Exhibit 99.1

For more information, please contact:

Investors and Shareholders
Jennifer Jordan
Cadence Design Systems, Inc.
408-944-7100
investor_relations@cadence.com

Media and Industry Analysts
Adolph Hunter
Cadence Design Systems, Inc.
408-914-6016
publicrelations@cadence.com

Cadence Reports Q3 Revenue Up 9% Over Q3 2005

     SAN JOSE, Calif.—Oct. 25, 2006—Cadence Design Systems, Inc. (NASDAQ: CDNS) today reported third quarter 2006 revenue of $366 million, an increase of 9 percent over the $337 million reported for the same period in 2005. On a GAAP basis, Cadence recognized net income of $42 million, or $0.14 per share on a diluted basis, in the third quarter of 2006, compared to $21 million, or $0.07 per share on a diluted basis, in the same period in 2005.

     In addition to using GAAP results in evaluating Cadence’s business, management believes it is useful to measure results using a non-GAAP measure of net income, which excludes, as applicable, amortization of intangible assets, stock-based compensation, in-process research and development charges, integration and other acquisition-related expenses, gains and expenses related to non-qualified deferred compensation plan assets, executive severance payments, restructuring charges and equity in losses (income) from investments. Non-GAAP net income is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company’s tax liability. See “GAAP to non-GAAP Reconciliation” below for further information on the non-GAAP measure.

     Using this non-GAAP measure, net income in the third quarter of 2006 was $81 million, or $0.26 per share on a diluted basis, as compared to $67 million, or $0.21 per share on a diluted basis, in the same period in 2005.

     “We continue to execute on our strategy. We are growing our core business and in the case of verification, expanding the market,” said Mike Fister, president and CEO of Cadence.

     Bill Porter, executive vice president and chief financial officer, added, “Again in the third quarter we achieved our targets for revenue growth, operating margin and cash flow, led by solid business across all geographies and strong performances in verification and custom IC.”

     The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not include the impact of any mergers, acquisitions or other business combinations completed after Sept. 30, 2006.

Business Outlook

     For the fourth quarter of 2006, the company expects total revenue in the range of $405 million to $415 million. Fourth quarter GAAP earnings per diluted share are expected to be in the range of $0.20 to $0.22. Diluted earnings per share using the non-GAAP measure defined below are expected to be in the range of $0.34 to $0.36.

     For the full year 2006, the company expects total revenue in the range of $1.458 billion to $1.468 billion. On a GAAP basis, net income per diluted share for fiscal 2006 is expected in the range of $0.50 to $0.52. Using the non-GAAP measure defined below, diluted earnings per share for fiscal 2006 are expected to be in the range of $1.04 to $1.06.

     A schedule showing a reconciliation of the business outlook from GAAP net income and diluted net income per share to the non-GAAP net income and diluted net income per share is included with this release.

Audio Webcast Scheduled

     Fister and Porter will host a third quarter 2006 financial results audio webcast today, Oct. 25, 2006, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the Web site at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting Oct. 25, 2006, at 5 p.m. Pacific time and ending at 5 p.m. Pacific time on Nov. 1, 2006. Webcast access is available at www.cadence.com/company/investor_relations.

About Cadence

     Cadence enables global electronic-design innovation and plays an essential role in the creation of today’s integrated circuits and electronics. Customers use Cadence^® software and hardware, methodologies, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. Cadence reported 2005 revenues of approximately $1.3 billion, and has approximately 5,200 employees. The company is headquartered in San Jose, Calif., with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about the company, its products, and services is available at www.cadence.com.

     Cadence and the Cadence logo are registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.

     The statements contained above regarding the company’s third quarter 2006 results, those contained in the Business Outlook section above and the statements by Mike Fister and Bill Porter include forward-looking statements based on current expectations or beliefs, as well as a number of preliminary assumptions about future events that are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Readers are cautioned not to put undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to a number of uncertainties and other factors, many of which are outside Cadence’s control, including, among others: Cadence’s ability to compete successfully in the design automation product and the commercial electronic design and methodology services industries; the mix of products and services sold and the timing of significant orders for its products; economic uncertainty; fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries in which Cadence does business; and the acquisition of other companies or technologies or the failure to successfully integrate those it acquires.

