Delaware | 000-15867 | 77-0148231 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
2655 Seely Avenue, Building 5 San Jose, California | 95134 | |||
(Address of Principal Executive Offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits |
Exhibit No. | Description | |
99.01 | Press Release issued by Cadence Design Systems, Inc. on July 24, 2013. |
CADENCE DESIGN SYSTEMS, INC. | ||
By: | /s/ Geoffrey G. Ribar | |
Geoffrey G. Ribar | ||
Senior Vice President and Chief Financial Officer |
Exhibit No. | Description | |
99.01 | Press Release issued by Cadence Design Systems, Inc. on July 24, 2013. |
Net Income Reconciliation | Three Months Ended | |||||||
June 29, 2013 | June 30, 2012 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Net income on a GAAP basis | $ | 9,429 | $ | 36,386 | ||||
Amortization of acquired intangibles | 11,087 | 6,534 | ||||||
Stock-based compensation expense | 15,111 | 10,361 | ||||||
Non-qualified deferred compensation expenses | 1,699 | 2,278 | ||||||
Restructuring and other charges | 2,656 | 43 | ||||||
Integration and acquisition-related costs | 10,093 | 3,627 | ||||||
Amortization of debt discount | 5,571 | 5,124 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | (1,193 | ) | (2,220 | ) | ||||
Income tax effect of non-GAAP adjustments | 6,712 | (9,245 | ) | |||||
Net income on a non-GAAP basis | $ | 61,165 | $ | 52,888 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
Diluted Net Income per Share Reconciliation | Three Months Ended | |||||||
June 29, 2013 | June 30, 2012 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Diluted net income per share on a GAAP basis | $ | 0.03 | $ | 0.13 | ||||
Amortization of acquired intangibles | 0.04 | 0.02 | ||||||
Stock-based compensation expense | 0.05 | 0.04 | ||||||
Non-qualified deferred compensation expenses | 0.01 | 0.01 | ||||||
Restructuring and other charges | 0.01 | — | ||||||
Integration and acquisition-related costs | 0.03 | 0.01 | ||||||
Amortization of debt discount | 0.02 | 0.02 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | — | (0.01 | ) | |||||
Income tax effect of non-GAAP adjustments | 0.02 | (0.03 | ) | |||||
Diluted net income per share on a non-GAAP basis | $ | 0.21 | $ | 0.19 | ||||
Shares used in calculation of diluted net income per share — GAAP** | 294,443 | 275,318 | ||||||
Shares used in calculation of diluted net income per share — non-GAAP** | 294,443 | 275,318 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
** | Shares used in the calculation of GAAP net income per share are expected to be the same as shares used in the calculation of non-GAAP net income per share, except when the company reports a GAAP net loss and non-GAAP net income, or GAAP net income and a non-GAAP net loss. |
June 29, 2013 | December 29, 2012 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 577,233 | $ | 726,357 | ||||
Short-term investments | 101,251 | 100,704 | ||||||
Receivables, net of allowances of $0 and $85, respectively | 92,581 | 97,821 | ||||||
Inventories | 38,705 | 36,163 | ||||||
2015 notes hedges | 335,131 | 303,154 | ||||||
Prepaid expenses and other | 120,598 | 127,036 | ||||||
Total current assets | 1,265,499 | 1,391,235 | ||||||
Property, plant and equipment, net of accumulated depreciation of $623,356 and $635,450, respectively | 243,288 | 244,439 | ||||||
Goodwill | 457,556 | 233,266 | ||||||
Acquired intangibles, net of accumulated amortization of $115,406 and $104,351, respectively | 337,705 | 184,938 | ||||||
Long-term receivables | 5,929 | 7,559 | ||||||
Other assets | 253,112 | 225,566 | ||||||
Total assets | $ | 2,563,089 | $ | 2,287,003 | ||||
Current liabilities: | ||||||||
Revolving credit facility | $ | 100,000 | $ | — | ||||
Convertible notes | 458,179 | 447,011 | ||||||
2015 notes embedded conversion derivative | 335,131 | 303,154 | ||||||
Accounts payable and accrued liabilities | 185,809 | 171,318 | ||||||
