurrence of an event that would
cause the Borrower to make any payment in respect of Taxes to such Bank or a
payment in indemnification with respect to any Taxes, and in any event if so
requested by the Borrower following such occurrence, each Bank shall use
reasonable efforts to make, fund or maintain its affected Loan (or relevant part
thereof) through another Lending Office if as a result thereof the additional
amounts so payable by the Borrower would be avoided or materially reduced;
provided, however, that such Bank shall not be obligated to select an
alternative Lending Office if such Bank determines that (a) as a result of such
selection such Bank would be in violation of any applicable law, regulation,
treaty, or



                                      28.
<PAGE>

guideline, or would incur additional costs or expenses or (b) such selection
would be inadvisable for regulatory reasons or inconsistent with the interests
of such Bank.

                  SECTION 6.04 Non-Receipt of Funds. Unless the Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to any of the Banks hereunder that the Borrower shall not make such payment in
full, the Agent may assume that the Borrower has made such payment in full to
the Agent on such date and the Agent may, in reliance upon such assumption,
cause to be distributed to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Borrower shall not have so
made such payment in full to the Agent, each Bank shall repay to the Agent
forthwith on demand such amount distributed to such Bank together with interest
thereon, for each day from the date such amount is distributed to such Bank
until the date such Bank repays such amount to the Agent, at the Federal Funds
Rate.

                  SECTION 6.05 Sharing of Payments. If any Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Loans made by it (other than pursuant
to a provision hereof providing for non-pro rata treatment) in excess of its Pro
Rata Share of payments on account of the Loans obtained by all the Banks, such
Bank shall forthwith advise the Agent of the receipt of such payment, and within
five Business Days of such receipt purchase from the other Banks (through the
Agent), without recourse, such participations in the Loans made by them as shall
be necessary to cause such purchasing Bank to share the excess payment ratably
with each of them in accordance with the respective Pro Rata Shares of the
Banks; provided, however, that if all or any portion of such excess payment is
thereafter recovered by or on behalf of the Borrower from such purchasing Bank,
the purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. No documentation other than notices and the
like referred to in this Section 6.05 shall be required to implement the terms
of this Section 6.05. The Agent shall keep records (which shall be conclusive
and binding in the absence of manifest error) of participations purchased
pursuant to this Section 6.05 and shall in each case notify the Banks following
any such purchases.

                                   ARTICLE VII
                              CONDITIONS PRECEDENT

                  SECTION 7.01 Conditions Precedent to the Initial Loans. The
obligation of each Bank to make its initial Loan shall be subject to the
satisfaction of each of the following conditions precedent on or before the
Closing Date:

                  (a) Fees and Expenses. The Borrower shall have paid (i) all
invoiced fees then due in accordance with Section 3.03 and under the Fee Letter
and (ii) all invoiced costs and expenses then due in accordance with Section
12.04(a).

                  (b) Loan Documents. The Agent shall have received the
following Loan Documents: (i) this Agreement, executed by the Borrower and each
Bank (ii) the Notes, executed by the Borrower, for any Banks requesting Notes;
and (iii) the Fee Letter, executed by each of the respective parties thereto.



                                      29.
<PAGE>

                  (c) Certificate of Responsible Officer. The Agent shall have
received in form and substance satisfactory to it a certificate of a Responsible
Officer of the Borrower, dated the Closing Date, stating that (a) the
representations and warranties contained in Section 8.01 and in the other Loan
Documents are true and correct on and as of the date of such certificate as
though made on and as of such date and (b) on and as of the Closing Date, no
Default shall have occurred and be continuing or shall result from the initial
Borrowing.

                  (d) Corporate Documents. The Agent shall have received the
following, in form and substance satisfactory to it:

                           (i) certified copies of the certificate or articles,
         as the case may be, of incorporation of the Borrower, together with
         certificates as to good standing and tax status, from the Secretary of
         State or other Governmental Authority, as applicable, of the Borrower's
         state of incorporation and California, each dated as of a recent date
         prior to the Closing Date;

                           (ii) a certificate of the Secretary or Assistant
         Secretary of the Borrower, dated the Closing Date, certifying (a)
         copies of the bylaws of the Borrower and the resolutions of the Board
         of Directors of the Borrower authorizing the execution, delivery and
         performance of the Loan Documents and (b) the incumbency, authority and
         signatures of each officer of the Borrower authorized to execute and
         deliver the Loan Documents and act with respect thereto, upon which
         certificate the Agent and the Banks may conclusively rely until the
         Agent shall have received a further certificate of the Secretary or an
         Assistant Secretary of the Borrower canceling or amending such prior
         certificate;

                  (e) Legal Opinion. The Agent shall have received the opinion
of Gibson Dunn & Crutcher LLP, counsel to the Borrower, dated the Closing Date,
in substantially the form of Exhibit E.

                  (f) Compliance Certificate. The Agent shall have received a
completed Compliance Certificate for the Borrower's fiscal quarter ended on June
30, 2001.

                  (g) Material Adverse Effect. On and as of the date of such
Borrowing, there shall have occurred no Material Adverse Effect since June 30,
2001.

                  (h) Payment to Departing Banks. All interest, principal, fees
and other amounts owing under the Existing Credit Agreement to any Departing
Bank shall have been paid in full, and all commitments by any Departing Bank to
lend thereunder shall be terminated.

                  SECTION 7.02 Conditions Precedent to All Loans. The obligation
of each Bank to make a Loan (including its initial Loan) on the occasion of each
Borrowing shall be subject to the satisfaction of each of the following
conditions precedent:

                  (a) Notice. The Borrower shall have given the Notice of
Borrowing as provided in Section 2.02(a).




                                      30.
<PAGE>

                  (b) Representations and Warranties; No Default. On the
date of such Borrowing, both before and after giving effect thereto and to the
application of proceeds therefrom: (i) the representations and warranties
contained in Section 8.01 and in the other Loan Documents shall be true, correct
and complete on and as of the date of such Borrowing as though made on and as of
such date; and (ii) no Default shall have occurred and be continuing or shall
result from such Borrowing. For purposes of this Section 7.02(b), the
representation and warranty made in Section 8.01(p) shall be deemed instead to
refer to the last day of the most recent quarter and year for which financial
statements have then been delivered; the preceding clause (i) shall not be
deemed to refer to any other representations and warranties which relate solely
to an earlier date (provided that such other representations and warranties
shall be true, correct and complete as of such earlier date); and the preceding
clause (i) shall take into account any amendments to the Schedules and other
disclosures made in writing by the Borrower to the Agent and the Banks after the
Closing Date and approved by the Agent and the Majority Banks. The giving of any
Notice of Borrowing and the acceptance by the Borrower of the proceeds of each
Borrowing on or following the Closing Date shall each be deemed a certification
to the Agent and the Banks that on and as of the date of such Borrowing such
statements are true.

                  (c) Additional Documents. The Agent shall have received,
in form and substance satisfactory to it, such additional approvals, opinions,
documents and other information as the Agent or any Bank (through the Agent) may
reasonably request.

                                  ARTICLE VIII
                         REPRESENTATIONS AND WARRANTIES

                  SECTION 8.01 Representations and Warranties. The Borrower
represents and warrants to each Bank and the Agent that:

                  (a) Organization and Powers. Each of the Borrower and its
Material Subsidiaries (i) is a corporation or partnership duly organized or
formed, as the case may be, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation, (ii) except as set forth
on Schedule 8.01(a), is qualified to do business and is in good standing in each
jurisdiction in which the failure so to qualify or be in good standing would
result in a Material Adverse Effect and (iii) has all requisite power and
authority to own its assets and carry on its business and, with respect to the
Borrower, to execute, deliver and perform its obligations under the Loan
Documents.

                  (b) Authorization; No Conflict. The execution, delivery and
performance by the Borrower of the Loan Documents have been duly authorized by
all necessary corporate action of the Borrower and do not and will not (i)
contravene the terms of the certificate or articles, as the case may be, of
incorporation and the bylaws of the Borrower or result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which the Borrower is a party or by
which it or its properties may be bound or affected; (ii) violate any provision
of any law, rule, regulation, order, writ, judgment, injunction, decree or the
like binding on or affecting the Borrower; or (iii) except as contemplated by
this Agreement, result in, or require, the creation or imposition of any Lien
upon or with respect to any of the properties of the Borrower.



                                      31.
<PAGE>
                  (c) Binding Obligation. The Loan Documents constitute, or
when delivered under this Agreement will constitute, legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms.

                  (d) Consents. No authorization, consent, approval,
license, exemption of, or filing or registration with, any Governmental
Authority, or approval or consent of any other Person, is required for the due
execution, delivery or performance by the Borrower of any of the Loan Documents.

                  (e) No Defaults. Neither the Borrower nor any of its Material
Subsidiaries is in default under any material contract, lease, agreement,
judgment, decree or order to which it is a party or by which it or its
properties may be bound.

                  (f) Title to Properties; Liens. The Borrower and its
Material Subsidiaries have good and marketable title to, or valid and subsisting
leasehold interests in, their properties and assets, and there is no Lien upon
or with respect to any of such properties or assets, except for Permitted Liens.

                  (g) Litigation. Except as set forth on Schedule 8.01(g),
there are no actions, suits or proceedings pending or, to the best of the
Borrower's knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries or the properties of the Borrower or any of its Subsidiaries before
any Governmental Authority or arbitrator which if determined adversely to the
Borrower or any such Subsidiary would result in a Material Adverse Effect.

                  (h) Compliance with Environmental Laws. Except as set forth on
Schedule 8.01(h), and except in respect of matters that in the aggregate are not
and cannot reasonably be expected to result in a Material Adverse Effect, the
Borrower and each Material Subsidiary is in full compliance with all
Environmental Laws, whether in connection with the ownership, use, maintenance
or operation of its Premises or the conduct of any business thereon, or
otherwise. Neither the Borrower, any Material Subsidiary, nor to the best of the
Borrower's knowledge, any previous owner, tenant, occupant, user or operator of
the Premises, or any present tenant or other present occupant, user or operator
of the Premises has used, generated, manufactured, installed, treated, released,
stored or disposed of any Hazardous Substances on, under, or at the Premises,
except in compliance with all applicable Environmental Laws. To the best of the
Borrower's knowledge, no Hazardous Substances have at any time been spilled,
leaked, dumped, deposited, discharged, disposed of or released on, under, at or
from the Premises, nor have any of the Premises been used at any time by any
Person as a landfill or waste disposal site. Except as set forth on Schedule
8.01(h), there are no actions, suits, claims, notices of violation, hearings,
investigations or proceedings pending or, to the best of the Borrower's
knowledge, threatened against or affecting the Borrower, any Material Subsidiary
or with respect to the ownership, use, maintenance and operation of the
Premises, relating to Environmental Laws or Hazardous Substances.

                  (i) Governmental Regulation. Neither the Borrower nor any
of its Material Subsidiaries is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940, the Interstate Commerce Act, any



                                      32.
<PAGE>

state public utilities code or any other federal or state statute or regulation
limiting its ability to incur Indebtedness.

                  (j) ERISA.

