813672--2/23/2007--CADENCE_DESIGN_SYSTEMS

related topics

{property, intellectual, protect}

{customer, product, revenue}

{tax, income, asset}

{stock, price, share}

{debt, indebtedness, cash}

{operation, international, foreign}

{product, candidate, development}

{system, service, information}

{cost, operation, labor}

{competitive, industry, competition}

{operation, natural, condition}

{personnel, key, retain}

{acquisition, growth, future}

{product, market, service}

We have experienced varied operating results, and our operating results for any particular fiscal period are affected by the timing of significant orders for our software products, fluctuations in customer preferences for license types and the timing of revenue recognition under those license types. Our future revenue is dependent in part upon our installed customer base continuing to license or buy additional products, renew maintenance agreements and purchase additional services. We may not receive significant revenue from our current research and development efforts for several years, if at all. Our failure to attract, train, motivate and retain key employees may make us less competitive in our industries and therefore harm our results of operations. We have acquired and expect to acquire other companies and businesses and may not realize the expected benefits of these acquisitions. The competition in our industries is substantial and we may not be able to continue to successfully compete in our industries. We may need to change our pricing models to compete successfully. We rely on our proprietary technology as well as software and other intellectual property rights licensed to us by third parties, and we cannot assure you that the precautions taken to protect our rights will be adequate or that we will continue to be able to adequately secure such intellectual property rights from third parties. We could lose key technology or suffer serious harm to our business because of the infringement of our intellectual property rights by third parties or because of our infringement of the intellectual property rights of third parties. If our security measures are breached and an unauthorized party obtains access to customer data, our information systems may be perceived as being unsecure and customers may curtail or stop their use of our products and services. We may not be able to effectively implement our restructuring activities, and our restructuring activities may not result in the expected benefits, which would negatively impact our future results of operations. The long sales cycle of our products and services makes the timing of our revenue difficult to predict and may cause our operating results to fluctuate unexpectedly. The effect of foreign exchange rate fluctuations and other risks to our international operations may seriously harm our financial condition. Our operating results could be adversely affected as a result of changes in our effective tax rates. We have received examination reports from the Internal Revenue Service proposing deficiencies in certain of our tax returns, and the outcome of current and future tax examinations may have a material adverse effect on our results of operations and cash flows. Forecasting our estimated annual effective tax rate is complex and subject to uncertainty, and material differences between forecasted and actual tax rates could have a material impact on our results of operations. Failure to obtain export licenses could harm our business by rendering us unable to ship products and transfer our technology outside of the United States. Errors or defects in our products and services could expose us to liability and harm our reputation. If we become subject to unfair hiring claims, we could be prevented from hiring needed employees, incur liability for damages and incur substantial costs in defending ourselves. Our business is subject to the risk of earthquakes, floods and other natural catastrophic events. We maintain research and development and other facilities in parts of the world that are not as politically stable as the United States, and as a result we may face a higher risk of business interruption from acts of war or terrorism than businesses located only or primarily in the United States. Risks Related to Our Securities and Indebtedness Our debt obligations expose us to risks that could adversely affect our business, operating results or financial condition, and could prevent us from fulfilling our obligations under such indebtedness. Conversion of the 2023 Notes or the Convertible Senior Notes will dilute the ownership interests of existing stockholders. At the option of the 2023 Noteholders and the Convertible Senior Noteholders under certain circumstances, we may be required to repurchase the 2023 Notes and the Convertible Senior Notes, as the case may be, in cash or shares of our common stock. Hedge and warrant transactions entered into in connection with the issuance of the Convertible Senior Notes and the 2023 Notes may affect the value of our common stock.

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813672--2/23/2007--CADENCE_DESIGN_SYSTEMS_INC