Current portion of deferred revenue | 282,784 | 295,787 | ||||||
Total current liabilities | 1,361,903 | 1,217,270 | ||||||
Long-term liabilities: | ||||||||
Long-term portion of deferred revenue | 43,892 | 50,529 | ||||||
Other long-term liabilities | 117,034 | 104,033 | ||||||
Total long-term liabilities | 160,926 | 154,562 | ||||||
Stockholders’ equity | 1,040,260 | 915,171 | ||||||
Total liabilities and stockholders’ equity | $ | 2,563,089 | $ | 2,287,003 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 29, 2013 | June 30, 2012 | June 29, 2013 | June 30, 2012 | |||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 337,983 | $ | 297,510 | $ | 666,254 | $ | 583,798 | ||||||||
Services | 24,498 | 28,966 | 50,493 | 58,508 | ||||||||||||
Total revenue | 362,481 | 326,476 | 716,747 | 642,306 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 28,095 | 32,406 | 57,942 | 59,618 | ||||||||||||
Cost of services | 15,148 | 17,071 | 33,492 | 36,445 | ||||||||||||
Marketing and sales | 95,277 | 80,418 | 185,679 | 164,213 | ||||||||||||
Research and development | 136,395 | 112,031 | 260,479 | 220,625 | ||||||||||||
General and administrative | 34,441 | 30,244 | 64,251 | 58,014 | ||||||||||||
Amortization of acquired intangibles | 5,327 | 3,643 | 9,118 | 7,429 | ||||||||||||
Restructuring and other charges (credits) | 2,656 | 43 | 2,508 | (8 | ) | |||||||||||
Total costs and expenses | 317,339 | 275,856 | 613,469 | 546,336 | ||||||||||||
Income from operations | 45,142 | 50,620 | 103,278 | 95,970 | ||||||||||||
Interest expense | (9,528 | ) | (8,566 | ) | (18,790 | ) | (17,103 | ) | ||||||||
Other income, net | 2,018 | 3,669 | 4,193 | 6,103 | ||||||||||||
Income before provision for income taxes | 37,632 | 45,723 | 88,681 | 84,970 | ||||||||||||
Provision for income taxes | 28,203 | 9,337 | 643 | 17,480 | ||||||||||||
Net income | $ | 9,429 | $ | 36,386 | $ | 88,038 | $ | 67,490 | ||||||||
Net income per share - basic | $ | 0.03 | $ | 0.13 | $ | 0.32 | $ | 0.25 | ||||||||
Net income per share - diluted | $ | 0.03 | $ | 0.13 | $ | 0.30 | $ | 0.24 | ||||||||
Weighted average common shares outstanding - basic | 277,146 | 269,739 | 276,018 | 268,840 | ||||||||||||
Weighted average common shares outstanding - diluted | 294,443 | 275,318 | 293,274 | 276,526 |
Six Months Ended | |||||||
June 29, 2013 | June 30, 2012 | ||||||
Cash and cash equivalents at beginning of period | $ | 726,357 | $ | 601,602 | |||
Cash flows from operating activities: | |||||||
Net income | 88,038 | 67,490 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 46,977 | 43,736 | |||||
Amortization of debt discount and fees | 12,625 | 11,529 | |||||
Stock-based compensation | 28,921 | 21,886 | |||||
Gain on investments, net | (2,477 | ) | (4,169 | ) | |||
Deferred income taxes | (4,413 | ) | 459 | ||||
Other non-cash items | 433 | 3,564 | |||||
Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||
Receivables | 8,719 | 16,513 | |||||
Inventories | (2,672 | ) | 499 | ||||
Prepaid expenses and other | 26,516 | 414 | |||||
Other assets | (45,274 | ) | (169 | ) | |||
Accounts payable and accrued liabilities | 10,023 | (4,694 | ) | ||||
Deferred revenue | (24,359 | ) | (27,446 | ) | |||
Other long-term liabilities | 7,174 | (1,424 | ) | ||||
Net cash provided by operating activities | 150,231 | 128,188 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (63,705 | ) | (49,083 | ) | |||
Proceeds from the sale of available-for-sale securities | 46,857 | 136 | |||||
Proceeds from the maturity of available-for-sale securities | 15,716 | — | |||||
Proceeds from the sale of long-term investments | 6,102 | 44 | |||||
Purchases of property, plant and equipment | (23,739 | ) | (18,269 | ) | |||
Investment in venture capital partnerships and equity investments | — | (250 | ) | ||||
Cash paid in business combinations and asset acquisitions, net of cash acquired | (392,139 | ) | (1,041 | ) | |||
