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 October 20, 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 October 20, 2014. |
Net Income Reconciliation | Three Months Ended | |||||||
September 27, 2014 | September 28, 2013 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Net income on a GAAP basis | $ | 37,535 | $ | 38,500 | ||||
Amortization and sale of acquired intangibles | 16,387 | 13,027 | ||||||
Stock-based compensation expense | 22,877 | 18,566 | ||||||
Non-qualified deferred compensation expenses (credits) | (104 | ) | 186 | |||||
Restructuring and other charges | 11,027 | 86 | ||||||
Acquisition and integration-related costs | 4,435 | 8,041 | ||||||
Special charges* | 459 | 745 | ||||||
Amortization of debt discount | 4,370 | 5,693 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | 1,944 | (1,544 | ) | |||||
Income tax effect of non-GAAP adjustments | (19,377 | ) | (19,895 | ) | ||||
Net income on a non-GAAP basis | $ | 79,553 | $ | 63,405 |
* | Comprised of costs related to a voluntary retirement program and executive severance costs |
** | 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 27, 2014 | September 28, 2013 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Diluted net income per share on a GAAP basis | $ | 0.12 | $ | 0.13 | ||||
Amortization and sale of acquired intangibles | 0.05 | 0.04 | ||||||
Stock-based compensation expense | 0.07 | 0.06 | ||||||
Non-qualified deferred compensation expenses (credits) | — | — | ||||||
Restructuring and other charges | 0.04 | — | ||||||
Acquisition and integration-related costs | 0.02 | 0.03 | ||||||
Special charges* | — | — | ||||||
Amortization of debt discount | 0.01 | 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 | (0.06 | ) | (0.07 | ) | ||||
Diluted net income per share on a non-GAAP basis | $ | 0.26 | $ | 0.21 | ||||
Shares used in calculation of diluted net income per share — GAAP*** | 309,995 | 296,958 | ||||||
Shares used in calculation of diluted net income per share — non-GAAP*** | 309,995 | 296,958 |
* | Comprised of costs related to a voluntary retirement program and executive severance costs |
** | 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 27, 2014 | December 28, 2013 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 500,483 | $ | 536,260 | ||||
Short-term investments | 94,970 | 96,788 | ||||||
Receivables, net | 107,634 | 107,624 | ||||||
Inventories | 61,096 | 50,220 | ||||||
2015 notes hedges | 452,498 | 306,817 | ||||||
Prepaid expenses and other | 134,929 | 123,382 | ||||||
Total current assets | 1,351,610 | 1,221,091 | ||||||
Property, plant and equipment, net of accumulated depreciation of $546,129 and $568,494, respectively | 231,337 | 238,715 | ||||||
Goodwill | 557,252 | 456,905 | ||||||
Acquired intangibles, net of accumulated amortization of $137,960 and $139,820, respectively | 378,827 | 311,693 | ||||||
Long-term receivables | 4,957 | 3,672 | ||||||
Other assets | 181,958 | 196,525 | ||||||
Total assets | $ | 2,705,941 | $ | 2,428,601 | ||||
Current liabilities: | ||||||||
Convertible notes | $ | 337,711 | $ | 324,826 | ||||
2015 notes embedded conversion derivative | 452,498 | 306,817 | ||||||
Accounts payable and accrued liabilities | 205,647 | 216,594 | ||||||
Current portion of deferred revenue | 300,188 | 299,973 | ||||||
Total current liabilities | 1,296,044 | 1,148,210 | ||||||
Long-term liabilities: | ||||||||
Long-term portion of deferred revenue | 42,873 | 52,850 | ||||||
Other long-term liabilities | 82,297 | 71,436 | ||||||
Total long-term liabilities | 125,170 | 124,286 | ||||||