                           (i) The Borrower and all ERISA Affiliates have
         satisfied all applicable contribution requirements under Section
         412(c)(11) of the Internal Revenue Code and have never sought a waiver
         under Section 412(d) of the Internal Revenue Code;

                           (ii) no Termination Event has occurred and is
         continuing, or is reasonably expected to occur;

                           (iii) the aggregate amount of Unfunded Accrued
         Benefits under all Pension Plans (excluding in such computation Pension
         Plans with assets greater than accrued benefits) does not exceed
         $5,000,000;

                           (iv) there is no condition or event under which the
         Borrower, any ERISA Affiliate, or any Plan maintained by the Borrower
         or any ERISA Affiliate could be subject to any risk of material
         liability under ERISA or the Internal Revenue Code, regardless of
         whether the Borrower or any ERISA Affiliate engaged in a transaction
         giving rise to the liability;

                           (v) neither the Borrower nor any ERISA Affiliate has
         unfunded, contingent liability that exceeds $5,000,000 with respect to
         Plans that provide post-retirement welfare benefits; and

                           (vi) all Plans maintained by, or contributed to by,
         the Borrower or any ERISA Affiliate comply in all material respects,
         and have been administered in material compliance with, the
         requirements of applicable law (including, if applicable, foreign law,
         ERISA and the Internal Revenue Code), and in accordance with each
         Plan's terms.

                  (k) Subsidiaries. The name, capital structure and
ownership of each Subsidiary of the Borrower on the date of this Agreement is as
set forth in Schedule 8.01(k). All of the outstanding capital stock of, or other
interest in, each such Subsidiary has been validly issued, and is fully paid and
nonassessable. Except as set forth in such Schedule, on the date of this
Agreement the Borrower has no equity interest in any Person. Each Material
Subsidiary of the Borrower, as of the date of this Agreement, is specified as
such on Schedule 8.01(k).

                  (l) Margin Regulations. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying "margin
stock" (within the meaning of Regulations G or U of the FRB). No part of the
proceeds of the Loans will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock, except in accordance with the provisions of Regulations T, U, and X of
the FRB.

                  (m) Taxes. Each of the Borrower and its Material
Subsidiaries has duly filed all tax and information returns required to be
filed, and has paid all taxes, fees, assessments and other governmental charges
or levies that have become due and payable, except to the extent



                                      33.
<PAGE>

such taxes or other charges are being contested in good faith and are adequately
reserved against in accordance with GAAP.

                  (n) Patents and Other Rights. Each of the Borrower and its
Subsidiaries possesses all permits, franchises, licenses, patents, trademarks,
trade names, service marks, copyrights and all rights with respect thereto, free
from burdensome restrictions, that are reasonably necessary for the ownership,
maintenance and operation of its business and neither the Borrower nor any such
Subsidiary is in violation of any rights of others with respect to the
foregoing, except where the failure to do so would not reasonably be expected to
result in a Material Adverse Effect.

                  (o) Insurance. The properties of the Borrower and its
Material Subsidiaries are insured, with financially sound and reputable
insurance companies, in such amounts, with such deductibles and covering such
risks as is customarily carried by companies engaged in similar businesses and
owning similar properties in the localities where the Borrower or such Material
Subsidiary operates.

                  (p) Financial Statements. The audited consolidated balance
sheet of the Borrower and its Subsidiaries as at December 30, 2000, and the
related consolidated statements of income, shareholders' equity and cash flows
for the fiscal year then ended, and the unaudited consolidated balance sheet of
the Borrower and its Subsidiaries as at June 30, 2001, and the related
consolidated statements of income, shareholders' equity and cash flows, for the
quarter then ended and the 6-month period then ended, are complete and correct
and fairly present the financial condition of the Borrower and its Subsidiaries
as at such dates and the results of operations of the Borrower and its
Subsidiaries for the periods covered by such statements, in each case in
accordance with GAAP consistently applied, subject, in the case of the June 30,
2001 financial statements, to normal year-end adjustments and the absence of
notes.

                  (q) Liabilities. Neither the Borrower nor any of its
Material Subsidiaries has any material liabilities, fixed or contingent, that
are not reflected in the financial statements referred to in subsection (p), in
the notes thereto or otherwise disclosed in writing to the Banks, other than
liabilities arising in the ordinary course of business since June 30, 2001.

                  (r) Labor Disputes, Etc. There are no strikes, lockouts or
other labor disputes against the Borrower or any of its Material Subsidiaries,
or, to the best of the Borrower's knowledge, threatened against or affecting the
Borrower or any of its Material Subsidiaries, and no event of loss has occurred
with respect to any assets or property of the Borrower or any of its
Subsidiaries, which would reasonably be expected to result in a Material Adverse
Effect.

                  (s) Solvency. Each of the Borrower and its Material
Subsidiaries is Solvent.

                  (t) Disclosure. None of the representations or warranties
made by the Borrower in the Loan Documents as of the date of such
representations and warranties, and none of the statements contained in each
exhibit, report, certificate or written statement furnished by or on behalf of
the Borrower or any of its Subsidiaries to the Agent and the Banks in connection
with the Loan Documents, contains any untrue statement of a material fact



                                      34.
<PAGE>

or omits any material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they
are made, not misleading, as of the time made or delivered.

                                   ARTICLE IX
                                    COVENANTS

                  SECTION 9.01 Reporting Covenants. So long as any of the
Obligations shall remain unpaid or any Bank shall have any Revolving Commitment,
the Borrower agrees that:

                  (a) Financial Statements and Other Reports. The Borrower
shall furnish to the Agent in sufficient copies for distribution to the Banks:

                           (i) as soon as available and in any event within 55
         days after the end of each of the first three fiscal quarters of each
         fiscal year, a consolidated balance sheet of the Borrower and its
         Subsidiaries as of the end of such quarter, and the related
         consolidated statements of income, shareholders' equity and cash flows
         of the Borrower and its Subsidiaries for such quarter and the portion
         of the fiscal year through the end of such quarter, prepared in
         accordance with GAAP consistently applied, all in reasonable detail and
         setting forth in comparative form the figures for the corresponding
         period in the preceding fiscal year, together with a certificate of a
         Responsible Officer of the Borrower stating that such financial
         statements fairly present the financial condition of the Borrower and
         its Subsidiaries as at such date and the results of operations of the
         Borrower and its Subsidiaries for the period ended on such date and
         have been prepared in accordance with GAAP consistently applied,
         subject to changes resulting from normal, year-end audit adjustments
         and except for the absence of notes;

                           (ii) as soon as available and in any event within 100
         days after the end of each fiscal year, a consolidated balance sheet of
         the Borrower and its Subsidiaries as of the end of such fiscal year,
         and the related consolidated statements of income, shareholders' equity
         and cash flows of the Borrower and its Subsidiaries for such fiscal
         year, prepared in accordance with GAAP consistently applied, all in
         reasonable detail and setting forth in comparative form the figures for
         the previous fiscal year, accompanied by a report thereon of a firm of
         independent certified public accountants of recognized national
         standing, which report shall be unqualified as to scope of audit or the
         status of the Borrower and its Subsidiaries as a going concern;

                           (iii) together with the financial statements required
         pursuant to clauses (i) and (ii), a Compliance Certificate of a
         Responsible Officer as of the end of the applicable accounting period;

                           (iv) promptly after the giving, sending or filing
         thereof, copies of all reports, if any, which the Borrower sends to the
         holders of its respective capital stock or other securities and of all
         reports or filings, if any, by the Borrower with the SEC or any
         national securities exchange.

As to any information contained in materials furnished pursuant to clause (iv),
the Borrower shall not be separately required to furnish such information under
clause (i) or (ii), but the



                                      35.
<PAGE>

foregoing shall not be in derogation of the obligation of the Borrower to
furnish the information and materials described in clauses (i) and (ii) at the
times specified therein.

                  (b) Additional Information. The Borrower shall furnish to the
Agent:

                           (i) promptly after the Borrower has knowledge or
         becomes aware thereof, notice of the occurrence or existence of any
         Default;

                           (ii) prompt written notice of (A) any proposed
         acquisition of stock, assets or property by the Borrower or any of its
         Material Subsidiaries that could reasonably be expected to result in
         material environmental liability under Environmental Laws, and (B)(1)
         any spillage, leakage, discharge, disposal, leaching, migration or
         release of any Hazardous Substances required to be reported to any
         Governmental Authority under applicable Environmental Laws, and (2) all
         actions, suits, claims, notices of violation, hearings, investigations
         or proceedings pending, or to the best of the Borrower's knowledge,
         threatened against or affecting the Borrower or any of its Material
         Subsidiaries or with respect to the ownership, use, maintenance and
         operation of the Premises, relating to Environmental Laws or Hazardous
         Substances;

                           (iii) prompt written notice of all actions, suits and
         proceedings before any Governmental Authority or arbitrator pending, or
         to the best of the Borrower's knowledge, threatened against or
         affecting the Borrower or any of its Material Subsidiaries which if
         adversely determined would be reasonably expected to have a Material
         Adverse Effect;

                           (iv) promptly after the Borrower has knowledge or
         becomes aware thereof, (a) notice of the occurrence of any Termination
         Event, together with a copy of any notice of such Termination Event to
         the PBGC, and (b) the details concerning any material action taken or
         proposed to be taken by the IRS, PBGC, Department of Labor or other
         Person with respect thereto;

                           (v) the information regarding insurance maintained by
         the Borrower and its Material Subsidiaries as required under Section
         9.03(c);

                           (vi) within 30 days of the date thereof, or, if
         earlier, on the date of delivery of any financial statements pursuant
         to subsection (a), notice of any material change in accounting policies
         or financial reporting practices by the Borrower or any of its Material
         Subsidiaries;

                           (vii) promptly after the occurrence thereof, notice
         of any labor controversy resulting in or threatening to result in any
         strike, work stoppage, boycott, shutdown or other material labor
         disruption against or involving the Borrower or any of its Material
         Subsidiaries;

                           (viii) upon the reasonable request from time to time,
         but no more often than once per fiscal quarter, of the Agent or any
         Bank (through the Agent), the Swap Termination Values, together with a
         description of the method by which such values were



                                      36.
<PAGE>

         determined, relating to any then-outstanding Rate Contracts to which
         the Borrower or any of its Material Subsidiaries is party;

                           (ix) prompt written notice of any other condition or
         event which has resulted, or that could reasonably be expected to
         result, in a Material Adverse Effect; and

                           (x) such other information respecting the operations,
         properties, business or condition (financial or otherwise) of the
         Borrower or its Subsidiaries as any Bank (through the Agent) may from
         time to time reasonably request.

Each notice pursuant to this subsection (b) shall be accompanied by a written
statement by a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein, and stating what action the Borrower proposes to
take with respect thereto.

                  SECTION 9.02 Financial Covenants. So long as any of the
Obligations shall remain unpaid or any Bank shall have any Revolving Commitment,
the Borrower agrees that:

                  (a) Minimum Consolidated EBITDA. The Borrower shall
maintain as of the last day of each fiscal quarter a minimum Consolidated EBITDA
for the period of four fiscal quarters ended on such date (taken as a single
accounting period) of not less than $200,000,000;

                  (b) [Intentionally omitted.]

                  (c) Minimum Fixed Charge Coverage Ratio. The Borrower
shall maintain as of the last day of each fiscal quarter a ratio (such ratio,
the "Fixed Charge Coverage Ratio") of (i) Consolidated EBITDA to (ii) the sum of
(without duplication) (A) Consolidated Interest Expense plus (B) 20% of Funded
Debt plus (C) taxes paid in cash, plus (D) payments in respect of Capital
Leases, in each case, of the Borrower and its Subsidiaries on a consolidated
basis, as determined in accordance with GAAP, for the 12-month period ended on
such date, of not less than 1.50 to 1.00.