Net cash used for investing activities | (410,908 | ) | (68,463 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility | 100,000 | — | |||||
Principal payments on receivable financing | (2,526 | ) | (2,907 | ) | |||
Payment of acquisition-related contingent consideration | (582 | ) | (39 | ) | |||
Tax effect related to employee stock transactions allocated to equity | 7,300 | 4,075 | |||||
Proceeds from issuance of common stock | 30,227 | 13,063 | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (11,758 | ) | (9,897 | ) | |||
Net cash provided by financing activities | 122,661 | 4,295 | |||||
Effect of exchange rate changes on cash and cash equivalents | (11,108 | ) | (3,964 | ) | |||
Increase (decrease) in cash and cash equivalents | (149,124 | ) | 60,056 | ||||
Cash and cash equivalents at end of period | $ | 577,233 | $ | 661,658 |
Three Months Ending September 28, 2013 | Year Ending December 28, 2013 | |||
Forecast | Forecast | |||
Diluted net income per share on a GAAP basis | $0.08 to $0.10 | $0.45 to $0.54 | ||
Amortization of acquired intangibles | 0.04 | 0.14 | ||
Stock-based compensation expense | 0.06 | 0.23 | ||
Non-qualified deferred compensation expenses | — | 0.01 | ||
Restructuring and other charges | — | 0.01 | ||
Integration and acquisition-related costs | 0.03 | 0.10 | ||
Amortization of debt discount | 0.02 | 0.08 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | — | (0.01) | ||
Income tax benefit due to a release of an uncertain tax position | — | (0.11) | ||
Income tax effect of non-GAAP adjustments | (0.04) | (0.10) | ||
Diluted net income per share on a non-GAAP basis | $0.19 to $0.21 | $0.80 to $0.89 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
Three Months Ending September 28, 2013 | Year Ending December 28, 2013 | |||
($ in millions) | Forecast | Forecast | ||
Net income on a GAAP basis | $24 to $30 | $134 to $161 | ||
Amortization of acquired intangibles | 12 | 43 | ||
Stock-based compensation expense | 19 | 69 | ||
Non-qualified deferred compensation expenses | — | 2 | ||
Restructuring and other charges | — | 3 | ||
Integration and acquisition-related costs | 8 | 29 | ||
Amortization of debt discount | 6 | 22 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | — | (2) | ||
Income tax benefit due to a release of an uncertain tax position | — | (34) | ||
Income tax effect of non-GAAP adjustments | (11) | (30) | ||
Net income on a non-GAAP basis | $58 to $64 | $236 to $263 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
2012 | 2013 | ||||||||||||||||||||
GEOGRAPHY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | ||||||||||||||
Americas | 44 | % | 46 | % | 43 | % | 45 | % | 45 | % | 44 | % | 45 | % | |||||||
EMEA | 19 | % | 20 | % | 20 | % | 21 | % | 20 | % | 22 | % | 21 | % | |||||||
Japan | 18 | % | 16 | % | 17 | % | 14 | % | 16 | % | 15 | % | 13 | % | |||||||
Asia | 19 | % | 18 | % | 20 | % | 20 | % | 19 | % | 19 | % | 21 | % | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
2012 | 2013 | ||||||||||||||||||||
PRODUCT GROUP | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | ||||||||||||||
Functional Verification, Hardware and IP | 30 | % | 33 | % | 30 | % | 30 | % | 30 | % | 26 | % | 28 | % | |||||||
Digital IC Design | 23 | % | 22 | % | 23 | % | 23 | % | 23 | % | 25 | % | 23 | % | |||||||
Custom IC Design | 23 | % | 22 | % | 24 | % | 24 | % | 23 | % | 25 | % | 25 | % | |||||||
Design for Manufacturing | 7 | % | 6 | % | 6 | % | 6 | % | 6 | % | 7 | % | 6 | % | |||||||
System Interconnect Design | 8 | % | 8 | % | 9 | % | 9 | % | 9 | % | 10 | % | 11 | % | |||||||
Services and other | 9 | % | 9 | % | 8 | % | 8 | % | 9 | % | 7 | % | 7 | % | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Three Months Ended June 29, 2013 | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
June 29, 2013 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 337,983 | — | $ | 337,983 | |||||||||||