Stockholders’ equity | 1,284,727 | 1,156,105 | ||||||
Total liabilities and stockholders’ equity | $ | 2,705,941 | $ | 2,428,601 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 27, 2014 | September 28, 2013 | September 27, 2014 | September 28, 2013 | |||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 374,110 | $ | 341,601 | $ | 1,085,928 | $ | 1,007,855 | ||||||||
Services | 26,386 | 25,046 | 71,906 | 75,539 | ||||||||||||
Total revenue | 400,496 | 366,647 | 1,157,834 | 1,083,394 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 36,954 | 32,546 | 116,858 | 90,488 | ||||||||||||
Cost of services | 17,125 | 17,190 | 48,733 | 50,682 | ||||||||||||
Marketing and sales | 100,387 | 98,094 | 297,321 | 283,773 | ||||||||||||
Research and development | 148,744 | 138,078 | 447,882 | 398,557 | ||||||||||||
General and administrative | 25,894 | 27,582 | 86,680 | 91,833 | ||||||||||||
Amortization of acquired intangibles | 6,316 | 5,141 | 17,105 | 14,259 | ||||||||||||
Restructuring and other charges | 11,027 | 86 | 11,397 | 2,594 | ||||||||||||
Total costs and expenses | 346,447 | 318,717 | 1,025,976 | 932,186 | ||||||||||||
Income from operations | 54,049 | 47,930 | 131,858 | 151,208 | ||||||||||||
Interest expense | (7,523 | ) | (9,583 | ) | (22,160 | ) | (28,373 | ) | ||||||||
Other income (expense), net | (417 | ) | 2,535 | 4,600 | 6,728 | |||||||||||
Income before provision for income taxes | 46,109 | 40,882 | 114,298 | 129,563 | ||||||||||||
Provision for income taxes | 8,574 | 2,382 | 20,430 | 3,025 | ||||||||||||
Net income | $ | 37,535 | $ | 38,500 | $ | 93,868 | $ | 126,538 | ||||||||
Net income per share - basic | $ | 0.13 | $ | 0.14 | $ | 0.33 | $ | 0.46 | ||||||||
Net income per share - diluted | $ | 0.12 | $ | 0.13 | $ | 0.31 | $ | 0.43 | ||||||||
Weighted average common shares outstanding - basic | 284,462 | 278,977 | 283,141 | 277,034 | ||||||||||||
Weighted average common shares outstanding - diluted | 309,995 | 296,958 | 305,595 | 294,531 |
Nine Months Ended | |||||||
September 27, 2014 | September 28, 2013 | ||||||
Cash and cash equivalents at beginning of period | $ | 536,260 | $ | 726,357 | |||
Cash flows from operating activities: | |||||||
Net income | 93,868 | 126,538 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 84,296 | 72,681 | |||||
Amortization of debt discount and fees | 14,863 | 19,102 | |||||
Stock-based compensation | 60,818 | 47,487 | |||||
Gain on investments, net | (3,202 | ) | (4,035 | ) | |||
Deferred income taxes | 18,963 | (6,425 | ) | ||||
Other non-cash items | 6,221 | 2,183 | |||||
Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||
Receivables | (1,858 | ) | 2,192 | ||||
Inventories | (15,796 | ) | (10,005 | ) | |||
Prepaid expenses and other | (8 | ) | 26,927 | ||||
Other assets | (38,241 | ) | (46,651 | ) | |||
Accounts payable and accrued liabilities | (15,623 | ) | 18,277 | ||||
Deferred revenue | (27,231 | ) | (5,474 | ) | |||
Other long-term liabilities | 7,585 | 5,644 | |||||
Net cash provided by operating activities | 184,655 | 248,441 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (98,392 | ) | (84,000 | ) | |||
Proceeds from the sale of available-for-sale securities | 69,912 | 59,014 | |||||
Proceeds from the maturity of available-for-sale securities | 32,402 | 30,506 | |||||
Proceeds from the sale of long-term investments | — | 6,200 | |||||
Purchases of property, plant and equipment | (27,958 | ) | (35,950 | ) | |||
Cash paid in business combinations and asset acquisitions, net of cash acquired | (167,248 | ) | (392,825 | ) | |||