     For a detailed discussion of these and other cautionary statements, please refer to the company’s filings with the Securities and Exchange Commission. These include the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2005 and the company’s Quarterly report on Form 10-Q for the quarter ended July 1, 2006.

GAAP to non-GAAP Reconciliation

     Cadence management evaluates and makes operating decisions using various operating measures. These measures are generally based on the revenues of its product, maintenance and services business operations and certain costs of those operations, such as cost of revenues, research and development, sales and marketing and general and administrative expenses. One such measure is non-GAAP net income (loss), which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended. This measure consists of GAAP net income (loss) excluding, as applicable, amortization of intangible assets, stock-based compensation, in-process research and development charges, integration and other acquisition-related expenses, restructuring charges (severance and benefits, excess facilities and asset-related restructuring charges), executive severance payments, gains and expenses related to non-qualified deferred compensation plan assets and equity in losses (income) from investments. Intangible assets consist primarily of purchased or licensed technology, backlog, patents, trademarks, distribution rights, customer contracts and related relationships and non-compete agreements. Non-GAAP net income (loss) is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company’s tax liability.

     Management believes it is useful in measuring Cadence’s operations to exclude amortization of intangibles, in-process research and development and acquisition-related expenses because these costs are primarily fixed at the time of an acquisition and generally cannot be changed by management in the short term. In addition, management believes it is useful to exclude stock-based compensation because it enhances investors’ ability to review Cadence’s business from the same perspective as Cadence’s management, which believes that stock-based compensation expense is not directly attributable to the underlying performance of the company’s business operations. Management also believes that it is useful to exclude restructuring costs. Cadence has dramatically reduced the size of its design services business and portions of its product and maintenance businesses over the past several years. As a result, in 2001, 2002 and 2003, Cadence’s GAAP statements of operations have included significant charges relating to such restructurings. Management believes that in measuring its operations it is useful to exclude such restructuring costs because the company’s level of restructuring activities is expected to significantly decrease in the foreseeable future. Finally, management also believes it is useful to exclude the equity in losses (income) from investments and investment write-downs, as these items are not part of the company’s direct cost of operations. Rather, these are non-operating items that are included in other income (expense) and are part of the company’s investment activities.

     Management believes that non-GAAP net income (loss) provides useful supplemental information to management and investors regarding the performance of the company’s business operations and facilitates comparisons to our historical operating results. Management also uses this information internally for forecasting and budgeting. Non-GAAP financial measures should not be considered as a substitute for measures of financial performance prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with their most directly comparable GAAP financial results.

     The following tables reconcile the specific items excluded from GAAP net income in the calculation of non-GAAP net income for the periods shown below:

	Quarters Ended
Net Income Reconciliation	September 30, 2006			October 1, 2005
(in thousands)	(unaudited)
Net income on a GAAP basis	$	42,060		$	21,271
Amortization of acquired intangibles		12,248			29,175
Stock-based compensation expense		24,273			13,890
Non-qualified deferred compensation expense		(864	)		1,523
Restructuring and other charges		(15	)		3,782
Executive severance payments		—			4,369
Integration and acquisition-related costs		376			717
Equity in losses from investments, gain on non-qualified deferred compensation plan assets		1,187			3,043
Income tax effect of non-GAAP adjustments		2,125			(11,034	)
Net income on a non-GAAP basis	$	81,390		$	66,736

	Quarters Ended
Diluted Net Income per Share Reconciliation	September 30, 2006		October 1, 2005
(in thousands, except per share data)	(unaudited)
Diluted net income per share on a GAAP basis	$	0.14	$	0.07
Amortization of acquired intangibles		0.04		0.09
Stock-based compensation expense		0.08		0.05
Non-qualified deferred compensation expense		—		—
Restructuring and other charges		—		0.01
Executive severance payments		—		0.01
Integration and acquisition-related costs		—		—
Equity in losses from investments, gain on non-qualified deferred compensation plan assets		—		0.01
Income tax effect of non-GAAP adjustments		—		(0.03	)
Diluted net income per share on a non-GAAP basis	$	0.26	$	0.21
Shares used in calculation of diluted net income per share — GAAP		312,266		317,741
Shares used in calculation of diluted net income per share —non-GAAP (A)		312,266		317,741

(A) Shares used in the calculation of GAAP earnings per share are expected to be the same as shares used in the calculation of non-GAAP earnings per share except when the company reports a GAAP loss and non-GAAP income, or GAAP income and a non-GAAP loss.

