Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income (loss) before provision (benefit) for income taxes

	2011		2010			2009
	(In thousands)
United States	$	39,175	$	(141,726	)	$	(184,268	)
Foreign Subsidiaries		56,251		78,958			30,763
Total income (loss) before provision (benefit) for income taxes	$	95,426	$	(62,768	)	$	(153,505	)

Components of income taxes provision (benefits)

	2011			2010			2009
	(In thousands)
Current:
Federal	$	(662	)	$	(143,045	)	$	(3,079	)
State and Local		1,363			(3,475	)		1,027
Foreign		13,752			24,468			2,155
Total current		14,453			(122,052	)		103
Deferred:
Federal		(4,937	)		(59,880	)		----
State and Local		(524	)		(8,523	)		----
Foreign		(2,350	)		4,212			(3,438	)
Total deferred		(7,811	)		(64,191	)		(3,438	)
Tax expense (benefit) allocated to shareholders’ equity		16,555			(3,063	)		(299	)
Total provision (benefit) for income taxes	$	23,197		$	(189,306	)	$	(3,634	)

Summary of income tax reconciliation

	2011			2010			2009
	(In thousands)
Provision computed at federal statutory income tax rate	$	33,400		$	(21,968	)	$	(53,727	)
State and local income tax, net of federal tax effect		6,493			(3,970	)		(9,334	)
Foreign income tax rate differential		(6,676	)		(7,053	)		(10,241	)
Non-deductible share-based compensation costs		1,651			11,129			7,579
Change in deferred tax asset valuation allowance		(3,617	)		(26,550	)		52,021
Tax credits		(12,588	)		(12,495	)		(11,356	)
Repatriation of foreign earnings		708			(407	)		3,412
Non-deductible research and development expense		----			3,199			----
Financing arrangements		----			(1,821	)		----
Non-deductible impairment losses		----			----			627
Withholding taxes		3,851			2,778			2,028
Tax settlements, domestic		328			(147,109	)		----
Tax settlements, foreign		(2,451	)		----			(649	)
Interest and penalties not included in tax settlements		1,840			7,595			11,629
Increase (decrease) in unrecognized tax benefits not included in tax settlements		933			8,496			5,730
Other		(675	)		(1,130	)		(1,353	)
Provision (benefit) for income taxes	$	23,197		$	(189,306	)	$	(3,634	)
Effective tax rate		24%			302%			2%

Components of deferred tax assets and liabilities

	2011			2010
	(In thousands)
Deferred Tax Assets:
Intangible assets	$	70,314		$	85,695
Reserves and accruals		77,325			96,782
Tax credit carryforwards		133,829			137,571
Capitalized research and development expense for income tax purposes		40,510			48,167
Investments		7,339			13,124
Share-based compensation costs		20,661			20,980
Operating loss carryforwards		56,330			45,768
Deferred income		17,840			14,944
Capital loss carryforwards		23,737			6,391
Other		10,781			12,713
Total deferred tax assets		458,666			482,135
Valuation allowance		(375,864	)		(374,740	)
Net deferred tax assets		82,802			107,395
Deferred Tax Liabilities:
Undistributed foreign earnings		(5,584	)		(15,561	)
Intangible assets		(66,878	)		(66,901	)
Tax deferred income		----			(9,651	)
Other		(6,700	)		(8,920	)
Total deferred tax liabilities		(79,162	)		(101,033	)
Total net deferred tax assets	$	3,640		$	6,362

Unrealized share-based compensation deductions

	2011		2010
	(Tax Effected - In thousands)
Federal	$	2,343	$	1,884
California		457		312

Summary of operating loss carryforward

	Amount		Expiration Periods
	(In thousands)
Federal	$	93,873	from 2021 through 2031
California		308,409	from 2016 through 2031
Other States (tax effected, net of federal benefit)		4,098	from 2012 through 2031
Foreign (tax effected)		1,595	do not expire until utilized

Summary of tax credit carryforwards

	Amount		Expiration Periods
	(In thousands)
Federal	$	86,770	from 2012 through 2031
California		34,590	do not expire until utilized
Other States		8,986	from 2012 through 2025
Foreign		6,175	do not expire until utilized

Unrecognized Tax Benefits

	2011			2010			2009
	(In thousands)
Unrecognized tax benefits at the beginning of the fiscal year	$	131,545		$	324,837		$	322,742
Gross amount of the increases (decreases) in unrecognized tax benefits of tax positions taken during a prior year		(3,791	)		(130,313	)		(1,638	)
Gross amount of the increases in unrecognized tax benefits as a result of tax positions taken during the current year		1,588			12,052			4,838
Amount of decreases in unrecognized tax benefits relating to settlements with taxing authorities, including the utilization of tax attributes		(30,115	)		(74,890	)		(1,061	)
Reductions to unrecognized tax benefits resulting from the lapse of the applicable statute of limitations		(421	)		(109	)		(226	)
Effect of foreign currency translation		6			(32	)		182
Unrecognized tax benefits at the end of the fiscal year	$	98,812		$	131,545		$	324,837
Total amounts of unrecognized tax benefits that, if upon resolution of the uncertain tax positions would reduce Cadence’s effective tax rate	$	75,057		$	83,676		$	257,589

Interest and penalties recognized in Statements of Operations

	2011			2010			2009
	(In thousands)
Interest	$	2,173		$	(46,268	)	$	17,540
Penalties		(1,495	)		4,471			1,043

Interest and penalties recognized in Balance Sheets

	2011		2010
	(In thousands)
Interest	$	35,368	$	33,749
Penalties		11,574		15,260