                  (d) Minimum Current Ratio. The Borrower shall maintain as
of the last day of each fiscal quarter a ratio of (i) current assets to (ii)
current liabilities, in each case, of the Borrower and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP, of not less than 1.00
to 1.00. For purposes of calculating the Borrower's compliance with this Section
9.02(d) as of the last day of any fiscal quarter, current liabilities shall
include (A) off-balance sheet Indebtedness having a maturity of less than one
year from such fiscal quarter-end, (B) reimbursement obligations in respect of
letters of credit having an expiry date less than one year from such fiscal
quarter-end and (C) the current portion of (1) all Loans then outstanding
hereunder and (2) all loans then outstanding under the Multi-Year Credit
Agreement.

                  (e) Maximum Funded Debt to EBITDA Ratio. The Borrower
shall maintain as of the last day of each fiscal quarter a ratio of (i) Funded
Debt of the Borrower and its Subsidiaries on a consolidated basis, to (ii)
Consolidated EBITDA for the twelve-month period ended on such date, of not more
than 2.00 to 1.00.



                                      37.
<PAGE>

                  SECTION 9.03 Additional Affirmative Covenants. So long as any
of the Obligations shall remain unpaid or any Bank shall have any Revolving
Commitment, the Borrower agrees that:

                  (a) Preservation of Existence, Etc. The Borrower shall,
and shall cause each of its Material Subsidiaries to, (i) maintain and preserve
its legal existence, and (ii) maintain and preserve its rights to transact
business and all other rights, franchises and privileges necessary or desirable
in the normal course of its business and operations and the ownership of its
properties, except in connection with transactions permitted by Section 9.04.

                  (b) Payment of Obligations. The Borrower shall, and shall
cause each of its Material Subsidiaries to, pay and discharge (i) all taxes,
fees, assessments and governmental charges or levies imposed upon it or upon its
properties or assets prior to the date on which penalties attach thereto, and
all lawful claims for labor, materials and supplies which, if unpaid, might
become a Lien upon any properties or assets of the Borrower or any Material
Subsidiary, except to the extent such taxes, fees, assessments or governmental
charges or levies, or such claims, are being contested in good faith by
appropriate proceedings and are adequately reserved against in accordance with
GAAP; (ii) all lawful claims which, if unpaid, would by law become a Lien upon
its property not constituting a Permitted Lien; and (iii) all Indebtedness, as
and when due and payable, but subject to any subordination provisions contained
in any instrument or agreement evidencing such Indebtedness.

                  (c) Maintenance of Insurance. The Borrower shall, and
shall cause each of its Material Subsidiaries to, carry and maintain in full
force and effect, at its own expense and with financially sound and reputable
insurance companies, insurance in such amounts, with such deductibles and
covering such risks as is customarily carried by companies engaged in the same
or similar businesses and owning similar properties in the localities where the
Borrower or such Subsidiary operates, including fire, extended coverage,
business interruption, public liability, property damage and worker's
compensation. Upon the request of the Agent or any Bank, the Borrower shall
furnish to the Agent from time to time a certificate of the Borrower's insurance
broker or other insurance specialist stating that all premiums then due on the
policies relating to insurance have been paid, that such policies are in full
force and effect and that such insurance coverage and such policies comply with
all the requirements of this subsection.

                  (d) Keeping of Records and Books of Account. The Borrower
shall, and shall cause each of its Material Subsidiaries to, keep adequate
records and books of account, in which complete entries shall be made in
accordance with GAAP, reflecting all financial transactions of the Borrower and
its Material Subsidiaries.

                  (e) Inspection Rights. Upon reasonable prior notice to the
Borrower (except during the existence of an Event of Default, in which case no
prior notice shall be required), the Borrower shall at any reasonable time and
from time to time permit the Agent and the Banks or any of their respective
agents or representatives to visit and inspect any of the properties of the
Borrower and its Material Subsidiaries and to examine and make copies of and
abstracts from the records and books of account of the Borrower and its Material
Subsidiaries, and to discuss the business affairs, finances and accounts of the
Borrower and any such Material Subsidiary with any of the officers or
accountants of the Borrower or such Material Subsidiary; provided that



                                      38.
<PAGE>
with respect to any such discussions with the Borrower's or any Material
Subsidiary's accountants, the Borrower shall be given a reasonable opportunity
to have a representative participate in or otherwise be present at any such
discussion; and provided further that so long as no Event of Default has
occurred and is continuing, the Borrower's prior written consent (which consent
shall not be unreasonably withheld) shall be required prior to any discussions
between the Agent or any Bank or any of their respective agents or
representatives, on the one hand, and the Borrower's or any Material
Subsidiary's accountants, on the other.

                  (f) Compliance with Laws, Etc. The Borrower shall, and
shall cause each of its Material Subsidiaries to, comply in all material
respects with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority (including all Environmental Laws) and the
terms of any indenture, contract or other instrument to which it may be a party
or under which it or its properties may be bound, except to the extent that the
failure to so comply would not reasonably be expected to result in a Material
Adverse Effect.

                  (g) Maintenance of Properties, Etc. The Borrower shall,
and shall cause each of its Material Subsidiaries to, maintain and preserve all
of its properties necessary or useful in the proper conduct of its business in
good working order and condition in accordance with the general practice of
other corporations of similar character and size, ordinary wear and tear
excepted.

                  (h) Licenses. The Borrower shall, and shall cause each of
its Material Subsidiaries to, obtain and maintain all licenses, authorizations,
consents, filings, exemptions, registrations and other governmental approvals
necessary in connection with (i) the execution, delivery and performance of the
Loan Documents and the consummation of the transactions therein contemplated and
(ii) the operation and conduct of its business and ownership of its properties,
except, in the case of this clause (ii), where the failure to do so would not
reasonably be expected to have a Material Adverse Effect.

                  (i) Action Under Environmental Laws. The Borrower shall,
and shall cause each of its Material Subsidiaries to, upon becoming aware of the
presence of any Hazardous Substance or the existence of any environmental
liability under applicable Environmental Laws with respect to the Premises, take
all actions, at their cost and expense, as shall be necessary or advisable to
investigate and clean up the condition of the Premises, including all removal,
containment and remedial actions, and restore the Premises to a condition in
compliance with applicable Environmental Laws.

                  (j) Use of Proceeds. The Borrower shall use the proceeds of
the Loans solely for general corporate purposes, including the repurchase of the
Borrower's stock for immediate cancellation and for acquisitions, in each case,
in compliance herewith.

                  (k) Further Assurances and Additional Acts. The Borrower
shall execute, acknowledge, deliver, file, notarize and register at its own
expense all such further agreements, instruments, certificates, documents and
assurances and perform such acts as the Agent or the Majority Banks shall
reasonably deem necessary or appropriate to effectuate the purposes of the Loan
Documents, and promptly provide the Agent with evidence of the foregoing
satisfactory in form and substance to the Agent or the Majority Banks.



                                      39.
<PAGE>

                  SECTION 9.04 Negative Covenants. So long as any of the
Obligations shall remain unpaid or any Bank shall have any Revolving Commitment,
the Borrower agrees that:

                  (a) Liens; Negative Pledges. The Borrower shall not
create, incur, assume or suffer to exist any Lien upon or with respect to any of
its properties, revenues or assets, whether now owned or hereafter acquired,
other than Permitted Liens.

                  (b) Change in Nature of Business. The Borrower shall not,
and shall not permit any of its Subsidiaries to, engage in any material line of
business substantially different from those lines of business carried on by it
at the date hereof or other businesses incidental or reasonably related thereto.
Without limiting the generality of the preceding sentence, the parties hereto
agree that this subsection 9.04(b) shall not operate to prohibit any Permitted
Receivables Purchase Facility otherwise permitted hereunder.

                  (c) Restrictions on Fundamental Changes. The Borrower
shall not, and shall not permit any of its Subsidiaries to, merge with or
consolidate into, or acquire all or substantially all of the assets of, any
Person, or sell, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets, except that:

                           (i) any of the Borrower's wholly owned Subsidiaries
         may merge with, consolidate into or transfer all or substantially all
         of its assets to another of the Borrower's wholly owned Subsidiaries or
         to the Borrower and in connection therewith such Subsidiary may be
         liquidated or dissolved;

                           (ii) the Borrower or any of its Subsidiaries may sell
         or dispose of assets in accordance with the provisions of subsection
         9.04(d);

                           (iii) the Borrower or any of its Subsidiaries may
         make any investment permitted by subsection 9.04(e);

                           (iv) the Borrower or any of its Subsidiaries may
         merge with or consolidate into any other Person, provided that (a) the
         Borrower is the surviving corporation in respect of any merger or
         consolidation involving the Borrower, (b) subject to the preceding
         clause (a), after giving effect to any such merger or consolidation,
         the surviving entity in respect thereof shall be a wholly owned
         Subsidiary, and (c) no such merger or consolidation shall be made if a
         Default would exist, or with the giving of notice or a passage of time,
         or both, would come into existence after giving effect thereto; and

                           (v) the Borrower or any of its Subsidiaries may sell,
         transfer or dispose of any Receivables and Receivables Related Assets
         pursuant to any Permitted Receivables Purchase Facility.

                  (d) Sales of Assets. The Borrower shall not convey, sell,
lease, transfer, or otherwise dispose of, or part with control of (whether in
one transaction or a series of transactions) all or any or any material part of
its business, property or assets (including any



                                      40.
<PAGE>

shares of stock in any Subsidiary or other Person), whether now owned or
hereafter acquired, except sales or other dispositions of any of the following:

                           (i) any inventory in the ordinary course of business;

                           (ii) any Permitted Investments;

                           (iii) any assets which have become worn out or
         obsolete or which are promptly being replaced, in the ordinary course
         of business;

                           (iv) any Receivables and Receivables Related Assets
         pursuant to any Permitted Receivables Purchase Facility;

                           (v) assets constituting the Borrower's
         design-services operation pursuant to the Tality IPO;

                           (vi) the Seely Avenue Campus pursuant to a
         sale-leaseback transaction, provided that such sale is made for fair
         value and the aggregate sales price from such sale is paid in cash;

                           (vii) any other assets to the extent not otherwise
         permitted hereunder; provided that such assets do not constitute
         Substantial Assets and such sale or disposition is made for fair value;
         and provided further that (A) at the time of any such sale or
         disposition, no Default shall exist or shall result therefrom, (B) the
         aggregate sales price from such sale or disposition shall be paid in
         cash, or, if approved by the board of directors of the Borrower,
         capital stock or debt obligations so long as the aggregate sales price
         paid in capital stock or debt obligations, when added to the non-cash
         sales price of all other assets sold, leased, transferred or otherwise
         disposed of pursuant to this clause (vii) after the Closing Date
         pursuant to this Section 9.04(d)(vii), does not exceed 5% of
         Consolidated Tangible Net Worth measured as of the last day of the then
         most recent fiscal quarter, and (C) no dispositions of accounts or
         notes receivable shall be permitted under this clause (vii) unless in
         connection with the sale of all or substantially all of a business
         unit, division or Subsidiary of the Borrower and such sale is otherwise
         permitted hereunder.

For purposes of clause (vii), a sale, lease, transfer or other disposition of
assets shall be deemed to be of "Substantial Assets" if such assets, when added
to all other assets sold, leased, transferred or otherwise disposed of after the
Closing Date (other than assets sold in the ordinary course of business), shall
exceed 15% of Consolidated Tangible Net Worth measured as of the last day of the
then most recent fiscal quarter.

