LEASES
Operating lease expense, which includes immaterial amounts of short-term leases, variable lease costs and sublease income, was as follows during fiscal 2025, 2024 and 2023:
| | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| (In thousands) |
| Operating lease expense | $ | 70,846 | | | $ | 61,827 | | | $ | 56,805 | |
Additional activity related to Cadence’s leases during fiscal 2025, 2024 and 2023 was as follows:
| | | | | | | | | | | | | | | | | |
| | | | | |
| 2025 | | 2024 | | 2023 |
| (In thousands) | | |
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | 55,244 | | | $ | 49,978 | | | $ | 46,069 | |
| ROU assets obtained in exchange for operating lease obligations | 79,567 | | | 42,614 | | | 32,597 | |
ROU lease assets and lease liabilities for Cadence’s operating leases were recorded in the consolidated balance sheets as follows:
| | | | | | | | | | | |
| As of |
| December 31,
2025 | | December 31,
2024 |
| (In thousands) |
| Other assets | $ | 175,964 | | | $ | 146,190 | |
| | | |
| Accounts payable and accrued liabilities | 49,889 | | | 41,554 | |
| Other long-term liabilities | 136,289 | | | 108,893 | |
| Total lease liabilities | $ | 186,178 | | | $ | 150,447 | |
| | | |
| Weighted average remaining lease term (in years) | 5.6 | | 5.3 |
| Weighted average discount rate | 5 | % | | 4 | % |
Future lease payments included in the measurement of lease liabilities on the consolidated balance sheet as of December 31, 2025, for the following five fiscal years and thereafter were as follows:
| | | | | | | | | |
| Operating | | | | |
| Leases | | | | |
| (In thousands) |
| 2026 | $ | 55,588 | | | | | |
| 2027 | 38,885 | | | | | |
| 2028 | 31,555 | | | | | |
| 2029 | 25,575 | | | | | |
| 2030 | 17,385 | | | | | |
| Thereafter | 44,761 | | | | | |
| Total future lease payments | 213,749 | | | | | |
| Less imputed interest | (27,571) | | | | | |
| Total lease liability balance | $ | 186,178 | | | | | |
As of December 31, 2025, Cadence had additional operating lease obligations of approximately $33.3 million for facility leases that will commence in 2026.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.