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 October 23, 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 October 23, 2013. |
Net Income Reconciliation | Three Months Ended | |||||||
September 28, 2013 | September 29, 2012 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Net income on a GAAP basis | $ | 38,500 | $ | 58,584 | ||||
Amortization and sale of acquired intangibles | 13,027 | 7,750 | ||||||
Stock-based compensation expense | 18,566 | 12,399 | ||||||
Non-qualified deferred compensation expenses (credits) | 186 | (839 | ) | |||||
Restructuring and other charges | 86 | 57 | ||||||
Integration and acquisition-related costs | 8,041 | 3,016 | ||||||
Executive severance costs | 745 | — | ||||||
Amortization of debt discount | 5,693 | 5,279 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | (1,544 | ) | 1,954 | |||||
Acquisition-related income tax benefit | — | (14,806 | ) | |||||
Income tax effect of non-GAAP adjustments | (19,895 | ) | (14,054 | ) | ||||
Net income on a non-GAAP basis | $ | 63,405 | $ | 59,340 |
* | 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 | |||||||
September 28, 2013 | September 29, 2012 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Diluted net income per share on a GAAP basis | $ | 0.13 | $ | 0.21 | ||||
Amortization and sale of acquired intangibles | 0.04 | 0.03 | ||||||
Stock-based compensation expense | 0.06 | 0.04 | ||||||
Non-qualified deferred compensation expenses (credits) | — | — | ||||||
Restructuring and other charges | — | — | ||||||
Integration and acquisition-related costs | 0.03 | 0.01 | ||||||
Executive severance costs | — | — | ||||||
Amortization of debt discount | 0.02 | 0.02 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | — | — | ||||||
Acquisition-related income tax benefit | — | (0.05 | ) | |||||
Income tax effect of non-GAAP adjustments | (0.07 | ) | (0.05 | ) | ||||
Diluted net income per share on a non-GAAP basis | $ | 0.21 | $ | 0.21 | ||||
Shares used in calculation of diluted net income per share — GAAP** | 296,958 | 283,328 | ||||||
Shares used in calculation of diluted net income per share — non-GAAP** | 296,958 | 283,328 |
* | 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. |
September 28, 2013 | December 29, 2012 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 620,403 | $ | 726,357 | ||||
Short-term investments | 96,019 | 100,704 | ||||||
Receivables, net of allowances of $144 and $85, respectively | 101,896 | 97,821 | ||||||
Inventories | 45,877 | 36,163 | ||||||
2015 notes hedges | 292,511 | 303,154 | ||||||
Prepaid expenses and other | 117,457 | 127,036 | ||||||
Total current assets | 1,274,163 | 1,391,235 | ||||||
Property, plant and equipment, net of accumulated depreciation of $564,416 and $635,450, respectively | 241,965 | 244,439 | ||||||
Goodwill | 456,267 | 233,266 | ||||||
Acquired intangibles, net of accumulated amortization of $128,004 and $104,351, respectively | 323,807 | 184,938 | ||||||
Long-term receivables | 3,994 | 7,559 | ||||||
Other assets | 257,191 | 225,566 | ||||||
Total assets | $ | 2,557,387 | $ | 2,287,003 | ||||
Current liabilities: | ||||||||
Revolving credit facility | $ | 50,000 | $ | — | ||||
Convertible notes | 463,837 | 447,011 | ||||||
2015 notes embedded conversion derivative | 292,511 | 303,154 | ||||||
Accounts payable and accrued liabilities | 193,445 | 171,318 | ||||||
Current portion of deferred revenue | 297,897 | 295,787 | ||||||
Total current liabilities | 1,297,690 | 1,217,270 | ||||||
Long-term liabilities: | ||||||||
Long-term portion of deferred revenue | 48,229 | 50,529 | ||||||
Other long-term liabilities | 115,262 | 104,033 | ||||||
Total long-term liabilities | 163,491 | 154,562 | ||||||
Stockholders’ equity | 1,096,206 | 915,171 | ||||||
