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 27, 2015. |
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 27, 2015. |
Net Income Reconciliation | Three Months Ended | |||||||
April 4, 2015 | March 29, 2014 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Net income on a GAAP basis | $ | 36,259 | $ | 33,070 | ||||
Amortization of acquired intangibles | 16,404 | 12,786 | ||||||
Stock-based compensation expense | 21,861 | 18,864 | ||||||
Non-qualified deferred compensation expenses | 527 | 2,063 | ||||||
Restructuring and other charges | 4,359 | 396 | ||||||
Acquisition and integration-related costs | 3,750 | 7,118 | ||||||
Amortization of debt discount on convertible notes | 5,026 | 4,209 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | (1,263 | ) | (3,609 | ) | ||||
Income tax effect of non-GAAP adjustments | (15,331 | ) | (15,510 | ) | ||||
Net income on a non-GAAP basis | $ | 71,592 | $ | 59,387 |
* | 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 | |||||||
April 4, 2015 | March 29, 2014 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Diluted net income per share on a GAAP basis | $ | 0.12 | $ | 0.11 | ||||
Amortization of acquired intangibles | 0.05 | 0.04 | ||||||
Stock-based compensation expense | 0.07 | 0.06 | ||||||
Non-qualified deferred compensation expenses | — | 0.01 | ||||||
Restructuring and other charges | 0.01 | — | ||||||
Acquisition and integration-related costs | 0.01 | 0.02 | ||||||
Amortization of debt discount on convertible notes | 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 | (0.05 | ) | (0.05 | ) | ||||
Diluted net income per share on a non-GAAP basis | $ | 0.23 | $ | 0.20 | ||||
Shares used in calculation of diluted net income per share — GAAP** | 311,847 | 301,034 | ||||||
Shares used in calculation of diluted net income per share — non-GAAP** | 311,847 | 301,034 |
* | 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. |
April 4, 2015 | January 3, 2015 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 887,736 | $ | 932,161 | ||||
Short-term investments | 92,640 | 90,445 | ||||||
Receivables, net | 133,924 | 122,492 | ||||||
Inventories | 54,450 | 56,394 | ||||||
2015 notes hedges | 429,847 | 523,930 | ||||||
Prepaid expenses and other | 135,047 | 126,313 | ||||||
Total current assets | 1,733,644 | 1,851,735 | ||||||
Property, plant and equipment, net of accumulated depreciation of $560,774 and $552,551, respectively | 225,556 | 230,112 | ||||||
Goodwill | 553,942 | 553,767 | ||||||
Acquired intangibles, net of accumulated amortization of $169,013 and $154,814, respectively | 344,450 | 360,932 | ||||||
Long-term receivables | 3,619 | 3,644 | ||||||
Other assets | 201,354 | 209,366 | ||||||
Total assets | $ | 3,062,565 | $ | 3,209,556 | ||||
Current liabilities: | ||||||||
Convertible notes | $ | 293,667 | $ | 342,499 | ||||
2015 notes embedded conversion derivative | 429,847 | 523,930 | ||||||
Accounts payable and accrued liabilities | 178,474 | 225,375 | ||||||
Current portion of deferred revenue | 324,448 | 301,287 | ||||||
Total current liabilities | 1,226,436 | 1,393,091 | ||||||
Long-term liabilities: | ||||||||
Long-term portion of deferred revenue | 48,418 | 54,726 | ||||||
Long-term debt | 348,705 | 348,676 | ||||||
Other long-term liabilities | 75,816 | 79,489 | ||||||
Total long-term liabilities | 472,939 | 482,891 | ||||||
Stockholders’ equity | 1,363,190 | 1,333,574 | ||||||
Total liabilities and stockholders’ equity | $ | 3,062,565 | $ | 3,209,556 |
Three Months Ended | ||||||||
April 4, 2015 | March 29, 2014 | |||||||
Revenue: | ||||||||
Product and maintenance | $ | 383,637 | $ | 357,350 | ||||
Services | 27,729 | 21,200 | ||||||
Total revenue | 411,366 | 378,550 | ||||||
Costs and expenses: | ||||||||
Cost of product and maintenance | 42,059 | 42,197 | ||||||
Cost of services | 18,526 | 14,902 | ||||||
Marketing and sales | 100,268 | 98,323 | ||||||
Research and development | 162,996 | 146,466 | ||||||
General and administrative | 27,642 | 28,744 | ||||||
Amortization of acquired intangibles | 6,231 | 5,210 | ||||||
Restructuring and other charges | 4,359 | 396 | ||||||
Total costs and expenses | 362,081 | 336,238 | ||||||