Investors are encouraged to look at GAAP results as the best measure of financial performance. For example, amortization of intangibles or in-process technology are important to consider because they may represent initial expenditures that under GAAP are reported across future fiscal periods. Likewise, stock-based compensation expense is an obligation of the company that should be considered. Restructuring charges can be triggered by acquisitions or product adjustments as well as overall company performance within a given business environment. All of these metrics are important to financial performance generally.

Though Cadence management finds its non-GAAP measure is useful in evaluating the performance of Cadence’s business, its reliance on this measure is limited because items excluded from such measures often have a material effect on Cadence’s earnings and earnings per share calculated in accordance with GAAP. Therefore, Cadence management typically uses its non-GAAP earnings and earnings per share measures, in conjunction with GAAP earnings and earnings per share measures, to address these limitations.

Cadence believes that presenting its non-GAAP measure of earnings and earnings per share provides investors with an additional tool for evaluating the performance of the company’s business, which management uses in its own evaluation of performance, and an additional baseline for assessing the future earnings potential of the company. While the GAAP results are more complete, the company prefers to allow investors to have this supplemental measure since, with reconciliation to GAAP, it may provide additional insight into its financial results.

Cadence expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings, Cadence may reiterate the Business Outlook published in this press release. At the same time, Cadence will keep this press release, including the outlook, publicly available on its Web site.

Prior to the start of the Quiet Period (described below), the public may continue to rely on the Business Outlook contained herein as still being Cadence’s current expectations on matters covered unless Cadence publishes a notice stating otherwise.

Beginning Dec. 15, 2006, Cadence will observe a “Quiet Period” during which the Business Outlook as provided in this press release and the company’s most recent annual report on Form 10-K and quarterly report on Form 10-Q no longer constitute the company’s current expectations. During the Quiet Period, the Business Outlook in these documents should be considered to be historical, speaking as of prior to the Quiet Period only and not subject to update by the company. During the Quiet Period, Cadence representatives will not comment on Cadence’s business outlook or its financial results or expectations. The Quiet Period will extend until the day when Cadence’s Fourth Quarter 2006 Earnings Release is published, which is currently scheduled for Jan. 31, 2007.

Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
September 30, 2006 and December 31, 2005
(In thousands)
(Unaudited)

	September 30, 2006		December 31, 2005
Current Assets:
Cash and cash equivalents	$	757,510	$	861,315
Short-term investments		24,628		33,276
Receivables, net of allowance for doubtful accounts of $6,906 and $10,979, respectively		248,624		282,073
Inventories		29,075		28,902
Prepaid expenses and other		84,209		70,736
Total current assets		1,144,046		1,276,302
Property, plant and equipment, net of accumulated depreciation of $602,902 and $549,593, respectively		353,290		356,945
Goodwill		1,268,421		1,232,926
Acquired intangibles, net		126,872		153,847
Installment contract receivables		131,399		102,748
Other assets		255,714		278,544
Total Assets	$	3,279,742	$	3,401,312
Current Liabilities:
Current portion of long-term debt	$	44,000	$	32,000
Accounts payable and accrued liabilities		199,594		300,586
Current portion of deferred revenue		274,174		273,265
Total current liabilities		517,768		605,851
Long-term Liabilities:
Long-term portion of deferred revenue		68,320		51,864
Convertible notes		420,000		420,000
Long-term debt		17,000		128,000
Other long-term liabilities		375,290		350,893
Total long-term liabilities		880,610		950,757
Stockholders’ Equity		1,881,364		1,844,704
Total Liabilities and Stockholders’ Equity	$	3,279,742	$	3,401,312

Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Quarters and Nine Months Ended September 30, 2006 and October 1, 2005
(In thousands, except per share amounts)
(Unaudited)

