Delaware | 000-15867 | 00-0000000 | ||
(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 April 21, 2014. |
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 April 21, 2014. |
Net Income Reconciliation | Three Months Ended | |||||||
March 29, 2014 | March 30, 2013 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Net income on a GAAP basis | $ | 33,070 | $ | 78,609 | ||||
Amortization of acquired intangibles | 12,786 | 7,598 | ||||||
Stock-based compensation expense | 18,864 | 13,810 | ||||||
Non-qualified deferred compensation expenses | 2,063 | 152 | ||||||
Restructuring and other charges (credits) | 396 | (148 | ) | |||||
Integration and acquisition-related costs | 7,118 | 4,935 | ||||||
Amortization of debt discount | 4,209 | 5,536 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | (3,609 | ) | (990 | ) | ||||
Income tax benefit due to a release of an uncertain tax position | — | (33,719 | ) | |||||
Income tax effect of non-GAAP adjustments | (15,510 | ) | (15,146 | ) | ||||
Net income on a non-GAAP basis | $ | 59,387 | $ | 60,637 |
* | 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 | |||||||
March 29, 2014 | March 30, 2013 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Diluted net income per share on a GAAP basis | $ | 0.11 | $ | 0.27 | ||||
Amortization of acquired intangibles | 0.04 | 0.03 | ||||||
Stock-based compensation expense | 0.06 | 0.05 | ||||||
Non-qualified deferred compensation expenses | 0.01 | — | ||||||
Restructuring and other charges (credits) | — | — | ||||||
Integration and acquisition-related costs | 0.02 | 0.02 | ||||||
Amortization of debt discount | 0.02 | 0.02 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | (0.01 | ) | (0.01 | ) | ||||
Income tax benefit due to a release of an uncertain tax position | — | (0.12 | ) | |||||
Income tax effect of non-GAAP adjustments | (0.05 | ) | (0.05 | ) | ||||
Diluted net income per share on a non-GAAP basis | $ | 0.20 | $ | 0.21 | ||||
Shares used in calculation of diluted net income per share — GAAP** | 301,034 | 292,151 | ||||||
Shares used in calculation of diluted net income per share — non-GAAP** | 301,034 | 292,151 |
* | 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. |
March 29, 2014 | December 28, 2013 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 532,761 | $ | 536,260 | ||||
Short-term investments | 97,006 | 96,788 | ||||||
Receivables, net | 106,322 | 107,624 | ||||||
Inventories | 55,605 | 50,220 | ||||||
2015 notes hedges | 369,731 | 306,817 | ||||||
Prepaid expenses and other | 136,300 | 123,382 | ||||||
Total current assets | 1,297,725 | 1,221,091 | ||||||
Property, plant and equipment, net of accumulated depreciation of $576,562 and $568,494, respectively | 239,425 | 238,715 | ||||||
Goodwill | 478,990 | 456,905 | ||||||
Acquired intangibles, net of accumulated amortization of $107,521 and $139,820, respectively | 316,498 | 311,693 | ||||||
Long-term receivables | 6,193 | 3,672 | ||||||
Other assets | 185,389 | 196,525 | ||||||
Total assets | $ | 2,524,220 | $ | 2,428,601 | ||||
Current liabilities: | ||||||||
Convertible notes | $ | 329,058 | $ | 324,826 | ||||
2015 notes embedded conversion derivative | 369,731 | 306,817 | ||||||
Accounts payable and accrued liabilities | 189,200 | 216,594 | ||||||
Current portion of deferred revenue | 304,705 | 299,973 | ||||||
Total current liabilities | 1,192,694 | 1,148,210 | ||||||
Long-term liabilities: | ||||||||
