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 July 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 July 21, 2014. |
Net Income Reconciliation | Three Months Ended | |||||||
June 28, 2014 | June 29, 2013 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Net income on a GAAP basis | $ | 23,263 | $ | 9,429 | ||||
Amortization of acquired intangibles | 14,192 | 11,087 | ||||||
Stock-based compensation expense | 19,077 | 15,111 | ||||||
Non-qualified deferred compensation expenses | 1,047 | 1,699 | ||||||
Restructuring and other charges (credits) | (26 | ) | 2,656 | |||||
Acquisition and integration-related costs | 8,787 | 10,093 | ||||||
Special charges* | 10,357 | — | ||||||
Amortization of debt discount | 4,241 | 5,571 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | (1,480 | ) | (1,193 | ) | ||||
Income tax effect of non-GAAP adjustments | (15,849 | ) | 6,712 | |||||
Net income on a non-GAAP basis | $ | 63,609 | $ | 61,165 |
* | Comprised of costs related to a voluntary retirement program |
** | 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 28, 2014 | June 29, 2013 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Diluted net income per share on a GAAP basis | $ | 0.08 | $ | 0.03 | ||||
Amortization of acquired intangibles | 0.05 | 0.04 | ||||||
Stock-based compensation expense | 0.06 | 0.05 | ||||||
Non-qualified deferred compensation expenses | — | 0.01 | ||||||
Restructuring and other charges (credits) | — | 0.01 | ||||||
Acquisition and integration-related costs | 0.03 | 0.03 | ||||||
Special charges* | 0.03 | — | ||||||
Amortization of debt discount | 0.01 | 0.02 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | — | — | ||||||
Income tax effect of non-GAAP adjustments | (0.05 | ) | 0.02 | |||||
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*** | 305,755 | 294,443 | ||||||
Shares used in calculation of diluted net income per share — non-GAAP*** | 305,755 | 294,443 |
* | Comprised of costs related to a voluntary retirement program |
** | 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 28, 2014 | December 28, 2013 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 557,416 | $ | 536,260 | ||||
Short-term investments | 97,910 | 96,788 | ||||||
Receivables, net | 101,924 | 107,624 | ||||||
Inventories | 58,311 | 50,220 | ||||||
2015 notes hedges | 455,844 | 306,817 | ||||||
Prepaid expenses and other | 143,314 | 123,382 | ||||||
Total current assets | 1,414,719 | 1,221,091 | ||||||
Property, plant and equipment, net of accumulated depreciation of $584,613 and $568,494, respectively | 239,314 | 238,715 | ||||||
Goodwill | 559,957 | 456,905 | ||||||
Acquired intangibles, net of accumulated amortization of $121,797 and $139,820, respectively | 395,430 | 311,693 | ||||||
Long-term receivables | 5,611 | 3,672 | ||||||
Other assets | 170,802 | 196,525 | ||||||
Total assets | $ | 2,785,833 | $ | 2,428,601 | ||||
Current liabilities: | ||||||||
Revolving credit facility | $ | 100,000 | $ | — | ||||
Convertible notes | 333,333 | 324,826 | ||||||
2015 notes embedded conversion derivative | 455,844 | 306,817 | ||||||
Accounts payable and accrued liabilities | 216,959 | 216,594 | ||||||
Current portion of deferred revenue | 301,911 | 299,973 | ||||||
Total current liabilities | 1,408,047 | 1,148,210 | ||||||
Long-term liabilities: | ||||||||
Long-term portion of deferred revenue | 46,800 | 52,850 | ||||||
Other long-term liabilities | 70,502 | 71,436 | ||||||
Total long-term liabilities | 117,302 | 124,286 | ||||||
Stockholders’ equity | 1,260,484 | 1,156,105 | ||||||
Total liabilities and stockholders’ equity | $ | 2,785,833 | $ | 2,428,601 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | |||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 354,468 | $ | 337,983 | $ | 711,818 | $ | 666,254 | ||||||||
Services | 24,320 | 24,498 | 45,520 | 50,493 | ||||||||||||
Total revenue | 378,788 | 362,481 | 757,338 | 716,747 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 37,707 | 28,095 | 79,904 | 57,942 | ||||||||||||
Cost of services | 16,706 | 15,148 | 31,608 | 33,492 | ||||||||||||
Marketing and sales | 98,611 | 95,277 | 196,934 | 185,679 | ||||||||||||
Research and development | 152,672 | 136,395 | 299,138 | 260,479 | ||||||||||||
General and administrative | 32,042 | 34,441 | 60,786 | 64,251 | ||||||||||||
Amortization of acquired intangibles | 5,579 | 5,327 | 10,789 | 9,118 | ||||||||||||
Restructuring and other charges (credits) | (26 | ) | 2,656 | 370 | 2,508 | |||||||||||
Total costs and expenses | 343,291 | 317,339 | 679,529 | 613,469 | ||||||||||||