                  (e) Loans and Investments. The Borrower shall not, and
shall not permit any of its Subsidiaries to, purchase or otherwise acquire the
capital stock, assets (constituting a business unit), obligations or other
securities of or any interest in any Person, or otherwise extend any credit to,
guarantee the obligations of or make any additional investments in any Person,
other than in connection with:



                                      41.
<PAGE>

                           (i) extensions of credit in the nature of accounts
         receivable, general intangibles or notes receivable arising from the
         licensing of software or the sales of goods or services in the ordinary
         course of business;

                           (ii) investments by the Borrower in the capital stock
         of wholly-owned Subsidiaries, and extensions of credit by the Borrower
         to any of its wholly owned Subsidiaries or by any of its wholly owned
         direct or indirect Subsidiaries to another of its wholly owned direct
         or indirect Subsidiaries or the Borrower, in each case in the ordinary
         course of business;

                           (iii) Permitted Investments;

                           (iv) investments permitted under Section 9.04
         (c)(iv);

                           (v) to the extent not otherwise permitted under this
         subsection 9.04(e), additional purchases of, loans to or investments in
         joint ventures or the capital stock, assets, obligations or other
         securities of or interest in other Persons not exceeding 15% of
         Consolidated Tangible Net Worth, measured as of the last day of the
         then most recent fiscal quarter, as to all such investments, loans and
         purchases in the aggregate, provided that (A) in the case of any such
         acquisition or investment the prior, effective written consent or
         approval to such acquisition or investment of the board of directors or
         equivalent governing body of the acquiree is obtained and (B)
         immediately after giving effect thereto, no Default shall have occurred
         and be continuing;

                           (vi) investments in the Venture Funds, so long as the
         aggregate unrecovered investment made therein (not counting recoveries
         fairly characterized as income) does not exceed $150,000,000;

                           (vii) investments existing on the Closing Date
         disclosed in Schedule 9.04(e);

                           (viii) investments consisting of the endorsement of
         negotiable instruments for deposit;

                           (ix) investments (including debt obligations)
         received in connection with the bankruptcy or reorganization of
         customers or suppliers and in settlement of delinquent obligations of,
         and other disputes with, customers or suppliers arising in the ordinary
         course of business;

                           (x) extensions of credit in the ordinary course of
         business consisting of (a) compensation of employees, officers and
         directors of the Borrower or a Subsidiary, as the case may be, so long
         as the board of directors of the Borrower or such Subsidiary determines
         that such compensation is in the best interests of the Borrower or such
         Subsidiary, (b) travel advances, employee relocation loans and other
         employee loans and advances, (c) loans to employees, officers or
         directors relating to the purchase of equity securities of the
         Borrower, and (d) other loans to officers and employees approved by the
         board of directors;



                                      42.
<PAGE>

                           (xi) investments in connection with any Permitted
         Receivables Purchase Facility; and

                           (xii) investments consisting of shares in Tality
         Corporation retained by the Borrower resulting from the Tality IPO.

                  (f) Transactions with Related Parties. Except in
connection with (i) any Permitted Receivables Purchase Facility otherwise
permitted hereunder, or (ii) investments in Alchemy or SpinCircuit or resulting
from the Tality IPO which are otherwise permitted by subsection (e) above, the
Borrower shall not, and shall not permit any of its Material Subsidiaries to,
enter into any transaction, including the purchase, sale or exchange of property
or the rendering of any services, with any Affiliate, any officer or director
thereof or any Person which beneficially owns or holds 5% or more of the equity
securities, or 5% or more of the equity interest, thereof (a "Related Party"),
or enter into, assume or suffer to exist, or permit any Material Subsidiary to
enter into, assume or suffer to exist, any employment or consulting contract
with any Related Party, except a transaction or contract which is in the
ordinary course of the Borrower's or such Material Subsidiary's business and
which, when considered in the aggregate with all such transactions between the
Related Party and the Borrower or such Material Subsidiary, such aggregate
transactions are upon fair and reasonable terms not less favorable to the
Borrower or such Material Subsidiary than it would obtain in a comparable arm's
length transaction (or series of transactions) with a Person not a Related
Party.

                  (g) Hazardous Substances. The Borrower shall not, and shall
not permit any of its Material Subsidiaries to, use, generate, manufacture,
install, treat, release, store or dispose of any Hazardous Substances, except in
compliance with all applicable Environmental Laws.

                  (h) Accounting Changes. The Borrower shall not, and shall
not suffer or permit any of its Material Subsidiaries to, (i) make any
significant change in accounting treatment or reporting practices, except as
required or permitted by GAAP, or, in respect of any non-U.S. Subsidiary, as
required or permitted by generally accepted accounting principles as then in
effect in the jurisdiction in which such non-U.S. Subsidiary is located or (ii)
without the prior written consent of the Majority Banks (not to be unreasonably
withheld), change its fiscal year or that of any of its consolidated
Subsidiaries, except to change the fiscal year of a Subsidiary acquired in
connection with a permitted acquisition to conform its fiscal year to the
Borrower's.

                                    ARTICLE X
                                EVENTS OF DEFAULT

                  SECTION 10.01 Events of Default. Any of the following events
which shall occur shall constitute an "Event of Default":

                  (a) Payments. The Borrower shall fail to pay (i) when due
any amount of principal of any Loan or Note, or (ii) within three days after the
date due, any amount of interest on any Loan or Note or any fee or other amount
payable hereunder or under any of the Loan Documents.



                                      43.
<PAGE>

                  (b) Representations and Warranties. Any representation or
warranty by the Borrower under or in connection with the Loan Documents shall
prove to have been incorrect in any material respect when made or deemed made.

                  (c) Failure by Borrower to Perform Certain Covenants. The
Borrower shall fail to perform or observe any term, covenant or agreement
contained in Section 9.02, subsections (a)(i) or (j) of Section 9.03 or Section
9.04 other than Subsection 9.04(g).

                  (d) Failure by Borrower to Perform Other Covenants. The
Borrower shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement or any other Loan Document on its part to be
performed or observed and any such failure shall remain unremedied for a period
of 30 days after either (i) a Responsible Officer of the Borrower knew or
reasonably should have known of such failure or (ii) the Borrower receives
written notice thereof by the Agent or any Bank.

                  (e) Insolvency; Voluntary Proceedings. The Borrower or any
Material Subsidiary (i) generally fails to pay, or admits in writing its
inability to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (ii) voluntarily
ceases to conduct its business in the ordinary course; (iii) commences any
Insolvency Proceeding with respect to itself; or (iv) takes any action to
effectuate or authorize any of the foregoing; or

                  (f) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Borrower or any Material
Subsidiary, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Borrower's or any
Material Subsidiary's properties, and any such proceeding or petition shall not
be dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within 60 days
after commencement, filing or levy; (ii) the Borrower or any Material Subsidiary
admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) the Borrower or any Material
Subsidiary acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or business;
or

                  (g) Default Under Other Indebtedness. (i) The Borrower or
any of its Material Subsidiaries shall fail (A) to make any payment of any
principal of, or interest or premium on, any single Indebtedness (other than in
respect of the Loans) having a principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $10,000,000 (or its
equivalent in another currency) when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace or notice period, if any, specified in the
agreement or instrument relating to such Indebtedness as of the date of such
failure; or (B) to perform or observe any term, covenant or condition on its
part to be performed or observed under any agreement or instrument relating to
any such Indebtedness, when required to be performed or observed, or any other
event shall occur or condition shall exist under any such agreement or
instrument, and such failure, event or



                                      44.
<PAGE>

condition shall continue after the applicable grace or notice period, if any,
specified in such agreement or instrument, if the effect of such failure, event
or condition is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness; or (ii) any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; (iii) there occurs under any
Rate Contract an Early Termination Date (as defined in such Rate Contract)
resulting from (A) any event of default under such Rate Contract as to which the
Borrower or any Material Subsidiary is the Defaulting Party (as defined in such
Rate Contract) or (B) any Termination Event (as so defined) as to which the
Borrower or any Material Subsidiary is an Affected Party (as so defined), and,
in either event, the Swap Termination Value owed by the Borrower or such
Material Subsidiary as a result thereof is greater than $10,000,000 (or its
equivalent in another currency).

                  (h) Judgments. (i) A final judgment or order for the
payment of money in excess of $50,000,000 (or its equivalent in another
currency) which is not fully covered by third-party insurance shall be rendered
against the Borrower or any of its Material Subsidiaries; or (ii) any
non-monetary judgment or order shall be rendered against the Borrower or any
Material Subsidiary which has or would reasonably be expected to have a Material
Adverse Effect; and in each case there shall be any period of 30 consecutive
days during which such judgment continues unsatisfied or during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect.

                  (i) ERISA. (i) The Borrower or an ERISA Affiliate shall
fail to satisfy its contribution requirements in an amount in excess of
$5,000,000 under Section 412(c)(11) of the Internal Revenue Code, whether or not
it has sought a waiver under Section 412(d) of the Internal Revenue Code; (ii)
in the case of a Termination Event involving the withdrawal from a Pension Plan
of a "substantial employer" (as defined in Section 4001(a)(2) or Section 4062(e)
of ERISA), the Borrower's or an ERISA Affiliate's proportionate share of that
Pension Plan's Unfunded Accrued Benefits is more than $5,000,000; (iii) in the
case of a Termination Event involving the complete or partial withdrawal from a
Multiemployer Plan, the Borrower or an ERISA Affiliate has incurred a withdrawal
liability in an aggregate amount exceeding $5,000,000; (iv) in the case of a
Termination Event not described in clause (ii) or (iii), the Unfunded Accrued
Benefits of the relevant Pension Plan or Plans exceed $5,000,000; (v) a Plan of
the Borrower or an ERISA Affiliate that is intended to be qualified under
Section 401(a) of the Internal Revenue Code shall lose its qualification, and
the loss can reasonably be expected to impose on the Borrower or an ERISA
Affiliate liability (for additional taxes, to Plan participants, or otherwise)
in the aggregate amount of $5,000,000 or more; (vi) the commencement or increase
of contributions to, the adoption of, or the amendment of a Plan by, the
Borrower or an ERISA Affiliate shall result in a net increase in unfunded
liabilities to the Borrower or an ERISA Affiliate in excess of $5,000,000; or
(vii) the occurrence of any combination of events listed in clauses (ii) through
(vi) that involves a net increase in aggregate Unfunded Accrued Benefits and
unfunded liabilities in excess of $5,000,000.

                  (j) Dissolution, Etc. The Borrower or any of its Material
Subsidiaries shall (i) liquidate, wind up or dissolve (or suffer any
liquidation, wind-up or dissolution), except to the extent expressly permitted
by Section 9.04, (ii) suspend its operations other than in the ordinary



                                      45.
<PAGE>

course of business, or (iii) take any corporate or similar action to authorize
any of the actions or events set forth above in this subsection (j).

                  (k) Subordination Provisions. The subordination provisions of
any agreement or instrument governing any Indebtedness subordinated to the
Obligations shall for any reason be revoked or invalidated, or otherwise cease
to be in full force and effect, any Person shall contest in any manner the
validity or enforceability thereof or deny that it has any further liability or
obligation thereunder, or the Indebtedness hereunder shall for any reason be
subordinated or shall not have the priority contemplated by this Agreement or
such subordination provisions.

                  (l) Mergers and Acquisitions. The Borrower or any
Subsidiary shall acquire or otherwise merge or consolidate with any Person for
cash consideration (in whole or in part), without the prior, effective written
consent or approval to such acquisition, merger or consolidation of the board of
directors or equivalent governing body of such Person.