Long-term portion of deferred revenue | 48,299 | 52,850 | ||||||
Other long-term liabilities | 69,025 | 71,436 | ||||||
Total long-term liabilities | 117,324 | 124,286 | ||||||
Stockholders’ equity | 1,214,202 | 1,156,105 | ||||||
Total liabilities and stockholders’ equity | $ | 2,524,220 | $ | 2,428,601 |
Three Months Ended | ||||||||
March 29, 2014 | March 30, 2013 | |||||||
Revenue: | ||||||||
Product and maintenance | $ | 357,350 | $ | 328,271 | ||||
Services | 21,200 | 25,995 | ||||||
Total revenue | 378,550 | 354,266 | ||||||
Costs and expenses: | ||||||||
Cost of product and maintenance | 42,197 | 29,847 | ||||||
Cost of services | 14,902 | 18,344 | ||||||
Marketing and sales | 98,323 | 90,402 | ||||||
Research and development | 146,466 | 124,084 | ||||||
General and administrative | 28,744 | 29,810 | ||||||
Amortization of acquired intangibles | 5,210 | 3,791 | ||||||
Restructuring and other charges (credits) | 396 | (148 | ) | |||||
Total costs and expenses | 336,238 | 296,130 | ||||||
Income from operations | 42,312 | 58,136 | ||||||
Interest expense | (7,268 | ) | (9,262 | ) | ||||
Other income, net | 3,382 | 2,175 | ||||||
Income before provision (benefit) for income taxes | 38,426 | 51,049 | ||||||
Provision (benefit) for income taxes | 5,356 | (27,560 | ) | |||||
Net income | $ | 33,070 | $ | 78,609 | ||||
Net income per share - basic | $ | 0.12 | $ | 0.29 | ||||
Net income per share - diluted | $ | 0.11 | $ | 0.27 | ||||
Weighted average common shares outstanding - basic | 281,615 | 274,936 | ||||||
Weighted average common shares outstanding - diluted | 301,034 | 292,151 |
Three Months Ended | |||||||
March 29, 2014 | March 30, 2013 | ||||||
Cash and cash equivalents at beginning of period | $ | 536,260 | $ | 726,357 | |||
Cash flows from operating activities: | |||||||
Net income | 33,070 | 78,609 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 26,017 | 21,682 | |||||
Amortization of debt discount and fees | 4,882 | 6,281 | |||||
Stock-based compensation | 18,864 | 13,810 | |||||
Gain on investments, net | (3,651 | ) | (1,006 | ) | |||
Deferred income taxes | 2,245 | 8,695 | |||||
Other non-cash items | 2,344 | (1,007 | ) | ||||
Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||
Receivables | (108 | ) | 23,652 | ||||
Inventories | (9,373 | ) | (979 | ) | |||
Prepaid expenses and other | (9,753 | ) | (1,099 | ) | |||
Other assets | 3,157 | 4,148 | |||||
Accounts payable and accrued liabilities | (29,680 | ) | (11,003 | ) | |||
Deferred revenue | (5,508 | ) | (16,648 | ) | |||
Other long-term liabilities | (4,408 | ) | (49,799 | ) | |||
Net cash provided by operating activities | 28,098 | 75,336 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (47,005 | ) | (24,282 | ) | |||
Proceeds from the sale of available-for-sale securities | 32,586 | 14,985 | |||||
Proceeds from the maturity of available-for-sale securities | 13,905 | 8,700 | |||||
Proceeds from the sale of long-term investments | — | 6,102 | |||||
Purchases of property, plant and equipment | (6,252 | ) | (6,569 | ) | |||
Cash paid in business combinations and asset acquisitions, net of cash acquired | (27,422 | ) | (757 | ) | |||
Net cash used for investing activities | (34,188 | ) | (1,821 | ) | |||
Cash flows from financing activities: | |||||||
Principal payments on receivable financing | — | (2,526 | ) | ||||
Payment of acquisition-related contingent consideration | (1,835 | ) | (582 | ) | |||