	Quarters Ended						Nine Months Ended
	September 30,			October 1,			September 30,			October 1,
	2006			2005			2006			2005
Revenue:
Product	$	244,561		$	218,559		$	684,826		$	593,812
Services		34,262			31,684			99,798			93,513
Maintenance		87,325			87,138			268,251			263,504
Total revenue		366,148			337,381			1,052,875			950,829
Costs and expenses:
Cost of product		14,097			18,565			54,669			62,674
Cost of services		23,034			23,545			70,995			69,632
Cost of maintenance		15,604			15,162			47,514			44,514
Marketing and sales		97,499			96,497			289,064			268,012
Research and development		110,335			100,575			342,133			291,966
General and administrative		35,240			35,108			109,267			101,846
Amortization of acquired intangibles		4,606			13,912			17,982			39,200
Restructuring and other charges		(15	)		3,782			(726	)		34,785
Write-off of acquired in-process technology		—			—			900			9,400
Total costs and expenses		300,400			307,146			931,798			922,029
Income from operations		65,748			30,235			121,077			28,800
Interest expense		(2,959	)		(1,217	)		(9,880	)		(3,943	)
Other income, net		9,993			4,667			53,191			11,356
Income before provision for income taxes and cumulative effect of change in accounting principle		72,782			33,685			164,388			36,213
Provision for income taxes		30,722			12,414			70,579			13,436
Net income before cumulative effect of change in accounting principle		42,060			21,271			93,809			22,777
Cumulative effect of change in accounting principle, net of tax		—			—			418			—
Net income	$	42,060		$	21,271		$	94,227		$	22,777
Net income per share before cumulative effect of change in accounting principle:
Basic	$	0.15		$	0.08		$	0.33		$	0.08
Diluted	$	0.14		$	0.07		$	0.30		$	0.08
Net income per share after cumulative effect of change in accounting principle:
Basic	$	0.15		$	0.08		$	0.34		$	0.08
Diluted	$	0.14		$	0.07		$	0.30		$	0.08
Weighted average common shares outstanding — basic		279,329			281,222			281,077			277,474
Weighted average common shares outstanding — diluted		312,266			317,741			314,190			312,587

Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	Nine Months Ended
	September 30,			October 1,
	2006			2005
Cash and Cash Equivalents at Beginning of Period	$	861,315		$	448,517
Cash Flows from Operating Activities:
Net income		94,227			22,777
Adjustments to reconcile net income to net cash provided by operating activities:
Cumulative effect of change in accounting principle		(418	)		—
Depreciation and amortization		113,862			143,725
Stock-based compensation		80,437			32,206
Equity in loss from investments, net		900			6,192
Gain on investments, net		(25,600	)		(16,045	)
Write-down of investment securities		1,429			10,184
Write-off of acquired in-process technology		900			9,400
Non-cash restructuring and other charges		122			2,179
Tax benefit from employee stock transactions		—			3,723
Tax benefit of call options		3,969			1,843
Deferred income taxes		13,697			(5,369	)
Proceeds from the sale of receivables		131,404			129,047
Provisions (recoveries) for losses (gains) on trade accounts receivable and sales returns		(3,727	)		569
Other non-cash items		4,035			3,151
Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables		77,489			123,076
Inventories		(2,777	)		(5,052	)
Prepaid expenses and other		(9,368	)		(17,042	)
Installment contract receivables		(195,038	)		(113,688	)
Other assets		5,108			(1,873	)
Accounts payable and accrued liabilities		(107,147	)		(49,132	)
Deferred revenue		13,275			(20,028	)
Other long-term liabilities		19,714			(10,232	)
Net cash provided by operating activities		216,493			249,611
Cash Flows from Investing Activities:
Proceeds from sale of available-for-sale securities		5,542			14,921
Proceeds from sale of short-term investments		—			289,225
Purchases of short-term investments		—			(180,975	)
Proceeds from the sale of long-term investments		21,599			6,033
Proceeds from sale of property, plant and equipment		—			33,625
Purchases of property, plant and equipment		(48,270	)		(49,954	)
Purchases of software licenses		(6,409	)		(500	)
Investment in venture capital partnerships and equity investments		(2,000	)		(9,184	)
Cash paid in business combinations, net of cash acquired, and acquisition of intangibles		(65,352	)		(295,438	)
Net cash used for investing activities		(94,890	)		(192,247	)
Cash Flows from Financing Activities:
Principal payments on long-term debt		(99,000	)		(58	)
Tax benefit from employee stock transactions		7,556			—
Proceeds from issuance of common stock		126,315			109,408
Purchases of treasury stock		(258,384	)		—
Net cash provided by (used for) financing activities		(223,513	)		109,350
Effect of exchange rate changes on cash and cash equivalents		(1,895	)		3,539
Increase (decrease) in cash and cash equivalents		(103,805	)		170,253
Cash and Cash Equivalents at End of Period	$	757,510		$	618,770