Net cash used for investing activities | (191,284 | ) | (417,055 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility | 100,000 | 100,000 | |||||
Payment on revolving credit facility | (100,000 | ) | (50,000 | ) | |||
Payment of convertible notes | (1 | ) | (78 | ) | |||
Payment of convertible notes embedded conversion derivative liability | (1 | ) | — | ||||
Proceeds from convertible notes hedges | 1 | — | |||||
Principal payments on receivable financing | — | (2,526 | ) | ||||
Payment of debt issuance costs | (322 | ) | — | ||||
Payment of acquisition-related contingent consideration | (1,835 | ) | (677 | ) | |||
Tax effect related to employee stock transactions allocated to equity | 5,786 | 9,494 | |||||
Proceeds from issuance of common stock | 54,717 | 40,691 | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (23,648 | ) | (19,461 | ) | |||
Payments for repurchases of common stock | (62,575 | ) | — | ||||
Net cash provided by (used for) financing activities | (27,878 | ) | 77,443 | ||||
Effect of exchange rate changes on cash and cash equivalents | (1,270 | ) | (14,783 | ) | |||
Decrease in cash and cash equivalents | (35,777 | ) | (105,954 | ) | |||
Cash and cash equivalents at end of period | $ | 500,483 | $ | 620,403 |
Three Months Ending January 3, 2015 | Year Ending January 3, 2015 | |||
Forecast | Forecast | |||
Diluted net income per share on a GAAP basis | $0.16 to $0.18 | $0.46 to $0.48 | ||
Amortization of acquired intangibles | 0.05 | 0.19 | ||
Stock-based compensation expense | 0.08 | 0.28 | ||
Non-qualified deferred compensation expenses | — | 0.01 | ||
Restructuring and other charges | — | 0.04 | ||
Acquisition and integration-related costs | 0.01 | 0.08 | ||
Special charges* | — | 0.04 | ||
Amortization of debt discount | 0.02 | 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 | (0.06) | (0.23) | ||
Diluted net income per share on a non-GAAP basis | $0.26 to $0.28 | $0.92 to $0.94 |
* | Comprised of costs related to a voluntary retirement program |
** | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
Three Months Ending January 3, 2015 | Year Ending January 3, 2015 | |||
($ in millions) | Forecast | Forecast | ||
Net income on a GAAP basis | $48 to $55 | $142 to $149 | ||
Amortization of acquired intangibles | 16 | 60 | ||
Stock-based compensation expense | 24 | 85 | ||
Non-qualified deferred compensation expenses | — | 3 | ||
Restructuring and other charges | — | 11 | ||
Acquisition and integration-related costs | 4 | 24 | ||
Special charges* | — | 11 | ||
Amortization of debt discount | 5 | 18 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | — | (3) | ||
Income tax effect of non-GAAP adjustments | (18) | (69) | ||
Net income on a non-GAAP basis | $79 to $86 | $282 to $289 |
* | 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 | Q3 | ||||||||||||||||
Americas | 44 | % | 45 | % | 48 | % | 47 | % | 46 | % | 45 | % | 44 | % | 46 | % | ||||||||
Asia | 19 | % | 21 | % | 20 | % | 19 | % | 20 | % | 23 | % | 23 | % | 22 | % | ||||||||
Europe, Middle East and Africa | 22 | % | 21 | % | 20 | % | 20 | % | 21 | % | 20 | % | 22 | % | 21 | % | ||||||||
Japan | 15 | % | 13 | % | 12 | % | 14 | % | 13 | % | 12 | % | 11 | % | 11 | % | ||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
2013 | 2014 | |||||||||||||||||||||||
PRODUCT GROUP | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 | ||||||||||||||||
Functional Verification, including Emulation Hardware | 22 | % | 22 | % | 24 | % | 25 | % | 23 | % | 23 | % | 21 | % | 23 | % | ||||||||
Digital IC Design and Signoff | 33 | % | 31 | % | 29 | % | 29 | % | 30 | % | 30 | % | 30 | % | 29 | % | ||||||||
