Acquisitions

12 Months Ended

Jan. 02, 2021

Business Combinations [Abstract]

ACQUISITIONS

ACQUISITIONS

On January 15, 2020, Cadence acquired all of the outstanding equity of AWR Corporation (“AWR”). On February 6, 2020, Cadence also acquired all of the outstanding equity of Integrand Software, Inc. (“Integrand”). These acquisitions enhance Cadence’s technology portfolio to address growing radio frequency design activity, driven by expanding use of 5G communications.

The aggregate cash consideration for these acquisitions was $195.6 million, after taking into account cash acquired of $1.5 million. The total purchase consideration was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition dates. Cadence will also make payments to certain employees, subject to continued employment and other performance-based conditions, through the first quarter of fiscal 2023.

With its acquisition of AWR and Integrand, Cadence recorded $101.3 million of definite-lived intangible assets, primarily related to existing technology and customer agreements and relationships. The weighted-average amortization period for definite-lived intangible assets acquired is approximately 9 years. Cadence also recorded $119.4 million of goodwill and $25.1 million of net liabilities, consisting primarily of deferred tax liabilities, assumed deferred revenue and trade accounts receivable. The recorded goodwill is primarily related to the acquired assembled workforce and expected synergies from combining operations of the acquired companies with Cadence. None of the goodwill related to the acquisitions of AWR and Integrand will be deductible for tax purposes.

Cadence completed one additional acquisition during fiscal 2020. This acquisition is not material to the consolidated financial statements. Cadence has not presented pro forma financial information for any of the businesses it acquired during fiscal 2020 because the results of operations for these businesses are not material to Cadence’s consolidated financial statements.

Acquisition-Related Transaction Costs

Transaction costs associated with acquisitions were $2.4 million, $2.3 million and $0.6 million during fiscal 2020, 2019 and 2018, respectively. These costs consist of professional fees and administrative costs and were expensed as incurred in Cadence’s consolidated income statements.