Income from operations | 35,497 | 45,142 | 77,809 | 103,278 | ||||||||||||
Interest expense | (7,369 | ) | (9,528 | ) | (14,637 | ) | (18,790 | ) | ||||||||
Other income, net | 1,635 | 2,018 | 5,017 | 4,193 | ||||||||||||
Income before provision for income taxes | 29,763 | 37,632 | 68,189 | 88,681 | ||||||||||||
Provision for income taxes | 6,500 | 28,203 | 11,856 | 643 | ||||||||||||
Net income | $ | 23,263 | $ | 9,429 | $ | 56,333 | $ | 88,038 | ||||||||
Net income per share - basic | $ | 0.08 | $ | 0.03 | $ | 0.20 | $ | 0.32 | ||||||||
Net income per share - diluted | $ | 0.08 | $ | 0.03 | $ | 0.19 | $ | 0.30 | ||||||||
Weighted average common shares outstanding - basic | 283,344 | 277,146 | 282,480 | 276,018 | ||||||||||||
Weighted average common shares outstanding - diluted | 305,755 | 294,443 | 303,395 | 293,274 |
Six Months Ended | |||||||
June 28, 2014 | June 29, 2013 | ||||||
Cash and cash equivalents at beginning of period | $ | 536,260 | $ | 726,357 | |||
Cash flows from operating activities: | |||||||
Net income | 56,333 | 88,038 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 53,609 | 46,977 | |||||
Amortization of debt discount and fees | 9,814 | 12,625 | |||||
Stock-based compensation | 37,941 | 28,921 | |||||
Gain on investments, net | (5,128 | ) | (2,477 | ) | |||
Deferred income taxes | 4,778 | (4,413 | ) | ||||
Other non-cash items | 3,694 | 433 | |||||
Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||
Receivables | 5,336 | 8,719 | |||||
Inventories | (12,266 | ) | (2,672 | ) | |||
Prepaid expenses and other | (13,602 | ) | 26,516 | ||||
Other assets | (1,273 | ) | (45,274 | ) | |||
Accounts payable and accrued liabilities | (13,550 | ) | 10,023 | ||||
Deferred revenue | (23,740 | ) | (24,359 | ) | |||
Other long-term liabilities | (4,983 | ) | 7,174 | ||||
Net cash provided by operating activities | 96,963 | 150,231 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (77,490 | ) | (63,705 | ) | |||
Proceeds from the sale of available-for-sale securities | 54,601 | 46,857 | |||||
Proceeds from the maturity of available-for-sale securities | 23,799 | 15,716 | |||||
Proceeds from the sale of long-term investments | — | 6,102 | |||||
Purchases of property, plant and equipment | (17,715 | ) | (23,739 | ) | |||
Cash paid in business combinations and asset acquisitions, net of cash acquired | (163,685 | ) | (392,139 | ) | |||
Net cash used for investing activities | (180,490 | ) | (410,908 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility | 100,000 | 100,000 | |||||
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 | 2,642 | 7,300 | |||||
Proceeds from issuance of common stock | 36,482 | 30,227 | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (12,292 | ) | (11,758 | ) | |||
Payments for repurchases of common stock | (25,032 | ) | — | ||||
Net cash provided by financing activities | 99,965 | 122,661 | |||||
Effect of exchange rate changes on cash and cash equivalents | 4,718 | (11,108 | ) | ||||
Increase (decrease) in cash and cash equivalents | 21,156 | (149,124 | ) | ||||
Cash and cash equivalents at end of period | $ | 557,416 | $ | 577,233 |
Three Months Ending September 27, 2014 | Year Ending January 3, 2015 | |||
Forecast | Forecast | |||
Diluted net income per share on a GAAP basis | $0.13 to $0.15 | $0.48 to $0.56 | ||
Amortization of acquired intangibles | 0.05 | 0.20 | ||
Stock-based compensation expense | 0.07 | 0.27 | ||
Non-qualified deferred compensation expenses | — | 0.01 | ||
Acquisition and integration-related costs | 0.02 | 0.08 | ||
Special charges* | — | 0.03 | ||
Amortization of debt discount | 0.01 | 0.06 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | — | (0.02) | ||
Income tax effect of non-GAAP adjustments | (0.05) | (0.21) | ||
Diluted net income per share on a non-GAAP basis | $0.23 to $0.25 | $0.90 to $0.98 |
* | Comprised of costs related to a voluntary retirement program |
** | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
Three Months Ending September 27, 2014 | Year Ending January 3, 2015 | |||
($ in millions) | Forecast | Forecast | ||
Net income on a GAAP basis | $41 to $47 | $147 to $172 | ||
Amortization of acquired intangibles | 16 | 60 | ||
Stock-based compensation expense | 21 | 83 | ||
Non-qualified deferred compensation expenses | — | 3 | ||
Acquisition and integration-related costs | 5 | 25 | ||
Special charges* | — | 10 | ||
Amortization of debt discount | 4 | 18 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | — | (5) | ||
Income tax effect of non-GAAP adjustments | (16) | (66) | ||
