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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income before provision for income taxes

Cadence’s income before provision for income taxes included income from the United States and from foreign subsidiaries for fiscal 2024, 2023 and 2022, was as follows:

			2024						2023						2022
			(In thousands)
United States			$	600,088					$	533,442					$	402,083
Foreign subsidiaries			795,731						748,484						643,280
Total income before provision for income taxes			$	1,395,819					$	1,281,926					$	1,045,363

Components of income taxes provision

Cadence’s provision for income taxes was comprised of the following items for fiscal 2024, 2023 and 2022:

			2024						2023						2022
			(In thousands)
Current:
Federal			$	281,674					$	156,495					$	212,380
State and local			50,430						15,933						7,280
Foreign			136,968						104,866						84,357
Total current			469,072						277,294						304,017
Deferred:
Federal			(130,490)						(87,851)						(79,170)
State and local			(5,127)						25,440						(50,640)
Foreign			6,880						25,899						22,204
Total deferred			(128,737)						(36,512)						(107,606)
Total provision for income taxes			$	340,335					$	240,782					$	196,411

Summary of income tax reconciliation

The provision for income taxes differs from the amount estimated by applying the United States statutory federal income tax rates of 21% to income before provision for income taxes for fiscal 2024, 2023, and 2022 as follows:

			2024						2023						2022
			(In thousands)
Provision computed at federal statutory income tax rate			$	293,122					$	269,205					$	219,526
State and local income tax, net of federal tax effect			50,130						40,304						29,622
Intercompany transfers of intangible property rights			7,833						23,826						—
Foreign income tax rate differential			(62,798)						(54,210)						(49,949)
Foreign-derived intangible income deduction			(13,344)						(14,253)						(2,335)
U.S. tax on foreign entities			144,222						113,011						132,563
Stock-based compensation			(6,181)						(26,805)						(17,023)
Change in deferred tax asset valuation allowance			11,441						9,077						(38,073)
Tax credits			(135,344)						(130,383)						(105,366)
Non-deductible acquisitions-related costs			11,770						6,709						4,273
Withholding taxes			20,175						15,300						17,459
Tax settlements, foreign			—						4,034						—
Increase (decrease) in unrecognized tax benefits			9,061						(19,660)						2,354
Other			10,248						4,627						3,360
Provision for income taxes			$	340,335					$	240,782					$	196,411
Effective tax rate			24		%				19		%				19		%

Components of deferred tax assets and liabilities

The components of deferred tax assets and liabilities consisted of the following as of December 31, 2024, and December 31, 2023:

			As of
			December 31, 2024						December 31, 2023
			(In thousands)
Deferred tax assets:
Tax credit carryforwards			$	110,031					$	129,513
Reserves and accruals			103,731						78,993
Intangible assets			487,947						506,398
Capitalized research and development expense for income tax purposes			368,085						242,465
Operating loss carryforwards			9,781						9,598
Deferred income			79,195						77,066
Capital loss carryforwards			16,861						16,483
Stock-based compensation costs			34,045						27,409
Depreciation and amortization			17,228						10,671
Investments			20,757						15,949
Lease liability			33,341						33,639
Prepaid expenses			—						3,253
Total deferred tax assets			1,281,002						1,151,437
Valuation allowance			(90,603)						(79,162)
Net deferred tax assets			1,190,399						1,072,275
Deferred tax liabilities:
Intangible assets			(107,251)						(83,308)
Undistributed foreign earnings			(76,045)						(64,371)
ROU assets			(33,341)						(33,639)
Investments			(14,171)						(6,318)
Other			(7,869)						(13,455)
Total deferred tax liabilities			(238,677)						(201,091)
Total net deferred tax assets			$	951,722					$	871,184

Summary of operating loss carryforward

As of December 31, 2024, Cadence’s operating loss carryforwards were as follows:

			Amount						Expiration Periods
			(In thousands)
Federal			$	61					2033
California			26,872						from 2025 through 2043
Other states (tax effected, net of federal benefit)			410						from 2025 through indefinite
Foreign (tax effected)			8,077						indefinite

Summary of tax credit carryforwards

As of December 31, 2024, Cadence had tax credit carryforwards of:

			Amount						Expiration Periods
			(In thousands)
Federal*			$	51,535					from 2031
California			58						indefinite
Other states			11,331						from 2033 through indefinite
Foreign			47,107						from 2044 through indefinite

_____________

*Certain of Cadence’s foreign tax credits have yet to be realized and as a result do not yet have an expiration period.

Earliest tax years open to examination by jurisdiction

As of December 31, 2024, Cadence’s earliest tax years that remain open to examination and the assessment of additional tax include:

Jurisdiction						Earliest Tax Year Open to Examination
United States – Federal						2020
United States – California						2020
Ireland						2020
Israel						2017
Korea						2019

Unrecognized tax benefits roll forward

The changes in Cadence’s gross amount of unrecognized tax benefits during fiscal 2024, 2023 and 2022 are as follows:

			2024						2023						2022
			(In thousands)
Unrecognized tax benefits at the beginning of the fiscal year			$	94,311					$	126,073					$	130,530
Gross amount of the increase (decrease) in unrecognized tax benefits of tax positions taken during a prior year*			10,109						(1,401)						2,152
Gross amount of the increases in unrecognized tax benefits as a result of tax positions taken during the current year			6,669						2,565						2,660
Amount of decreases in unrecognized tax benefits relating to settlements with taxing authorities, including the utilization of tax attributes			—						(8,000)						—
Reductions to unrecognized tax benefits resulting from the lapse of the applicable statute of limitations			(3,173)						(24,768)						(7,430)
Effect of foreign currency translation			(528)						(158)						(1,839)
Unrecognized tax benefits at the end of the fiscal year			$	107,388					$	94,311					$	126,073
Total amounts of unrecognized tax benefits that, if upon resolution of the uncertain tax positions would reduce Cadence’s effective tax rate			$	106,420					$	93,398					$	121,415

_____________

* Includes unrecognized tax benefits of tax positions recorded in connection with acquisitions

Interest and penalties recognized in consolidated income statements and balance sheets

The total amounts of interest, net of tax, and penalties recognized in the consolidated income statements as provision for income taxes for fiscal 2024, 2023 and 2022 were as follows:

			2024						2023						2022
			(In thousands)
Interest			$	3,893					$	2,282					$	434
Penalties			143						267						7

The total amounts of gross accrued interest and penalties recognized in the consolidated balance sheets as of December 31, 2024, and December 31, 2023, were as follows:

			As of
			December 31, 2024						December 31, 2023
			(In thousands)
Interest			$	9,010					$	4,813
Penalties			1,261						—

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