Cadence Design Systems, Inc.
As of October 25, 2006
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
(Unaudited)

	Quarter ended		Year ended
	December 30, 2006		December 30, 2006
	Forecast		Forecast
Diluted net income per share on a GAAP basis		$0.20 to $0.22		$0.50 to $0.52
Amortization of acquired intangibles		0.04		0.20
Stock-based compensation expense		0.07		0.32
Non-qualified deferred compensation expense		—		0.01
Integration and acquisition-related costs		—		0.01
Equity in losses from investments, gain on non-qualified deferred compensation plan assets		—		(0.01)
Income tax effect of non-GAAP adjustments		0.03		0.01
Diluted net income per share on a non-GAAP basis		$0.34 to $0.36		$1.04 to $1.06

Cadence Design Systems, Inc.
As of October 25, 2006
Impact of Non-GAAP Adjustments on Forward Looking Net Income
(Unaudited)

	Quarter ended		Year ended
	December 30, 2006		December 30, 2006
($ in Millions)	Forecast		Forecast
Net income on a GAAP basis		$60 to $67		$155 to $162
Amortization of acquired intangibles		13		63
Stock-based compensation expense		22		102
Non-qualified deferred compensation expense		—		4
Restructuring and other charges		—		(1)
Write-off of acquired in-process technology		—		1
Integration and acquisition-related costs		—		2
Equity in losses from investments, gain on non-qualified deferred compensation plan assets		1		(3)
Income tax effect of non-GAAP adjustments		10		3
Net income on a non-GAAP basis		$106 to $113		$326 to $333

Cadence Design Systems, Inc.
(Unaudited)

Revenue Mix by Geography (% of Total Revenue)

	2004															2005															2006
	Q1			Q2			Q3			Q4			Year			Q1			Q2			Q3			Q4			Year			Q1			Q2			Q3
GEOGRAPHY
North America		53	%		57	%		55	%		45	%		52	%		46	%		49	%		53	%		42	%		48	%		51	%		48	%		54	%
Europe		16	%		19	%		21	%		30	%		22	%		16	%		17	%		21	%		20	%		18	%		19	%		18	%		22	%
Japan		22	%		14	%		15	%		14	%		16	%		30	%		25	%		20	%		26	%		25	%		21	%		24	%		13	%
Asia		9	%		10	%		9	%		11	%		10	%		8	%		9	%		6	%		12	%		9	%		9	%		10	%		11	%
Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

Revenue Mix by Product Group (% of Total Revenue)

	2004															2005															2006
	Q1			Q2			Q3			Q4			Year			Q1			Q2			Q3			Q4			Year			Q1			Q2			Q3
PRODUCT GROUP
Functional Verification		20	%		20	%		18	%		19	%		19	%		20	%		19	%		21	%		25	%		21	%		26	%		22	%		24	%
Digital IC Design		25	%		21	%		24	%		27	%		24	%		27	%		23	%		26	%		29	%		28	%		20	%		26	%		19	%
Custom IC Design		27	%		24	%		27	%		27	%		27	%		23	%		31	%		27	%		22	%		25	%		27	%		27	%		30	%
Design for Manufacturing		6	%		9	%		12	%		8	%		9	%		9	%		9	%		9	%		8	%		9	%		8	%		8	%		8	%
System Interconnect		10	%		9	%		8	%		9	%		9	%		10	%		9	%		8	%		7	%		8	%		9	%		8	%		10	%
Services & Other		12	%		17	%		11	%		10	%		12	%		11	%		9	%		9	%		9	%		9	%		10	%		9	%		9	%
Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

Note: Product Group total revenue includes Product + Maintenance