Total liabilities and stockholders’ equity | $ | 2,557,387 | $ | 2,287,003 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 28, 2013 | September 29, 2012 | September 28, 2013 | September 29, 2012 | |||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 341,601 | $ | 310,118 | $ | 1,007,855 | $ | 893,916 | ||||||||
Services | 25,046 | 28,415 | 75,539 | 86,923 | ||||||||||||
Total revenue | 366,647 | 338,533 | 1,083,394 | 980,839 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 32,546 | 34,461 | 90,488 | 94,079 | ||||||||||||
Cost of services | 17,190 | 16,809 | 50,682 | 53,254 | ||||||||||||
Marketing and sales | 98,094 | 82,461 | 283,773 | 246,674 | ||||||||||||
Research and development | 138,078 | 115,078 | 398,557 | 335,703 | ||||||||||||
General and administrative | 27,582 | 26,350 | 91,833 | 84,364 | ||||||||||||
Amortization of acquired intangibles | 5,141 | 3,876 | 14,259 | 11,305 | ||||||||||||
Restructuring and other charges | 86 | 57 | 2,594 | 49 | ||||||||||||
Total costs and expenses | 318,717 | 279,092 | 932,186 | 825,428 | ||||||||||||
Income from operations | 47,930 | 59,441 | 151,208 | 155,411 | ||||||||||||
Interest expense | (9,583 | ) | (8,737 | ) | (28,373 | ) | (25,840 | ) | ||||||||
Other income (expense), net | 2,535 | (131 | ) | 6,728 | 5,972 | |||||||||||
Income before provision (benefit) for income taxes | 40,882 | 50,573 | 129,563 | 135,543 | ||||||||||||
Provision (benefit) for income taxes | 2,382 | (8,011 | ) | 3,025 | 9,469 | |||||||||||
Net income | $ | 38,500 | $ | 58,584 | $ | 126,538 | $ | 126,074 | ||||||||
Net income per share - basic | $ | 0.14 | $ | 0.22 | $ | 0.46 | $ | 0.47 | ||||||||
Net income per share - diluted | $ | 0.13 | $ | 0.21 | $ | 0.43 | $ | 0.45 | ||||||||
Weighted average common shares outstanding - basic | 278,977 | 271,350 | 277,034 | 269,643 | ||||||||||||
Weighted average common shares outstanding - diluted | 296,958 | 283,328 | 294,531 | 278,760 |
Nine Months Ended | |||||||
September 28, 2013 | September 29, 2012 | ||||||
Cash and cash equivalents at beginning of period | $ | 726,357 | $ | 601,602 | |||
Cash flows from operating activities: | |||||||
Net income | 126,538 | 126,074 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 72,681 | 67,171 | |||||
Amortization of debt discount and fees | 19,102 | 17,480 | |||||
Stock-based compensation | 47,487 | 34,285 | |||||
Gain on investments, net | (4,035 | ) | (2,222 | ) | |||
Deferred income taxes | (6,425 | ) | (14,107 | ) | |||
Other non-cash items | 2,183 | 3,578 | |||||
Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||
Receivables | 2,192 | 24,276 | |||||
Inventories | (10,005 | ) | 6,936 | ||||
Prepaid expenses and other | 26,927 | 1,547 | |||||
Other assets | (46,651 | ) | (3,101 | ) | |||
Accounts payable and accrued liabilities | 18,277 | (1,714 | ) | ||||
Deferred revenue | (5,474 | ) | (38,230 | ) | |||
Other long-term liabilities | 5,644 | (1,855 | ) | ||||
Net cash provided by operating activities | 248,441 | 220,118 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (84,000 | ) | (101,248 | ) | |||
Proceeds from the sale of available-for-sale securities | 59,014 | 5,936 | |||||
Proceeds from the maturity of available-for-sale securities | 30,506 | 1,500 | |||||
Proceeds from the sale of long-term investments | 6,200 | 44 | |||||
Purchases of property, plant and equipment | (35,950 | ) | (25,932 | ) | |||
Investment in venture capital partnerships and equity investments | — | (250 | ) | ||||
Cash paid in business combinations and asset acquisitions, net of cash acquired | (392,825 | ) | (66,432 | ) | |||
Net cash used for investing activities | (417,055 | ) | (186,382 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility | 100,000 | — | |||||
Payment on revolving credit facility | (50,000 | ) | — | ||||
Payment of convertible notes | (78 | ) | — | ||||
Principal payments on receivable financing | (2,526 | ) | (2,907 | ) | |||