Tax effect related to employee stock transactions allocated to equity | 1,827 | 5,276 | |||||
Proceeds from issuance of common stock | 23,377 | 21,801 | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (10,981 | ) | (8,775 | ) | |||
Payments for repurchases of common stock | (12,517 | ) | — | ||||
Net cash provided by (used for) financing activities | (129 | ) | 15,194 | ||||
Effect of exchange rate changes on cash and cash equivalents | 2,720 | (4,914 | ) | ||||
Increase (decrease) in cash and cash equivalents | (3,499 | ) | 83,795 | ||||
Cash and cash equivalents at end of period | $ | 532,761 | $ | 810,152 |
Three Months Ending June 28, 2014 | Year Ending January 3, 2015 | |||
Forecast | Forecast | |||
Diluted net income per share on a GAAP basis | $0.10 to $0.12 | $0.56 to $0.66 | ||
Amortization of acquired intangibles | 0.04 | 0.17 | ||
Stock-based compensation expense | 0.06 | 0.27 | ||
Non-qualified deferred compensation expenses | — | 0.01 | ||
Integration and acquisition-related costs | 0.02 | 0.06 | ||
Amortization of debt discount | 0.01 | 0.06 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | — | (0.01) | ||
Income tax effect of non-GAAP adjustments | (0.04) | (0.20) | ||
Diluted net income per share on a non-GAAP basis | $0.19 to $0.21 | $0.92 to $1.02 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
Three Months Ending June 28, 2014 | Year Ending January 3, 2015 | |||
($ in millions) | Forecast | Forecast | ||
Net income on a GAAP basis | $30 to $36 | $172 to $202 | ||
Amortization of acquired intangibles | 13 | 52 | ||
Stock-based compensation expense | 19 | 83 | ||
Non-qualified deferred compensation expenses | — | 2 | ||
Integration and acquisition-related costs | 5 | 18 | ||
Amortization of debt discount | 4 | 18 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | — | (4) | ||
Income tax effect of non-GAAP adjustments | (14) | (62) | ||
Net income on a non-GAAP basis | $57 to $63 | $279 to $309 |
* | 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. |
2013 | 2014 | |||||||||||||||||
GEOGRAPHY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | ||||||||||||
Americas | 44 | % | 45 | % | 48 | % | 47 | % | 46 | % | 45 | % | ||||||
Europe, Middle East and Africa | 22 | % | 21 | % | 20 | % | 20 | % | 21 | % | 20 | % | ||||||
Japan | 15 | % | 13 | % | 12 | % | 14 | % | 13 | % | 12 | % | ||||||
Asia | 19 | % | 21 | % | 20 | % | 19 | % | 20 | % | 23 | % | ||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
2013 | 2014 | |||||||||||||||||
PRODUCT GROUP | Q1 | Q2 | Q3 | Q4 | Year | Q1 | ||||||||||||
Functional Verification, including Emulation Hardware | 22 | % | 22 | % | 24 | % | 25 | % | 23 | % | 23 | % | ||||||
Digital IC Design and Signoff | 33 | % | 31 | % | 29 | % | 29 | % | 30 | % | 30 | % | ||||||
Custom IC Design | 28 | % | 28 | % | 28 | % | 26 | % | 27 | % | 27 | % | ||||||
System Interconnect and Analysis | 10 | % | 11 | % | 10 | % | 10 | % | 11 | % | 10 | % | ||||||
IP | 7 | % | 8 | % | 9 | % | 10 | % | 9 | % | 10 | % | ||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Three Months Ended March 29, 2014 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 29, 2014 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 357,350 | $ | — | $ | 357,350 | ||||||||||
Services | 21,200 | — | 21,200 | |||||||||||||
Total revenue | 378,550 | — | 378,550 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 42,197 | (8,082 | ) | (A) | 34,115 | |||||||||||