                  SECTION 10.02 Effect of Event of Default. If any Event of
Default shall occur and be continuing, the Agent shall, at the request of, or
may, with the consent of, the Majority Banks, (I) by notice to the Borrower, (A)
declare the Revolving Commitments of the Banks to be terminated, whereupon the
same shall forthwith terminate, and (B) declare the entire unpaid principal
amount of the Loans and the Notes, all interest accrued and unpaid thereon and
all other Obligations to be forthwith due and payable, whereupon the Loans and
the Notes, all such accrued interest and all such other Obligations shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower, provided that if an event described in Sections 10.01(e) or 10.01(f)
shall occur, the result which would otherwise occur only upon giving of notice
by the Agent to the Borrower as specified in this clause (I) shall occur
automatically, without the giving of any such notice; and (II) whether or not
the actions referred to in clause (I) have been taken, proceed to enforce all
other rights and remedies available to the Agent and the Banks under the Loan
Documents and applicable law.

                                   ARTICLE XI
                                    THE AGENT

                  SECTION 11.01 Authorization and Action. Each Bank hereby
appoints ABN AMRO as Agent and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers and perform such duties under this
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto. The duties and obligations of the Agent are strictly limited to those
expressly provided for herein, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Agent. As to any matters not expressly
provided for by the Loan Documents (including enforcement or collection of the
Loan Documents), the Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Banks, and such instructions shall be binding upon
all Banks; provided, however, that except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act under any Loan Document unless it shall be indemnified to



                                      46.
<PAGE>

its satisfaction by the Banks against any and all liability and expense which
may be incurred by reason of taking or continuing to take any such action, and
that the Agent shall not in any event be required to take any action which
exposes the Agent to liability or which is contrary to any Loan Document or
applicable law. Nothing in any Loan Document shall, or shall be construed to,
constitute the Agent a trustee or fiduciary for any Bank. In performing its
functions and duties hereunder, the Agent shall act solely as the agent of the
Banks and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for the Borrower. Without
limiting the generality of the foregoing, the use of the term "agent" in this
Agreement and the other Loan Documents with reference to the Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties.

         SECTION 11.02 Limitation on Liability of Agent; Notices; Closing.

                  (a) Limitation on Liability of Agent. Neither the Agent
nor any Affiliate thereof nor any of their respective directors, officers,
employees or agents shall be liable for any action taken or omitted to be taken
by it or them under or in connection with any Loan Document, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agent (i) may treat a Bank as the holder of its
Loans for all purposes hereof unless and until such Bank and its assignee shall
have delivered to the Agent and the Borrower an Assignment and Acceptance
Agreement substantially in the form of Exhibit F (an "Assignment and
Acceptance"), and the Agent receives written notice of the assignment in
substantially the form of Schedule 1 to the Assignment and Acceptance and the
other conditions to assignment set forth in Section 12.09 shall have been
satisfied; (ii) may consult with legal counsel (including counsel to the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; and
(iii) shall incur no liability to any Bank under or in respect of any Loan
Document by acting upon any notice, consent, certificate, telegram, facsimile,
telex or teletype message, statement or other instrument or writing believed by
it to be genuine and signed or sent by the proper party or parties or by acting
upon any representation or warranty made or deemed to be made hereunder or under
any other Loan Document. Further, the Agent (A) makes no warranty or
representation to any Bank and shall not be responsible to any Bank for the
accuracy or completeness of any information, exhibit or report furnished under
any Loan Document, for any statements, warranties or representations (whether
written or oral) made or deemed made in or in connection with any Loan
Documents; (B) shall have no duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or any other Loan Document on the part of the Borrower or any other
Person or to inspect the property, books or records of the Borrower or any other
Person; and (C) shall not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, sufficiency, value or
collectibility of this Agreement or any other Loan Document or of any
collateral.

                  (b) Notices. Promptly upon receipt thereof, the Agent shall
forward to each Bank originals or copies, as specified in this Agreement or any
other Loan Document, of all agreements, instruments, opinions, financial
statements, notices and other documents delivered



                                      47.
<PAGE>

by the Borrower or any other Person to the Agent pursuant to any Loan Document
for distribution to the Banks. Except for any of the foregoing expressly
required to be furnished to the Banks by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Bank with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.

                  (c) Closing. For purposes of determining compliance with
the conditions specified in Section 7.01, each Bank that has executed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent (or made available) by
the Agent to such Bank for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to such Bank, unless an officer of the Agent responsible for the
transactions contemplated by the Loan Documents shall have received notice from
such Bank prior to the Closing Date specifying its objection thereto and either
such objection shall not have been withdrawn by notice to the Agent to that
effect on or prior to the Closing Date or, if any Borrowing on the Closing Date
has been requested, the Bank shall not have made available to the Agent on or
prior to the Closing Date the Bank's Pro Rata Share of any Borrowing.

                  SECTION 11.03 Agent and Affiliates. With respect to its
Revolving Commitment, the Loans made by it, the Notes issued to it and all other
Obligations owing to it as a Bank, the Agent shall have the same rights and
powers under the Loan Documents as any other Bank and may exercise the same as
though it were not the Agent; and the term "Bank" or "Banks" shall, unless
otherwise expressly indicated, include the Agent in its individual capacity. The
Agent and its Affiliates may accept deposits from, lend money to, act as trustee
under indentures of and generally engage in any kind of business with the
Borrower, and any Affiliate thereof, all as if the Agent were not the Agent
hereunder and without any duty to account therefor to the Banks.

                  SECTION 11.04 Notice of Defaults. The Agent shall not be
deemed to have knowledge or notice of the occurrence of a Default hereunder
(other than nonpayment of principal of or interest on the Loans or of any fees
or any of its costs and expenses) unless the Agent has actual knowledge thereof
or has received notice in writing from a Bank or the Borrower referring to this
Agreement, describing such event or condition and expressly stating that such
notice is a "notice of default." Should the Agent receive such notice of the
occurrence of a Default, the Agent shall promptly give notice thereof to the
Banks. The Agent thereupon shall take such action with respect to such Default
as shall be reasonably directed by the Majority Banks; provided that, unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable in the best interests of the
Banks.

                  SECTION 11.05 Non-Reliance on Agent. Each Bank has itself
been, and will continue to be, based on such documents and information as it has
deemed appropriate, solely responsible for making its own independent appraisal
of and investigations into the financial condition, creditworthiness, condition,
affairs, status and nature of the Borrower or any of its Subsidiaries.
Accordingly, each Bank confirms to the Agent that it has not relied, and will
not hereafter rely, on the Agent (I) to check or inquire on such Bank's behalf
into the adequacy,



                                      48.
<PAGE>

accuracy or completeness of any information provided by the Borrower or any
other Person under or in connection with the Loan Documents or the transactions
herein contemplated (whether or not such information has been or is hereafter
distributed to such Bank by the Agent), or (II) to assess or keep under review
on such Bank's behalf the financial condition, creditworthiness, condition,
affairs, status or nature of the Borrower or any Subsidiary.

                  SECTION 11.06 Indemnification. The Banks agree to indemnify
the Agent, and any Affiliates, directors, officers, employees, agents, counsel
and other advisors (collectively, the "Related Persons") of the Agent (to the
extent not reimbursed by the Borrower), ratably in accordance with the
respective Pro Rata Shares of the Banks, against and hold each of them harmless
from any and all liabilities, obligations, losses, claims, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever, including the reasonable fees and disbursements of counsel to
the Agent (including allocated costs of internal counsel), which may be imposed
on, incurred by, or asserted against the Agent or any such Related Person to be
indemnified, in any way relating to or arising out of the Loan Documents, the
use or intended use of the proceeds of the Loans or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent or
other such Related Person to be indemnified in connection with any of the
foregoing; provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent they are found by a final
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Agent, or any other Related Person to be
indemnified.

                  SECTION 11.07 Delegation of Duties. The Agent may, in its
discretion, employ from time to time one or more agents or attorneys-in-fact
(including any of the Agent's Affiliates) to perform any of the Agent's duties
under the Loan Documents. The Agent shall not be responsible for the negligence
or misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.

                  SECTION 11.08 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving 90 days' written notice thereof to the Banks and the Borrower.
Upon any such resignation, the Borrower shall have the right to appoint a
successor Agent from among the Banks, with the consent of the Majority Banks
(which shall not be unreasonably withheld), and the Borrower and the Banks shall
use their best efforts so to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Borrower and the Majority Banks, and shall
have accepted such appointment, prior to the effective date of the retiring
Agent's resignation, the retiring Agent may, on behalf of the Banks, appoint a
successor Agent from among the Banks. Upon the effectiveness of the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges, duties and obligations of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under the Loan Documents.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article XI shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under the Loan Documents.

                  SECTION 11.09 Co-Agents. None of the Banks identified on the
facing page or signature pages of this Agreement as a "co-agent" shall have any
right, power, obligation,



                                      49.
<PAGE>
liability, responsibility or duty under this Agreement other than those
applicable to all Banks as such. Without limiting the foregoing, none of the
Banks so identified as a "co-agent" shall have or be deemed to have any
fiduciary relationship with any Bank. Each Bank acknowledges that it has not
relied, and will not rely, on any of the Banks so identified in deciding to
enter into this Agreement or in taking or not taking action hereunder.

                                   ARTICLE XII
                                  MISCELLANEOUS

                  SECTION 12.01 Amendments and Waivers. Except as otherwise
provided herein or in any other Loan Document, (I) no amendment to any provision
of this Agreement or any of the other Loan Documents shall in any event be
effective unless the same shall be in writing and signed by the Borrower, the
Agent and the Majority Banks (or the Agent with the written consent of the
Majority Banks); and (II) no waiver of any provision of this Agreement or any
other Loan Document, or consent to any departure by the Borrower, shall in any
event be effective unless the same shall be in writing and signed by the Agent
and the Majority Banks (or the Agent with the consent of the Majority Banks).
Any such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that,
notwithstanding the foregoing provisions of this Section 12.01, any term or
provision of Article XI (other than the provisions of Section 11.08 pertaining
to Borrower consent) may be amended without the agreement or consent of, or
prior notice to, the Borrower; and provided further, however, that, unless in
writing and signed by all of the Banks (or by the Agent with the written consent
of all the Banks), no amendment, waiver or consent shall do any of the
following:

                                    (A) increase the amount, or extend the
                  stated expiration or termination date, of the Revolving
                  Commitments of the Banks (or any of them), except as otherwise
                  provided in subsection 4.01(c) with respect to the extension
                  of the Revolving Termination Date as provided therein;

                                    (B) reduce the principal of, or interest on,
                  the Loans or any fee or other amount payable to the Banks (or
                  any of them) hereunder;

                                    (C) postpone any date fixed for any payment
                  in respect of principal of, or interest on, the Loans or any
                  fee or other amount payable to the Banks (or any of them)
                  hereunder;

                                    (D) change the definition of "Majority
                  Banks" or any definition or provision of this Agreement
                  requiring the approval of Majority Banks or some other
                  specified amount of Banks;

                                    (E) consent to the assignment or transfer by
                  the Borrower of any of its rights and obligations under the
                  Loan Documents;

                                    (F) waive any of the conditions specified in
                  Article VII;

                                    (G) amend, modify or waive the provisions of
                  Section 6.01, 6.05 or 12.07; or





                                      50.
<PAGE>

                                    (H) amend, modify or waive the provisions of
                  this Section 12.01; and

provided, further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Banks required hereinabove to
take such action, affect the rights, obligations or duties of the Agent under
any Loan Document, and (ii) the Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed by the parties thereto.

         SECTION 12.02 Notices.