Payment of acquisition-related contingent consideration | (677 | ) | (39 | ) | |||
Tax effect related to employee stock transactions allocated to equity | 9,494 | 5,790 | |||||
Proceeds from issuance of common stock | 40,691 | 28,755 | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (19,461 | ) | (13,457 | ) | |||
Net cash provided by financing activities | 77,443 | 18,142 | |||||
Effect of exchange rate changes on cash and cash equivalents | (14,783 | ) | (4,381 | ) | |||
Increase (decrease) in cash and cash equivalents | (105,954 | ) | 47,497 | ||||
Cash and cash equivalents at end of period | $ | 620,403 | $ | 649,099 |
Three Months Ending December 28, 2013 | Year Ending December 28, 2013 | |||
Forecast | Forecast | |||
Diluted net income per share on a GAAP basis | $0.11 to $0.13 | $0.55 to $0.56 | ||
Amortization and sale of acquired intangibles | 0.04 | 0.15 | ||
Stock-based compensation expense | 0.07 | 0.22 | ||
Non-qualified deferred compensation expenses | — | 0.01 | ||
Restructuring and other charges | — | 0.01 | ||
Integration and acquisition-related costs | 0.02 | 0.10 | ||
Executive severance costs | — | — | ||
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 | — | (0.12) | ||
Income tax effect of non-GAAP adjustments | (0.04) | (0.14) | ||
Diluted net income per share on a non-GAAP basis | $0.22 to $0.24 | $0.85 to $0.86 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
Three Months Ending December 28, 2013 | Year Ending December 28, 2013 | |||
($ in millions) | Forecast | Forecast | ||
Net income on a GAAP basis | $33 to $39 | $160 to $165 | ||
Amortization and sale of acquired intangibles | 12 | 44 | ||
Stock-based compensation expense | 19 | 66 | ||
Non-qualified deferred compensation expenses | — | 2 | ||
Restructuring and other charges | — | 3 | ||
Integration and acquisition-related costs | 6 | 30 | ||
Executive severance costs | — | 1 | ||
Amortization of debt discount | 6 | 22 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | — | (4) | ||
Income tax benefit due to a release of an uncertain tax position | — | (34) | ||
Income tax effect of non-GAAP adjustments | (13) | (41) | ||
Net income on a non-GAAP basis | $63 to $69 | $249 to $254 |
* | 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 | Q3 | ||||||||||||||||
Americas | 44 | % | 46 | % | 43 | % | 45 | % | 45 | % | 44 | % | 45 | % | 48 | % | ||||||||
EMEA | 19 | % | 20 | % | 20 | % | 21 | % | 20 | % | 22 | % | 21 | % | 20 | % | ||||||||
Japan | 18 | % | 16 | % | 17 | % | 14 | % | 16 | % | 15 | % | 13 | % | 12 | % | ||||||||
Asia | 19 | % | 18 | % | 20 | % | 20 | % | 19 | % | 19 | % | 21 | % | 20 | % | ||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
2012 | 2013 | |||||||||||||||||||||||
PRODUCT GROUP | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 | ||||||||||||||||
Functional Verification, Hardware and IP | 30 | % | 33 | % | 30 | % | 30 | % | 30 | % | 26 | % | 28 | % | 31 | % | ||||||||
Digital IC Design | 23 | % | 22 | % | 23 | % | 23 | % | 23 | % | 25 | % | 23 | % | 21 | % | ||||||||
Custom IC Design | 23 | % | 22 | % | 24 | % | 24 | % | 23 | % | 25 | % | 25 | % | 25 | % | ||||||||
Design for Manufacturing | 7 | % | 6 | % | 6 | % | 6 | % | 6 | % | 7 | % | 6 | % | 6 | % | ||||||||
System Interconnect Design | 8 | % | 8 | % | 9 | % | 9 | % | 9 | % | 10 | % | 11 | % | 10 | % | ||||||||
Services and other | 9 | % | 9 | % | 8 | % | 8 | % | 9 | % | 7 | % | 7 | % | 7 | % | ||||||||
Total | 100 | % | 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 September 28, 2013 | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
September 28, 2013 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 341,601 | $ | — | $ | 341,601 | ||||||||||
Services | 25,046 | — | 25,046 | |||||||||||||
Total revenue | 366,647 | — | 366,647 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 32,546 | (8,339 | ) | (A) | 24,207 | |||||||||||