Custom IC Design | 28 | % | 28 | % | 28 | % | 26 | % | 27 | % | 27 | % | 28 | % | 27 | % | ||||||||
System Interconnect and Analysis | 10 | % | 11 | % | 10 | % | 10 | % | 11 | % | 10 | % | 11 | % | 10 | % | ||||||||
IP | 7 | % | 8 | % | 9 | % | 10 | % | 9 | % | 10 | % | 10 | % | 11 | % | ||||||||
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 27, 2014 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
September 27, 2014 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 374,110 | $ | — | $ | 374,110 | ||||||||||
Services | 26,386 | — | 26,386 | |||||||||||||
Total revenue | 400,496 | — | 400,496 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 36,954 | (10,703 | ) | (A) | 26,251 | |||||||||||
Cost of services | 17,125 | (924 | ) | (A) | 16,201 | |||||||||||
Marketing and sales | 100,387 | (6,799 | ) | (A) | 93,588 | |||||||||||
Research and development | 148,744 | (15,418 | ) | (A) | 133,326 | |||||||||||
General and administrative | 25,894 | (3,894 | ) | (A) | 22,000 | |||||||||||
Amortization of acquired intangibles | 6,316 | (6,316 | ) | (A) | — | |||||||||||
Restructuring and other charges | 11,027 | (11,027 | ) | — | ||||||||||||
Total costs and expenses | 346,447 | (55,081 | ) | 291,366 | ||||||||||||
Income from operations | 54,049 | 55,081 | 109,130 | |||||||||||||
Interest expense | (7,523 | ) | 4,370 | (B) | (3,153 | ) | ||||||||||
Other income (expense), net | (417 | ) | 1,944 | (C) | 1,527 | |||||||||||
Income before provision for income taxes | 46,109 | 61,395 | 107,504 | |||||||||||||
Provision for income taxes | 8,574 | 19,377 | (D) | 27,951 | ||||||||||||
Net income | $ | 37,535 | $ | 42,018 | $ | 79,553 |
Amortization of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation credits | Acquisition and integration-related costs | Special charges (E) | Total adjustments | ||||||||||||||||||||||
Cost of product and maintenance | $ | 10,071 | $ | 633 | $ | (1 | ) | $ | — | $ | — | $ | 10,703 | ||||||||||||||
Cost of services | — | 926 | (2 | ) | — | — | 924 | ||||||||||||||||||||
Marketing and sales | — | 5,930 | (1 | ) | 870 | — | 6,799 | ||||||||||||||||||||
Research and development | — | 11,580 | (95 | ) | 3,933 | — | 15,418 | ||||||||||||||||||||
General and administrative | — | 3,808 | (5 | ) | (368 | ) | 459 | 3,894 | |||||||||||||||||||
Amortization of acquired intangibles | 6,316 | — | — | — | — | 6,316 | |||||||||||||||||||||
Total | $ | 16,387 | $ | 22,877 | $ | (104 | ) | $ | 4,435 | $ | 459 | $ | 44,054 |
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Three Months Ended September 28, 2013 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(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 | ) | (F) | 24,207 | |||||||||||
Cost of services | 17,190 | (662 | ) | (F) | 16,528 | |||||||||||
Marketing and sales | 98,094 | (5,655 | ) | (F) | 92,439 | |||||||||||
Research and development | 138,078 | (16,713 | ) | (F) | 121,365 | |||||||||||
General and administrative | 27,582 | (4,055 | ) | (F) | 23,527 | |||||||||||
Amortization of acquired intangibles | 5,141 | (5,141 | ) | (F) | — | |||||||||||
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 | (G) | (3,890 | ) | ||||||||||
Other income, net | 2,535 | (1,544 | ) | (H) | 991 | |||||||||||
Income before provision for income taxes | 40,882 | 44,800 | 85,682 | |||||||||||||
Provision for income taxes | 2,382 | 19,895 | (I) | 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 | Acquisition and integration-related costs | Special charges (J) | 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 |