                  (a) Notices. All notices and other communications provided
for hereunder and under the other Loan Documents shall, unless otherwise stated
herein, be in writing (including by facsimile transmission followed by a
telephone call by the sender to confirm receipt by the recipient party) and
mailed, sent or delivered to the respective parties hereto at or to their
respective addresses or facsimile numbers set forth in Schedule 2, or at or to
such other address or facsimile number as shall be designated by any party in a
written notice to the other parties hereto. All such notices and communications
shall be effective (i) if delivered by hand, when delivered; (ii) if sent by
mail, upon the earlier of the date of receipt and five Business Days after
deposit in the mail, first class (or air mail, with respect to communications to
be sent to or from the United States), postage prepaid; and (iii) if sent by
facsimile transmission, upon verbal confirmation of receipt by the recipient
party; provided, however, that notices and communications to the Agent shall not
be effective until received.

                  (b) Facsimile and Telephonic Notice. The Borrower acknowledges
and agrees that the agreement of the Agent and the Banks herein and in any other
Loan Document to receive certain notices by telephone and facsimile is solely
for the convenience and at the request of the Borrower. The Agent and the Banks
shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Borrower to give such notice and the Agent and the
Banks shall not have any liability to the Borrower or any other Person on
account of any action taken or not taken by the Agent and the Banks in reliance
upon such telephonic or facsimile notice. The obligation of the Borrower to
repay the Loans and the other Obligations shall not be affected in any way or to
any extent by any failure by the Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Agent
and the Banks of a confirmation which is at variance with the terms understood
by the Agent and the Banks to be contained in the telephonic or facsimile
notice.

                  SECTION 12.03 No Waiver; Cumulative Remedies. No failure on
the part of the Agent or any Bank to exercise, and no delay in exercising, any
right, remedy, power or privilege under any Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
remedy, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights and remedies
under the Loan Documents are cumulative and not exclusive of any rights,
remedies, powers and privileges that may otherwise be available to the Agent or
any Bank.

         SECTION 12.04 Costs and Expenses; Indemnification.



                                      51.
<PAGE>

                  (a) Costs and Expenses. The Borrower agrees to pay not
later than 30 days after written demand therefor, including a statement of
account, whether or not the transactions contemplated hereby shall be
consummated:

                           (i) the reasonable out-of-pocket costs and expenses
         of the Agent and any of its Affiliates, and the reasonable fees and
         disbursements of outside counsel to the Agent, in connection with the
         negotiation, preparation, execution, delivery and syndication of the
         Loan Documents, and any amendments, modifications or waivers requested
         by the Borrower of the terms thereof; and

                           (ii) all costs and expenses of the Agent, its
         Affiliates and the Banks, and fees and disbursements of counsel
         (including allocated costs of internal counsel), in connection with (a)
         any Default, (b) the enforcement or attempted enforcement of, and
         preservation of any rights or interests under, the Loan Documents, and
         (c) any out-of-court workout or other refinancing or restructuring or
         any bankruptcy case, including any losses, costs and expenses sustained
         by the Agent and any Bank as a result of any failure by the Borrower to
         perform or observe its obligations contained in the Loan Documents.

                  (b) Indemnification. Whether or not the transactions
contemplated hereby shall be consummated, the Borrower hereby agrees to
indemnify the Agent, each Bank and any Related Person thereof (each an
"Indemnified Person") against, and hold each of them harmless from, any and all
liabilities, obligations, losses, claims, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including the reasonable fees and disbursements of counsel to an
Indemnified Person (including allocated costs of internal counsel), which may be
imposed on, incurred by, or asserted against any Indemnified Person, (i) in any
way relating to or arising out of any of the Loan Documents, the use or intended
use of the proceeds of the Loans, or the transactions contemplated hereby, (ii)
with respect to any investigation, litigation or other proceeding relating to
any of the foregoing, irrespective of whether the Indemnified Person shall be
designated a party thereto, or (iii) in any way relating to or arising out of
the use, generation, manufacture, installation, treatment, storage or presence,
or the spillage, leakage, leaching, migration, dumping, deposit, discharge,
disposal or release, at any time, of any Hazardous Substances on, under, at or
from any Premises, including any personal injury or property damage suffered by
any Person, and any investigation, site assessment, environmental audit,
feasibility study, monitoring, clean-up, removal, containment, restoration,
remedial response or remedial work undertaken by or on behalf of the any
Indemnified Person at any time, voluntarily or involuntarily, with respect to
the Premises (the "Indemnified Liabilities"); provided that the Borrower shall
not be liable to any Indemnified Person for any portion of such Indemnified
Liabilities to the extent they are found by a final decision of a court of
competent jurisdiction to have resulted from such Indemnified Person's gross
negligence or willful misconduct. Subject to the preceding proviso, if and to
the extent that the foregoing indemnification is for any reason held
unenforceable, the Borrower agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.

                  (c) Other Charges. The Borrower agrees to indemnify the
Agent and each of the Banks against and hold each of them harmless from any and
all present and future stamp, transfer, documentary and other such taxes,
levies, fees, assessments and other charges made by



                                      52.
<PAGE>

any jurisdiction by reason of the execution, delivery, performance and
enforcement of the Loan Documents.

                  SECTION 12.05 Right of Set-Off. Upon the occurrence and during
the continuance of any Event of Default, each Bank hereby is authorized, to the
extent permitted by applicable statute, at any time and from time to time,
without notice to the Borrower (any such notice being expressly waived by the
Borrower), to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at any
time owing by such Bank to or for the credit or the account of the Borrower
against any and all of the Obligations of the Borrower now or hereafter existing
under this Agreement and the other Loan Documents, irrespective of whether or
not such Bank shall have made any demand under this Agreement or any such other
Loan Document and although such Obligations may be unmatured. Each Bank agrees
promptly to notify the Borrower (through the Agent) after any such set-off and
application made by such Bank; provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Bank under this Section 12.05 are in addition to other rights and remedies
(including other rights of set-off) which such Bank may have.

                  SECTION 12.06 Survival. All covenants, agreements,
representations and warranties made in any Loan Documents shall, except to the
extent otherwise provided therein, survive the execution and delivery of this
Agreement, the making of the Loans and the execution and delivery of the Notes,
and shall continue in full force and effect so long as the Banks have any
Revolving Commitments, any Loans remain outstanding or any other Obligations
remain unpaid or any obligation to perform any other act under any Loan Document
remains unsatisfied. Without limiting the generality of the foregoing, the
obligations of the Borrower under Sections 5.02, 5.03, 6.03 and 12.04, and of
the Banks under Sections 6.03 and 11.06, and all similar obligations under the
other Loan Documents (including all obligations to pay costs and expenses and
all indemnity obligations), shall survive the repayment of the Loans and the
termination of the Revolving Commitments.

                  SECTION 12.07 Obligations Several. The obligations of the
Banks under the Loan Documents are several. The failure of any Bank or the Agent
to carry out its obligations thereunder shall not relieve any other Bank or the
Agent of any obligation thereunder, nor shall any Bank or the Agent be
responsible for the obligations of, or any action taken or omitted by, any other
Person hereunder or thereunder. Nothing contained in any Loan Document shall be
deemed to cause any Bank or the Agent to be considered a partner of or joint
venturer with any other Bank or Banks, the Agent or the Borrower.

                  SECTION 12.08 Benefits of Agreement. The Loan Documents are
entered into for the sole protection and benefit of the parties hereto and their
successors and assigns, and no other Person other than Affiliates of the Agent
and the Related Persons referred to in Sections 11.06, 12.04 and 12.14 shall be
a direct or indirect beneficiary of, or shall have any direct or indirect cause
of action or claim in connection with, any Loan Document.

         SECTION 12.09 Binding Effect; Assignment.



                                      53.
<PAGE>

                  (a) Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Agent and when the
Agent shall have been notified by each Bank that such Bank has executed it and
thereafter shall be binding upon, inure to the benefit of and be enforceable by
the Borrower, the Agent and each Bank and their respective successors and
assigns.

                  (b) Assignment. The Borrower shall not have the right to
assign its rights and obligations hereunder or under the other Loan Documents or
any interest herein or therein without the prior written consent of the Banks.
Each Bank may sell, assign, transfer or grant participations in all or any
portion of such Bank's rights and obligations hereunder and under the other Loan
Documents to any Bank or Eligible Assignee on the basis set forth below in this
subsection (b).

                           (i) Any Bank may, with the written consent of the
        Borrower and the Agent (which in each case shall not be unreasonably
        withheld), at any time assign and delegate to one or more Eligible
        Assignees all, or any ratable part of all, of the Revolving Loans and
        Revolving Commitment, or the Term Loans, as the case may be, and the
        other rights and obligations of such Bank hereunder; provided, however,
        that (A) no consent of the Borrower shall be required during the
        existence of an Event of Default; (B) no consent of the Borrower or the
        Agent shall be required in connection with any assignment and delegation
        by a Bank to an Eligible Assignee that is another Bank or an Affiliate
        of such Bank; and (C) except in connection with an assignment of all of
        a Bank's rights and obligations with respect to its Revolving Commitment
        and Loans, any such assignment to an Eligible Assignee that is not a
        Bank hereunder shall be equal to or greater than $15,000,000.

                           (ii) In the event of any such assignment, unless and
         until (A) an Assignment and Acceptance and notice of assignment shall
         have been delivered pursuant to clause (i) of Section 11.02(a), (B) the
         Agent shall have received payment of an administrative transfer charge
         in the amount of $3,500 from the assigning Bank (unless the assignee
         shall otherwise agree to pay such charge), and (C) the Agent and the
         Borrower shall have received all tax forms and documents required under
         Section 6.03(d), such assignee shall not be entitled to exercise the
         rights of a Bank under this Agreement and the other Loan Documents with
         respect to such assignment and the Agent shall not be obligated to make
         payment of any amount to which such assignee may become entitled
         thereunder other than to the assigning Bank. Subject to satisfaction of
         the foregoing conditions in connection with any assignment, upon the
         effectiveness of such assignment, the assignee shall be deemed a "Bank"
         for all purposes of this Agreement and the other Loan Documents with
         respect to the rights and obligations assigned to it, and the assigning
         Bank shall, to the extent that rights and obligations hereunder and
         under the other Loan Documents have been assigned by it pursuant to
         such Assignment and Acceptance, relinquish its rights and be released
         from its obligations under the Loan Documents; provided, however, that
         the assigning Bank shall not relinquish its rights under Article V or
         under Sections 6.03 and 12.04 to the extent such rights relate to the
         time prior to the effective date of the Assignment and Acceptance.



                                      54.
<PAGE>

                           (iii) In connection with any partial assignment, upon
         the request of the assigning Bank or the assignee, (A) the Borrower
         shall execute and deliver substitute Notes to the assigning Bank or the
         assignee, dated the effective date of such assignment, setting forth
         the respective Revolving Commitment, or Term Loans, as the case may be,
         of such assigning Bank and assignee as the respective maximum principal
         amounts thereof, and containing other appropriate insertions, and the
         assigning Bank shall thereupon return the Notes previously held by it;
         and (B) Schedules 1 and 2 shall be deemed amended to reflect the
         adjustment of the Revolving Commitments and Pro Rata Shares of the
         Banks resulting therefrom and the Lending Office, if any, and address
         for notices of the assignee.