Services | 24,498 | — | 24,498 | |||||||||||||
Total revenue | 362,481 | — | 362,481 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 28,095 | (6,095 | ) | (A) | 22,000 | |||||||||||
Cost of services | 15,148 | (483 | ) | (A) | 14,665 | |||||||||||
Marketing and sales | 95,277 | (3,868 | ) | (A) | 91,409 | |||||||||||
Research and development | 136,395 | (13,096 | ) | (A) | 123,299 | |||||||||||
General and administrative | 34,441 | (9,121 | ) | (A) | 25,320 | |||||||||||
Amortization of acquired intangibles | 5,327 | (5,327 | ) | (A) | — | |||||||||||
Restructuring and other charges | 2,656 | (2,656 | ) | — | ||||||||||||
Total costs and expenses | 317,339 | (40,646 | ) | 276,693 | ||||||||||||
Income from operations | 45,142 | 40,646 | 85,788 | |||||||||||||
Interest expense | (9,528 | ) | 5,571 | (B) | (3,957 | ) | ||||||||||
Other income, net | 2,018 | (1,193 | ) | (C) | 825 | |||||||||||
Income before provision for income taxes | 37,632 | 45,024 | 82,656 | |||||||||||||
Provision for income taxes | 28,203 | (6,712 | ) | (D) | 21,491 | |||||||||||
Net income | $ | 9,429 | $ | 51,736 | $ | 61,165 |
Amortization of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation expenses | Integration and acquisition-related costs | Total adjustments | |||||||||||||||||||
Cost of product and maintenance | $ | 5,760 | $ | 323 | $ | 12 | — | $ | 6,095 | ||||||||||||||
Cost of services | — | 466 | 17 | — | 483 | ||||||||||||||||||
Marketing and sales | — | 3,327 | 146 | 395 | 3,868 | ||||||||||||||||||
Research and development | — | 7,485 | 879 | 4,732 | 13,096 | ||||||||||||||||||
General and administrative | — | 3,510 | 645 | 4,966 | 9,121 | ||||||||||||||||||
Amortization of acquired intangibles | 5,327 | — | — | — | 5,327 | ||||||||||||||||||
Total | $ | 11,087 | $ | 15,111 | $ | 1,699 | $ | 10,093 | $ | 37,990 |
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Three Months Ended June 30, 2012 | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
June 30, 2012 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 297,510 | — | $ | 297,510 | |||||||||||
Services | 28,966 | — | 28,966 | |||||||||||||
Total revenue | 326,476 | — | 326,476 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 32,406 | (3,188 | ) | (E) | 29,218 | |||||||||||
Cost of services | 17,071 | (426 | ) | (E) | 16,645 | |||||||||||
Marketing and sales | 80,418 | (2,420 | ) | (E) | 77,998 | |||||||||||
Research and development | 112,031 | (7,865 | ) | (E) | 104,166 | |||||||||||
General and administrative | 30,244 | (5,258 | ) | (E) | 24,986 | |||||||||||
Amortization of acquired intangibles | 3,643 | (3,643 | ) | (E) | — | |||||||||||
Restructuring and other charges | 43 | (43 | ) | — | ||||||||||||
Total costs and expenses | 275,856 | (22,843 | ) | 253,013 | ||||||||||||
Income from operations | 50,620 | 22,843 | 73,463 | |||||||||||||
Interest expense | (8,566 | ) | 5,124 | (F) | (3,442 | ) | ||||||||||
Other income, net | 3,669 | (2,220 | ) | (G) | 1,449 | |||||||||||
Income before provision for income taxes | 45,723 | 25,747 | 71,470 | |||||||||||||
Provision for income taxes | 9,337 | 9,245 | (H) | 18,582 | ||||||||||||
Net income | $ | 36,386 | $ | 16,502 | $ | 52,888 |
Amortization of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation expenses | Integration and acquisition-related costs | Total adjustments | |||||||||||||||||||
Cost of product and maintenance | $ | 2,891 | $ | 268 | $ | 29 | — | $ | 3,188 | ||||||||||||||
Cost of services | — | 384 | 42 | — | 426 | ||||||||||||||||||
Marketing and sales | — | 2,128 | 212 | 80 | 2,420 | ||||||||||||||||||
Research and development | — | 4,441 | 1,083 | 2,341 | 7,865 | ||||||||||||||||||
General and administrative | — | 3,140 | 912 | 1,206 | 5,258 | ||||||||||||||||||
Amortization of acquired intangibles | 3,643 | — | — | — | 3,643 | ||||||||||||||||||
Total | $ | 6,534 | $ | 10,361 | $ | 2,278 | $ | 3,627 | $ | 22,800 |