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Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2023
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 2023, 2022 and 2021, was as follows:
202320222021
(In thousands)
United States$533,442 $402,083 $376,037 
Foreign subsidiaries748,484 643,280 392,398 
Total income before provision for income taxes$1,281,926 $1,045,363 $768,435 
Components of income taxes provision
Cadence’s provision for income taxes was comprised of the following items for fiscal 2023, 2022 and 2021:
202320222021
(In thousands)
Current:
Federal$156,495 $212,380 $19,957 
State and local15,933 7,280 25,246 
Foreign104,866 84,357 70,455 
Total current277,294 304,017 115,658 
Deferred:
Federal(87,851)(79,170)(16,415)
State and local25,440 (50,640)(30,406)
Foreign25,899 22,204 3,643 
Total deferred(36,512)(107,606)(43,178)
Total provision for income taxes$240,782 $196,411 $72,480 
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 2023, 2022, and 2021 as follows:
202320222021
(In thousands)
Provision computed at federal statutory income tax rate$269,205 $219,526 $161,880 
State and local income tax, net of federal tax effect40,304 29,622 24,640 
Intercompany transfers of intangible property rights23,826 — — 
Foreign income tax rate differential(54,210)(49,949)(26,887)
Foreign-derived intangible income deduction(14,253)(2,335)(22,050)
U.S. tax on foreign entities113,011 132,563 51,112 
Stock-based compensation(26,805)(17,023)(55,091)
Change in deferred tax asset valuation allowance9,077 (38,073)(8,262)
Tax credits(130,383)(105,366)(90,054)
Non-deductible research and development expense— — 4,443 
Withholding taxes15,300 17,459 23,495 
Tax settlements, foreign4,034 — — 
Increase (decrease) in unrecognized tax benefits(19,660)2,354 1,511 
Other11,336 7,633 7,743 
Provision for income taxes$240,782 $196,411 $72,480 
Effective tax rate19 %19 %9 %
Components of deferred tax assets and liabilities
The components of deferred tax assets and liabilities consisted of the following as of December 31, 2023, and December 31, 2022:
As of
December 31,
2023		December 31,
2022
(In thousands)
Deferred tax assets:
Tax credit carryforwards$129,513 $142,374 
Reserves and accruals78,993 75,543 
Intangible assets506,398 538,424 
Capitalized research and development expense for income tax purposes242,465 149,625 
Operating loss carryforwards9,598 11,081 
Deferred income77,066 64,897 
Capital loss carryforwards16,483 16,777 
Stock-based compensation costs27,409 22,830 
Depreciation and amortization10,671 9,176 
Investments15,949 9,016 
Lease liability33,639 37,758 
Prepaid expenses3,253 14,699 
Total deferred tax assets1,151,437 1,092,200 
Valuation allowance(79,162)(70,085)
Net deferred tax assets1,072,275 1,022,115 
Deferred tax liabilities:
Intangible assets(83,308)(82,971)
Undistributed foreign earnings(64,371)(51,394)
ROU assets(33,639)(37,758)
Investments
(6,318)— 
Other(13,455)(11,060)
Total deferred tax liabilities(201,091)(183,183)
Total net deferred tax assets$871,184 $838,932 
Summary of operating loss carryforward As of December 31, 2023, Cadence’s operating loss carryforwards were as follows:
AmountExpiration Periods
(In thousands)
Federal$167 from 2027 through 2033
California28,437 from 2025 through 2041
Other states (tax effected, net of federal benefit)762 from 2024 through indefinite
Foreign (tax effected)6,719 indefinite
Summary of tax credit carryforwards
As of December 31, 2023, Cadence had tax credit carryforwards of:
AmountExpiration Periods
(In thousands)
Federal*$42,905 from 2031
California33,542 indefinite
Other states 11,065 from 2031 through indefinite
Foreign 42,002 from 2042 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, 2023, Cadence’s earliest tax years that remain open to examination and the assessment of additional tax include:
JurisdictionEarliest Tax Year Open to Examination
United States – Federal2017
United States – California2019
Ireland2019
Israel2017
Korea2019
Unrecognized tax benefits roll forward
The changes in Cadence’s gross amount of unrecognized tax benefits during fiscal 2023, 2022 and 2021 are as follows:
202320222021
(In thousands)
Unrecognized tax benefits at the beginning of the fiscal year$126,073 $130,530 $113,021 
Gross amount of the increase (decrease) in unrecognized tax benefits of tax positions taken during a prior year*
(1,401)2,152 15,414 
Gross amount of the increases in unrecognized tax benefits as a result of tax positions taken during the current year2,565 2,660 5,100 
Amount of decreases in unrecognized tax benefits relating to settlements with taxing authorities, including the utilization of tax attributes(8,000)— (270)
Reductions to unrecognized tax benefits resulting from the lapse of the applicable statute of limitations(24,768)(7,430)(2,778)
Effect of foreign currency translation(158)(1,839)43 
Unrecognized tax benefits at the end of the fiscal year$94,311 $126,073 $130,530 
Total amounts of unrecognized tax benefits that, if upon resolution of the uncertain tax positions would reduce Cadence’s effective tax rate$93,398 $121,415 $79,654 
_____________
* 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 2023, 2022 and 2021 were as follows:
202320222021
(In thousands)
Interest$2,282 $434 $1,171 
Penalties267 7 (11)
The total amounts of gross accrued interest and penalties recognized in the consolidated balance sheets as of December 31, 2023, and December 31, 2022, were as follows:
As of
December 31,
2023		December 31,
2022
(In thousands)
Interest$4,813 $5,133 
Penalties— —