                           (iv) In the event of any grant of a participation,
        the granting Bank shall remain a "Bank" for purposes of this Agreement,
        the Borrower, the other Banks and the Agent shall continue to deal
        solely and directly with such Bank in connection with this Agreement and
        the other Loan Documents, and no Bank shall transfer or grant any
        participating interest under which the participant shall have rights to
        approve any amendment to, or any consent or waiver with respect to, this
        Agreement or any other Loan Document, except to the extent such
        amendment, consent or waiver would require the consent of the Bank
        granting such participation as described in the second proviso to
        Section 12.01 or the unanimous consent of all of the Banks as described
        in the third proviso to Section 12.01. In the case of any such
        participation, the participant shall not have any of the rights of a
        Bank under this Agreement or the other Loan Documents, except that the
        participant shall (A) be deemed to have a right of setoff under Section
        12.05 in respect of its participation to the same extent as if it were a
        "Bank" hereunder, provided that such participant shall also be
        considered a "Bank" for purposes of Section 6.05; and (B) such
        participant shall also be entitled to the benefits of Sections 5.02,
        5.03, 6.03 and 12.04, provided that any amounts payable under Sections
        5.03 or 6.03 to any participant shall not exceed the amounts which would
        have been payable by the Borrower thereunder to the Bank granting such
        participation.

                           (v) The Borrower agrees that in connection with any
         such grant or assignment, such Bank may deliver to the prospective
         participant or assignee financial statements and other relevant
         information relating to the Borrower and its Subsidiaries.

                           (vi) Each Bank shall obtain from any such prospective
         participant or assignee a confidentiality agreement in which such
         participant or assignee agrees to an obligation of confidentiality
         substantially similar to the terms of Section 12.14.

                           (vii) Notwithstanding any other provision in this
         Agreement, any Bank may at any time create a security interest in, or
         pledge, all or any portion of its rights under and interest in this
         Agreement and any Note held by it in favor of any Federal Reserve Bank
         in accordance with Regulation A of the FRB or U.S. Treasury Regulation
         31 CFR Section 203.14, and such Federal Reserve Bank may enforce such
         pledge or security interest in any manner permitted under applicable
         law.



                                      55.
<PAGE>

                  SECTION 12.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.

         SECTION 12.11 Submission to Jurisdiction.

                  (a) Submission to Jurisdiction. The Borrower hereby (i)
submits to the non-exclusive jurisdiction of the courts of the State of
California and the Federal courts of the United States sitting in the State of
California for the purpose of any action or proceeding arising out of or
relating to the Loan Documents, (ii) agrees that all claims in respect of any
such action or proceeding may be heard and determined in such courts, (iii)
irrevocably waives (to the extent permitted by applicable law) any objection
which it now or hereafter may have to the laying of venue of any such action or
proceeding brought in any of the foregoing courts, and any objection on the
ground that any such action or proceeding in any such court has been brought in
an inconvenient forum and (iv) agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner permitted by law.

                  (b) No Limitation. Nothing in this Section 12.11 shall
limit the right of the Agent or the Banks to bring any action or proceeding
against the Borrower or its property in the courts of other jurisdictions.

                  SECTION 12.12 Waiver of Jury Trial. THE BORROWER, THE BANKS
AND THE AGENT HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER, THE BANKS AND THE
AGENT HEREBY AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. A COPY OF THIS
SECTION 12.12 MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER OF
THE RIGHT TO TRIAL BY JURY AND CONSENT TO TRIAL BY COURT.

                  SECTION 12.13 Limitation on Liability. No claim shall be made
by the Borrower or its Affiliates against the Agent, the Banks or any of their
respective Related Persons for any



                                      56.
<PAGE>

special, indirect, exemplary, consequential or punitive damages in respect of
any breach or wrongful conduct (whether or not the claim therefor is based on
contract, tort or duty imposed by law), in connection with, arising out of or in
any way related to the transactions contemplated by the Loan Documents or any
act or omission or event occurring in connection therewith; and the Borrower
hereby waives, releases and agrees not to sue upon any such claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.

                  SECTION 12.14 Confidentiality. Each Bank and the Agent shall
hold all non-public information relating to the Borrower and its Subsidiaries
obtained by it under this Agreement in accordance with its customary procedures
for handling confidential information of this nature, except for: (i) disclosure
to its Affiliates or to its counsel or to any agent or advisor acting on its
behalf in connection with the negotiation, execution or performance of the Loan
Documents; (ii) disclosure as reasonably required in connection with a transfer
to a prospective assignee or participant of all or part of its Loans or
Revolving Commitment or any participation therein, as provided in Section
12.09(b); (iii) disclosure as may be required or requested by any Governmental
Authority or representative thereof or pursuant to legal process; (iv)
disclosure to any Person and in any proceeding necessary in such Bank's or the
Agent's judgment to protect its interests in connection with any claim or
dispute involving such Bank or the Agent; and (v) any other disclosure with the
prior written consent of the Borrower. Prior to any disclosure by any Bank or
the Agent of such non-public information permitted under clause (iii) (other
than in connection with an examination of the financial condition of such Bank,
the Agent or any of their Affiliates by any Governmental Authority), it shall,
if permitted by applicable laws or judicial order, notify the Borrower of such
pending disclosure. In no event shall any Bank or the Agent be obligated or
required to return any materials furnished by the Borrower or its Subsidiaries.
Notwithstanding the foregoing, such obligation of confidentiality shall not
apply if the information or substantially similar information (a) is rightfully
received by any Bank or the Agent from a Person other than the Borrower or any
of its Affiliates without such Bank or the Agent being under an obligation to
such Person not to disclose such information, or (b) is or becomes part of the
public domain.

                  SECTION 12.15 Entire Agreement. The Loan Documents reflect the
entire agreement among the Borrower, the Banks and the Agent with respect to the
matters set forth herein and therein and supersede any prior agreements,
Revolving Commitments, drafts, communications, discussions and understandings,
oral or written, with respect thereto.

                  SECTION 12.16 Severability. Whenever possible, each provision
of the Loan Documents shall be interpreted in such manner as to be effective and
valid under all applicable laws and regulations. If, however, any provision of
any of the Loan Documents shall be prohibited by or invalid under any such law
or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation, or,
if for any reason it is not deemed so modified, it shall be ineffective and
invalid only to the extent of such prohibition or invalidity without affecting
the remaining provisions of such Loan Document, or the validity or effectiveness
of such provision in any other jurisdiction.

                  SECTION 12.17 Counterparts This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so



                                      57.
<PAGE>

executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.

                  SECTION 12.18 Effect of Amendment. This Agreement is intended
to amend the Existing Credit Agreement and, solely for convenience of reference,
to restate it. The Borrower hereby acknowledges, certifies and agrees that, with
respect to the "Loans" outstanding under and as defined in the Existing Credit
Agreement as of the Closing Date, the Borrower's obligation to repay such loans
to the Banks shall continue and constitute Revolving Loans under and subject to
the terms and provisions of this Agreement and shall initially be deemed Base
Rate Loans or Eurodollar Rate Loans hereunder to the same extent as under the
Existing Credit Agreement on the Closing Date. All outstanding Notes under the
Existing Credit Agreement (i) shall be superseded and replaced by the Notes
delivered under this Agreement; and (ii) will be deemed cancelled upon the
occurrence of the Closing Date. Furthermore, the Borrower hereby reaffirms the
validity and binding effect of all documents and agreements executed and
delivered pursuant to the Existing Credit Agreement, some or all of which have
been amended pursuant to this Agreement.

                  SECTION 12.19 Certain Transitional Matters. On the Closing
Date, the amount of "Revolving Loans" then outstanding under and as defined in
the Existing Credit Agreement and held by each "Bank" under and as defined in
the Existing Credit Agreement shall be adjusted to reflect the changes in the
Banks' Revolving Commitments and Pro Rata Shares under this Agreement as set
forth in Schedule 1, subject to Section 5.02. Each "Bank" having "Revolving
Loans" then outstanding and whose "Pro Rata Share" under and as defined in the
Existing Credit Agreement has been decreased on the Closing Date as a result of
this Agreement shall be deemed to have assigned on the Closing Date, without
recourse, to each "Bank" increasing its "Revolving Commitment" under and as
defined in the Existing Credit Agreement such portion of such "Revolving Loans"
as shall be necessary to effectuate such adjustment. Each Bank increasing its
"Revolving Commitment" on the Closing Date as a result of this Agreement shall
(i) be deemed to have assumed such portion of such "Revolving Loans" and (ii)
fund on the Closing Date such assumed amounts to the Agent for the account of
the assigning "Bank" in accordance with the provisions hereof in the amount
notified to such increasing "Bank" by the Agent.


                           [SIGNATURE PAGES FOLLOW.]


                                      58.
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.

                                          THE BORROWER

                                          CADENCE DESIGN SYSTEMS, INC.

                                          By
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                          THE AGENT

                                          ABN AMRO BANK N.V., AS AGENT

                                          By
                                            ------------------------------------
                                            Name:
                                            Title:


                                          By
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                          THE BANKS

                                          ABN AMRO BANK N.V., AS A BANK

                                          By
                                            ------------------------------------
                                            Name:
                                            Title:

                                          By
                                            ------------------------------------
                                            Name:
                                            Title:


<PAGE>
                                          U.S. BANK NATIONAL ASSOCIATION

                                          By
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                          KEYBANK NATIONAL ASSOCIATION

                                          By
                                            ------------------------------------
                                            Name:
                                            Title:


<PAGE>
                                          UBS AG, STAMFORD BRANCH

                                          By
                                            ------------------------------------
                                            Name:
                                            Title:

                                          By
                                            ------------------------------------
                                            Name:
                                            Title:

<PAGE>
                                          BARCLAYS BANK PLC

                                          By
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                          THE INDUSTRIAL BANK OF JAPAN, LIMITED


                                          By
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                          FLEET NATIONAL BANK


                                          By
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                          MELLON BANK, N.A.


                                          By
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                          THE BANK OF NOVA SCOTIA


                                          By
                                            ------------------------------------
                                            Name:
                                            Title:

<PAGE>
                                          THE CHASE MANHATTAN BANK



                                          By
                                            ------------------------------------
                                            Name:
                                            Title:

<PAGE>
                                          WELLS FARGO BANK,
                                          NATIONAL ASSOCIATION


                                          By
                                            ------------------------------------
                                            Name:
                                            Title:


                                          By
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                          THE FUJI BANK LIMITED


                                          By
                                            ------------------------------------
                                            Name:
                                            Title:

<PAGE>
                                  ATTACHMENT A

                  Permitted Receivables Purchase Facilities

                  1. Purchase and Sale Program Agreement executed and delivered
as of February 25, 1998, by and among Cadence Design Systems, Inc., a Delaware
corporation ("Seller"), Cadence Design Systems, Inc., a Delaware corporation
(solely in its capacity as the servicer of the Contracts thereunder,
"Servicer"), and BancBoston Leasing Inc., a Massachusetts corporation
("BancBoston"), as supplemented by that certain Addendum to Purchase and Sale
Program Agreement executed and delivered as of December 31, 1998, by and among
Cadence Design Systems, Inc., a Delaware corporation (in its individual capacity
"Cadence Design"), Servicer, Cadence Credit Corporation, a Delaware corporation
("Cadence Credit"), Cadence Receivables Consolidation Corporation, a Delaware
corporation and BancBoston.

                  2. Amended and Restated Purchase and Sale Program Agreement
executed and delivered as of March 19, 1999, by and among Cadence Design
Systems, Inc., a Delaware corporation ("Cadence Design"), Cadence Credit
Corporation, a Delaware corporation, ("Cadence Credit"), Cadence Credit
Corporation, a Delaware corporation (solely in its capacity as the servicer of
the Contracts thereunder, "Servicer"), and Bane One Leasing Corporation, an Ohio
corporation ("Banc One"), as supplemented by that certain Addendum to Amended
and Restated Purchase and Sale Program Agreement executed and delivered as of
March 19, 1999, by and among Cadence Design, Cadence Credit, Servicer, Cadence
Receivables Consolidation Corporation, a Delaware corporation, and Banc one.