Cost of services | 17,190 | (662 | ) | (A) | 16,528 | |||||||||||
Marketing and sales | 98,094 | (5,655 | ) | (A) | 92,439 | |||||||||||
Research and development | 138,078 | (16,713 | ) | (A) | 121,365 | |||||||||||
General and administrative | 27,582 | (4,055 | ) | (A) | 23,527 | |||||||||||
Amortization of acquired intangibles | 5,141 | (5,141 | ) | (A) | — | |||||||||||
Restructuring and other charges | 86 | (86 | ) | — | ||||||||||||
Total costs and expenses | 318,717 | (40,651 | ) | 278,066 | ||||||||||||
Income from operations | 47,930 | 40,651 | 88,581 | |||||||||||||
Interest expense | (9,583 | ) | 5,693 | (B) | (3,890 | ) | ||||||||||
Other income, net | 2,535 | (1,544 | ) | (C) | 991 | |||||||||||
Income before provision for income taxes | 40,882 | 44,800 | 85,682 | |||||||||||||
Provision for income taxes | 2,382 | 19,895 | (D) | 22,277 | ||||||||||||
Net income | $ | 38,500 | $ | 24,905 | $ | 63,405 |
Amortization and sale of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation expenses | Integration and acquisition-related costs | Executive severance costs | Total adjustments | ||||||||||||||||||||||
Cost of product and maintenance | $ | 7,886 | $ | 438 | $ | 15 | $ | — | $ | — | $ | 8,339 | |||||||||||||||
Cost of services | — | 641 | 21 | — | — | $ | 662 | ||||||||||||||||||||
Marketing and sales | — | 4,594 | 3 | 578 | 480 | $ | 5,655 | ||||||||||||||||||||
Research and development | — | 9,356 | 60 | 7,297 | — | $ | 16,713 | ||||||||||||||||||||
General and administrative | — | 3,537 | 87 | 166 | 265 | $ | 4,055 | ||||||||||||||||||||
Amortization of acquired intangibles | 5,141 | — | — | — | — | $ | 5,141 | ||||||||||||||||||||
Total | $ | 13,027 | $ | 18,566 | $ | 186 | $ | 8,041 | $ | 745 | $ | 40,565 |
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Three Months Ended September 29, 2012 | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
September 29, 2012 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 310,118 | $ | — | $ | 310,118 | ||||||||||
Services | 28,415 | — | 28,415 | |||||||||||||
Total revenue | 338,533 | — | 338,533 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 34,461 | (4,204 | ) | (E) | 30,257 | |||||||||||
Cost of services | 16,809 | (474 | ) | (E) | 16,335 | |||||||||||
Marketing and sales | 82,461 | (2,868 | ) | (E) | 79,593 | |||||||||||
Research and development | 115,078 | (7,225 | ) | (E) | 107,853 | |||||||||||
General and administrative | 26,350 | (3,679 | ) | (E) | 22,671 | |||||||||||
Amortization of acquired intangibles | 3,876 | (3,876 | ) | (E) | — | |||||||||||
Restructuring and other charges | 57 | (57 | ) | — | ||||||||||||
Total costs and expenses | 279,092 | (22,383 | ) | 256,709 | ||||||||||||
Income from operations | 59,441 | 22,383 | 81,824 | |||||||||||||
Interest expense | (8,737 | ) | 5,279 | (F) | (3,458 | ) | ||||||||||
Other income, net | (131 | ) | 1,954 | (G) | 1,823 | |||||||||||
Income before provision for income taxes | 50,573 | 29,616 | 80,189 | |||||||||||||
Provision for income taxes | (8,011 | ) | 28,860 | (H) | 20,849 | |||||||||||
Net income | $ | 58,584 | $ | 756 | $ | 59,340 |
Amortization of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation credits | Integration and acquisition-related costs | Total adjustments | |||||||||||||||||||
Cost of product and maintenance | $ | 3,874 | $ | 343 | $ | (13 | ) | $ | — | $ | 4,204 | ||||||||||||
Cost of services | — | 493 | (19 | ) | — | 474 | |||||||||||||||||
Marketing and sales | — | 2,647 | (87 | ) | 308 | 2,868 | |||||||||||||||||
Research and development | — | 5,774 | (369 | ) | 1,820 | 7,225 | |||||||||||||||||
General and administrative | — | 3,142 | (351 | ) | 888 | 3,679 | |||||||||||||||||
Amortization of acquired intangibles | 3,876 | — | — | — | 3,876 | ||||||||||||||||||
Total | $ | 7,750 | $ | 12,399 | $ | (839 | ) | $ | 3,016 | $ | 22,326 |