Cost of services | 14,902 | (739 | ) | (A) | 14,163 | |||||||||||
Marketing and sales | 98,323 | (5,695 | ) | (A) | 92,628 | |||||||||||
Research and development | 146,466 | (15,751 | ) | (A) | 130,715 | |||||||||||
General and administrative | 28,744 | (5,354 | ) | (A) | 23,390 | |||||||||||
Amortization of acquired intangibles | 5,210 | (5,210 | ) | (A) | — | |||||||||||
Restructuring and other charges | 396 | (396 | ) | — | ||||||||||||
Total costs and expenses | 336,238 | (41,227 | ) | 295,011 | ||||||||||||
Income from operations | 42,312 | 41,227 | 83,539 | |||||||||||||
Interest expense | (7,268 | ) | 4,209 | (B) | (3,059 | ) | ||||||||||
Other income (expense), net | 3,382 | (3,609 | ) | (C) | (227 | ) | ||||||||||
Income before provision for income taxes | 38,426 | 41,827 | 80,253 | |||||||||||||
Provision for income taxes | 5,356 | 15,510 | (D) | 20,866 | ||||||||||||
Net income | $ | 33,070 | $ | 26,317 | $ | 59,387 |
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 | $ | 7,576 | $ | 482 | $ | 24 | $ | — | $ | 8,082 | |||||||||||||
Cost of services | — | 703 | 36 | — | 739 | ||||||||||||||||||
Marketing and sales | — | 4,596 | 111 | 988 | 5,695 | ||||||||||||||||||
Research and development | — | 9,667 | 1,123 | 4,961 | 15,751 | ||||||||||||||||||
General and administrative | — | 3,416 | 769 | 1,169 | 5,354 | ||||||||||||||||||
Amortization of acquired intangibles | 5,210 | — | — | — | 5,210 | ||||||||||||||||||
Total | $ | 12,786 | $ | 18,864 | $ | 2,063 | $ | 7,118 | $ | 40,831 |
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Three Months Ended March 30, 2013 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 30, 2013 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 328,271 | $ | — | $ | 328,271 | ||||||||||
Services | 25,995 | — | 25,995 | |||||||||||||
Total revenue | 354,266 | — | 354,266 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 29,847 | (4,175 | ) | (E) | 25,672 | |||||||||||
Cost of services | 18,344 | (530 | ) | (E) | 17,814 | |||||||||||
Marketing and sales | 90,402 | (3,104 | ) | (E) | 87,298 | |||||||||||
Research and development | 124,084 | (7,928 | ) | (E) | 116,156 | |||||||||||
General and administrative | 29,810 | (6,967 | ) | (E) | 22,843 | |||||||||||
Amortization of acquired intangibles | 3,791 | (3,791 | ) | (E) | — | |||||||||||
Restructuring and other charges (credits) | (148 | ) | 148 | — | ||||||||||||
Total costs and expenses | 296,130 | (26,347 | ) | 269,783 | ||||||||||||
Income from operations | 58,136 | 26,347 | 84,483 | |||||||||||||
Interest expense | (9,262 | ) | 5,536 | (F) | (3,726 | ) | ||||||||||
Other income, net | 2,175 | (990 | ) | (G) | 1,185 | |||||||||||
Income before provision (benefit) for income taxes | 51,049 | 30,893 | 81,942 | |||||||||||||
Provision (benefit) for income taxes | (27,560 | ) | 48,865 | (H) | 21,305 | |||||||||||
Net income | $ | 78,609 | $ | (17,972 | ) | $ | 60,637 |
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 | $ | 3,807 | $ | 364 | $ | 4 | $ | — | $ | 4,175 | |||||||||||||
Cost of services | — | 525 | 5 | — | 530 | ||||||||||||||||||
Marketing and sales | — | 3,018 | 22 | 64 | 3,104 | ||||||||||||||||||
Research and development | — | 6,553 | 78 | 1,297 | 7,928 | ||||||||||||||||||
General and administrative | — | 3,350 | 43 | 3,574 | 6,967 | ||||||||||||||||||
Amortization of acquired intangibles | 3,791 | — | — | — | 3,791 | ||||||||||||||||||
Total | $ | 7,598 | $ | 13,810 | $ | 152 | $ | 4,935 | $ | 26,495 |