                  3. Purchase and Sale Program Agreement executed and delivered
as of January 18, 1999, by and among Cadence Design Systems, Inc., a Delaware
corporation ("Cadence Design"), Cadence Credit Corporation, a Delaware
corporation, ("Cadence Credit"), Servicer, and Dresdner Kleinwort Benson North
America Leasing, Inc. ("Dresdner"), as supplemented by that certain Addendum to
Purchase and Sale Program Agreement executed and delivered as of April 21, 1999,
by and among Cadence Design, Cadence Credit Servicer, Cadence Receivables
Consolidation Corporation, a Delaware corporation ("Cadence Consolidation"), and
Dresdner.

                  4. Amended and Restated Purchase and Sale Program Agreement
executed and delivered as of December 31, 1998, by and among Cadence Design
Systems, Inc., a Delaware corporation ("Cadence Design"), Cadence Credit
Corporation, a Delaware corporation, ("Cadence Credit"), Cadence Credit
Corporation, a Delaware corporation (solely in its capacity as the servicer of
the Contracts thereunder, "Servicer"), and Sanwa Business Credit Corporation, a
Delaware corporation ("Sanwa"), as supplemented by that certain Addendum to
Amended and Restated Purchase and Sale Program Agreement executed and delivered
as of December 31, 1998, by and among Cadence Design, Cadence Credit, Servicer,
Cadence Receivables Consolidation Corporation, a Delaware corporation ("Cadence
Consolidation"), and Sanwa.

                  5. Purchase and Sale Program Agreement executed and delivered
as of March 24, 1999, by and among Cadence Design Systems, Inc., a Delaware
corporation ("Cadence Design, Cadence Credit Corporation, a Delaware
corporation, ("Cadence Credit"), Cadence Credit Corporation, a Delaware
corporation (solely in its capacity as the servicer of the



                                 Attachment A-1

<PAGE>
Contracts thereunder, "Servicer", and Heller Financial Leasing, Inc., a Delaware
corporation ("Heller"), as supplemented by that certain Addendum to Purchase and
Sale Program Agreement executed and delivered as of March 24, 1999, by and among
Cadence Design, Cadence Credit, Servicer, Cadence Receivables Consolidation
Corporation, a Delaware corporation, and Heller.

                  6. Purchase and Sale Program Agreement executed and delivered
as of March 29, 1999, by and among Cadence Design Systems, Inc., a Delaware
corporation ("Cadence Design"), Cadence Credit Corporation, a Delaware
corporation, ("Cadence Credit"), Cadence Credit Corporation, a Delaware
corporation (solely in its capacity as the servicer of the Contracts thereunder,
"Servicer"), and Hitachi Credit America Corp., a Delaware corporation
("Hitachi"), as supplemented by that certain Addendum to Purchase and Sale
Program Agreement executed and delivered as of March 29, 1999, by and among
Cadence Design, Cadence Credit, Servicer, Cadence Receivables Consolidation
Corporation, a Delaware corporation, and Hitachi.

                  7. Purchase and Sale Program Agreement and amendment thereto
executed and delivered as of December 1, 1998, by and among Cadence Design
Systems, Inc., a Delaware corporation, Cadence Design Systems, Inc., a Delaware
corporation (solely in its capacity as the servicer of the Contracts
thereunder), and International Software Finance Corporation, a Delaware
corporation.

                  8. Purchase and Sale Program Agreement executed and delivered
as of April 16, 1999, by and among Cadence Design Systems, Inc., a Delaware
corporation ("Cadence Design"), Cadence Credit Corporation, a Delaware
corporation, ("Cadence Credit"), Cadence Credit Corporation, a Delaware
corporation (solely in its capacity as the servicer of the Contracts thereunder,
"Servicer"), and Leasetec Corporation, a Delaware corporation ("Leasetec"), as
supplemented by that certain Addendum to Purchase and Sale Program Agreement
executed and delivered as of April 16, 1999, by and among Cadence Design,
Cadence Credit, Servicer, Cadence Receivables Consolidation Corporation, a
Delaware corporation, and Leasetec.

                  9. Amended and Restated Purchase and Sale Program Agreement
executed and delivered as of May 21, 1999, by and among Cadence Design Systems,
Inc., a Delaware corporation ("Cadence Design"), Cadence Credit Corporation, a
Delaware corporation, ("Cadence Credit"), Cadence Credit Corporation, a Delaware
corporation (solely in its capacity as the servicer of the Contracts thereunder,
"Servicer"), and Mellon US Leasing, a division of Mellon Leasing Corporation, a
Pennsylvania corporation ("Mellon"), as supplemented by that certain Addendum to
Amended and Restated Purchase and Sale Program executed and delivered as of May
21, 1999, by and among Cadence Design, Cadence Credit, Servicer, Cadence
Receivables Consolidation Corporation, a Delaware corporation, and Mellon.

                  10. Amended and Restated Purchase and Sale Program executed
and delivered as of March 12, 1999, by and among Cadence Design Systems, Inc., a
Delaware corporation ("Cadence Design"), Cadence Credit Corporation, a Delaware
corporation, ("Cadence Credit"), Cadence Credit Corporation, a Delaware
corporation (solely in its capacity as the servicer of the Contracts thereunder,
"Servicer"), and Prime Leasing, Inc., an Illinois corporation ("Prime Leasing"),
as supplemented by that certain Addendum to Amended and Restated Purchase and
Sale Program Agreement executed and delivered as of March 12, 1999, by and among
Cadence



                                 Attachment A-2
<PAGE>

Design, Cadence Credit, Servicer, Cadence Receivables Consolidation Corporation,
a Delaware corporation, and Prime Leasing.

                  11. Purchase and Sale Program Agreement s executed and
delivered as of March 31, 1999, by and among Cadence Design Systems, Inc., a
Delaware corporation ("Cadence Design"), Cadence Credit Corporation, a Delaware
corporation, ("Cadence Credit"), Cadence Credit Corporation, a Delaware
corporation (solely in its capacity as the servicer of the Contracts thereunder,
"Servicer"), and Siemens Credit Corporation, a Delaware corporation ("Siemens"),
as supplemented by that certain Addendum to Purchase and Sale Program Agreement
executed and delivered as of March 31, 1999, by and among Cadence Design,
Cadence Credit, Servicer, Cadence Receivables Consolidation Corporation, a
Delaware corporation, and Siemens.

                  12. Purchase and Sale Program Agreement executed and delivered
as of June 24, 1998, by and among Cadence Design Systems, Inc., a Delaware
corporation, Cadence Design Systems, Inc., a Delaware corporation (solely in its
capacity as the servicer of the Contracts thereunder), and Software Lease
Finance Group, Inc., a California corporation.

                  13. Purchase and Sale Program Agreement (United Kingdom)
executed and delivered as of June 30, 2000, by and between Cadence Design
Systems Limited ("Sellee") and Leasetec UK Limited ("Purchaser").

                  14. Receivables Sale Agreement dated as of September 30, 1998,
among Cadence Receivables Corporation, Cadence Credit Corporation, Cadence
Design Systems, Inc., Windmill Funding Corporation, the liquidity providers from
time to time party thereto, and ABN AMRO Bank N.V., as the enhancer and the
agent, together with the other agreements in connection therewith.



                                 Attachment A-3

<PAGE>
                                     ANNEX I

                                  PRICING GRID

                  The Applicable Margin and the Applicable Fee Amount, for any
day, shall be the amount per annum set forth below based on the Fixed Charge
Coverage Ratio set forth in the Compliance Certificate most recently delivered
by the Borrower to the Agent pursuant to Section 9.01(a)(iii) (or Section
7.01(f), as the case may be) of the Credit Agreement; changes in the Applicable
Margin and the Applicable Fee Amount resulting from a change in the Fixed Charge
Coverage Ratio shall become effective on the earlier of: (i) the date of
delivery by the Borrower to the Agent of a new Compliance Certificate and
accompanying financial statements pursuant to Section 9.01(a)(iii); and (ii) the
date on which the Borrower is required to deliver such new Compliance
Certificate and accompanying financial statements pursuant to Section
9.01(a)(iii) (such date, the "Compliance Date"). If the Borrower shall fail to
deliver a Compliance Certificate and accompanying financial statements within
the number of days after the end of any fiscal quarter or fiscal year as
required pursuant to Section 9.01(a)(iii) (without giving effect to any grace
period), the parties agree that the Applicable Margin and the Applicable Fee
Amount shall be adjusted retroactively to the Compliance Date upon the Agent's
receipt of the applicable Compliance Certificate and accompanying financial
statements pursuant to Section 9.01(a)(iii).

<TABLE>
<CAPTION>
=======================================================================================================================
                                                                   EURODOLLAR RATE
     LEVEL                 FIXED CHARGE COVERAGE RATIO                 SPREAD        COMMITMENT FEE     UTILIZATION FEE
=======================================================================================================================
<S>               <C>                                              <C>               <C>                <C>
    Level 1       less than or equal to 2.00                           1.500%             0.225%             .250%
-----------------------------------------------------------------------------------------------------------------------
    Level 2       greater than 2.00 but less than or equal to
                  3.00                                                 1.375%             0.225%             .250%
-----------------------------------------------------------------------------------------------------------------------
    Level 3       greater than 3.00                                    1.250%             0.225%             .250%
=======================================================================================================================
</TABLE>



                                   Annex I-1

<PAGE>
                                   SCHEDULE 1

                              REVOLVING COMMITMENTS
                               AND PRO RATA SHARES

<TABLE>
<CAPTION>
=========================================================================================================
                       BANK                              REVOLVING COMMITMENT           PRO RATA SHARE
---------------------------------------------------------------------------------------------------------
<S>                                                       <C>                           <C>
ABN AMRO Bank N.V.                                         $35,714,285.710               13.73626373%
---------------------------------------------------------------------------------------------------------
Fleet National Bank                                        $32,857,142.860               12.63736264%
---------------------------------------------------------------------------------------------------------
KeyBank National Association                               $28,571,428.570               10.98901099%
---------------------------------------------------------------------------------------------------------
UBS AG, Stamford Branch                                    $28,571,428.570               10.98901099%
---------------------------------------------------------------------------------------------------------
U.S. Bank National Association                             $25,000,000.000                9.61538462%
---------------------------------------------------------------------------------------------------------
The Bank of Nova Scotia                                    $22,857,142.860                8.79120879%
---------------------------------------------------------------------------------------------------------
Barclays Bank PLC                                          $21,428,571.430                8.24175824%
---------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank                                   $20,000,000.000                7.69230769%
---------------------------------------------------------------------------------------------------------
Wells Fargo Bank, National Association                     $17,857,142.860                6.86813187%
---------------------------------------------------------------------------------------------------------
Mellon Bank, N.A.                                          $14,285,714.290                5.49450550%
---------------------------------------------------------------------------------------------------------
The Fuji Bank, Limited                                      $7,142,857.140                2.74725275%
---------------------------------------------------------------------------------------------------------
The Industrial Bank of Japan, Limited                       $5,714,285.710                2.19780220%
---------------------------------------------------------------------------------------------------------
                                                          $260,000,000.000              100.00000000%
=========================================================================================================
</TABLE>



                                  Schedule 1-1

</TEXT>
</DOCUMENT>
</SUBMISSION>