Net income on a non-GAAP basis | $71 to $77 | $275 to $300 |
* | Comprised of costs related to a voluntary retirement program |
** | 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 | Q2 | |||||||||||||||
Americas | 44 | % | 45 | % | 48 | % | 47 | % | 46 | % | 45 | % | 44 | % | ||||||||
Asia | 19 | % | 21 | % | 20 | % | 19 | % | 20 | % | 23 | % | 23 | % | ||||||||
Europe, Middle East and Africa | 22 | % | 21 | % | 20 | % | 20 | % | 21 | % | 20 | % | 22 | % | ||||||||
Japan | 15 | % | 13 | % | 12 | % | 14 | % | 13 | % | 12 | % | 11 | % | ||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
2013 | 2014 | |||||||||||||||||||||
PRODUCT GROUP | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | |||||||||||||||
Functional Verification, including Emulation Hardware | 22 | % | 22 | % | 24 | % | 25 | % | 23 | % | 23 | % | 21 | % | ||||||||
Digital IC Design and Signoff | 33 | % | 31 | % | 29 | % | 29 | % | 30 | % | 30 | % | 30 | % | ||||||||
Custom IC Design | 28 | % | 28 | % | 28 | % | 26 | % | 27 | % | 27 | % | 28 | % | ||||||||
System Interconnect and Analysis | 10 | % | 11 | % | 10 | % | 10 | % | 11 | % | 10 | % | 11 | % | ||||||||
IP | 7 | % | 8 | % | 9 | % | 10 | % | 9 | % | 10 | % | 10 | % | ||||||||
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 28, 2014 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
June 28, 2014 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 354,468 | $ | — | $ | 354,468 | ||||||||||
Services | 24,320 | — | 24,320 | |||||||||||||
Total revenue | 378,788 | — | 378,788 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 37,707 | (9,504 | ) | (A) | 28,203 | |||||||||||
Cost of services | 16,706 | (1,384 | ) | (A) | 15,322 | |||||||||||
Marketing and sales | 98,611 | (6,992 | ) | (A) | 91,619 | |||||||||||
Research and development | 152,672 | (21,177 | ) | (A) | 131,495 | |||||||||||
General and administrative | 32,042 | (8,824 | ) | (A) | 23,218 | |||||||||||
Amortization of acquired intangibles | 5,579 | (5,579 | ) | (A) | — | |||||||||||
Restructuring and other charges (credits) | (26 | ) | 26 | — | ||||||||||||
Total costs and expenses | 343,291 | (53,434 | ) | 289,857 | ||||||||||||
Income from operations | 35,497 | 53,434 | 88,931 | |||||||||||||
Interest expense | (7,369 | ) | 4,241 | (B) | (3,128 | ) | ||||||||||
Other income, net | 1,635 | (1,480 | ) | (C) | 155 | |||||||||||
Income before provision for income taxes | 29,763 | 56,195 | 85,958 | |||||||||||||
Provision for income taxes | 6,500 | 15,849 | (D) | 22,349 | ||||||||||||
Net income | $ | 23,263 | $ | 40,346 | $ | 63,609 |
Amortization of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation expenses | Acquisition and integration-related costs | Special charges (E) | Total adjustments | ||||||||||||||||||||||
Cost of product and maintenance | $ | 8,613 | $ | 485 | $ | 5 | $ | — | $ | 401 | $ | 9,504 | |||||||||||||||
Cost of services | — | 709 | 8 | — | 667 | 1,384 | |||||||||||||||||||||
Marketing and sales | — | 4,560 | 20 | 499 | 1,913 | 6,992 | |||||||||||||||||||||
Research and development | — | 9,701 | 642 | 4,980 | 5,854 | 21,177 | |||||||||||||||||||||
General and administrative | — | 3,622 | 372 | 3,308 | 1,522 | 8,824 | |||||||||||||||||||||
Amortization of acquired intangibles | 5,579 | — | — | — | — | 5,579 | |||||||||||||||||||||
Total | $ | 14,192 | $ | 19,077 | $ | 1,047 | $ | 8,787 | $ | 10,357 | $ | 53,460 |
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Three Months Ended June 29, 2013 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(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 | ) | (F) | 22,000 | |||||||||||
Cost of services | 15,148 | (483 | ) | (F) | 14,665 | |||||||||||
Marketing and sales | 95,277 | (3,868 | ) | (F) | 91,409 | |||||||||||
Research and development | 136,395 | (13,096 | ) | (F) | 123,299 | |||||||||||
General and administrative | 34,441 | (9,121 | ) | (F) | 25,320 | |||||||||||
Amortization of acquired intangibles | 5,327 | (5,327 | ) | (F) | — | |||||||||||
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 | (G) | (3,957 | ) | ||||||||||
Other income, net | 2,018 | (1,193 | ) | (H) | 825 | |||||||||||
Income before provision for income taxes | 37,632 | 45,024 | 82,656 | |||||||||||||
Provision for income taxes | 28,203 | (6,712 | ) | (I) | 21,491 | |||||||||||
Net income | $ | 9,429 | $ | 51,736 | $ | 61,165 |
Amortization of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation expenses | Acquisition and integration-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 |