Income from operations | 49,285 | 42,312 | ||||||
Interest expense | (11,754 | ) | (7,268 | ) | ||||
Other income, net | 4,781 | 3,382 | ||||||
Income before provision for income taxes | 42,312 | 38,426 | ||||||
Provision for income taxes | 6,053 | 5,356 | ||||||
Net income | $ | 36,259 | $ | 33,070 | ||||
Net income per share - basic | $ | 0.13 | $ | 0.12 | ||||
Net income per share - diluted | $ | 0.12 | $ | 0.11 | ||||
Weighted average common shares outstanding - basic | 284,523 | 281,615 | ||||||
Weighted average common shares outstanding - diluted | 311,847 | 301,034 |
Three Months Ended | |||||||
April 4, 2015 | March 29, 2014 | ||||||
Cash and cash equivalents at beginning of period | $ | 932,161 | $ | 536,260 | |||
Cash flows from operating activities: | |||||||
Net income | 36,259 | 33,070 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 29,433 | 26,017 | |||||
Amortization of debt discount and fees | 5,945 | 4,882 | |||||
Stock-based compensation | 21,861 | 18,864 | |||||
Gain on investments, net | (1,270 | ) | (3,651 | ) | |||
Deferred income taxes | 1,864 | 2,245 | |||||
Other non-cash items | 929 | 2,344 | |||||
Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||
Receivables | (12,450 | ) | (108 | ) | |||
Inventories | 1,682 | (9,373 | ) | ||||
Prepaid expenses and other | (10,004 | ) | (9,753 | ) | |||
Other assets | 3,627 | 3,157 | |||||
Accounts payable and accrued liabilities | (44,754 | ) | (29,680 | ) | |||
Deferred revenue | 16,812 | (5,508 | ) | ||||
Other long-term liabilities | (3,246 | ) | (4,408 | ) | |||
Net cash provided by operating activities | 46,688 | 28,098 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (33,161 | ) | (47,005 | ) | |||
Proceeds from the sale of available-for-sale securities | 20,551 | 32,586 | |||||
Proceeds from the maturity of available-for-sale securities | 10,350 | 13,905 | |||||
Proceeds from the sale of long-term investments | 1,364 | — | |||||
Purchases of property, plant and equipment | (7,520 | ) | (6,252 | ) | |||
Cash paid in business combinations and asset acquisitions, net of cash acquired | — | (27,422 | ) | ||||
Net cash used for investing activities | (8,416 | ) | (34,188 | ) | |||
Cash flows from financing activities: | |||||||
Payment of convertible notes | (53,862 | ) | — | ||||
Payment of convertible notes embedded conversion derivative liability | (77,139 | ) | — | ||||
Proceeds from convertible notes hedges | 77,139 | — | |||||
Payment of acquisition-related contingent consideration | — | (1,835 | ) | ||||
Tax effect related to employee stock transactions allocated to equity | 6,482 | 1,827 | |||||
Proceeds from issuance of common stock | 24,609 | 23,377 | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (14,114 | ) | (10,981 | ) | |||
Payments for repurchases of common stock | (36,797 | ) | (12,517 | ) | |||
Net cash used for financing activities | (73,682 | ) | (129 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (9,015 | ) | 2,720 | ||||
Decrease in cash and cash equivalents | (44,425 | ) | (3,499 | ) | |||
Cash and cash equivalents at end of period | $ | 887,736 | $ | 532,761 |
Three Months Ending July 4, 2015 | Year Ending January 2, 2016 | |||
Forecast | Forecast | |||
Diluted net income per share on a GAAP basis | $0.14 to $0.16 | $0.60 to $0.70 | ||
Amortization of acquired intangibles | 0.05 | 0.20 | ||
Stock-based compensation expense | 0.07 | 0.30 | ||
Non-qualified deferred compensation expenses | — | — | ||
Restructuring and other charges | — | 0.01 | ||
Acquisition and integration-related costs | 0.01 | 0.03 | ||
Amortization of debt discount on convertible notes | 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) | (0.20) | ||
Diluted net income per share on a non-GAAP basis | $0.23 to $0.25 | $0.96 to $1.06 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
Three Months Ending July 4, 2015 | Year Ending January 2, 2016 | |||
($ in millions) | Forecast | Forecast | ||
Net income on a GAAP basis | $45 to $51 | $186 to $218 | ||
Amortization of acquired intangibles | 16 | 64 | ||
Stock-based compensation expense | 23 | 95 | ||
Non-qualified deferred compensation expenses | — | 1 | ||
Restructuring and other charges | — | 4 | ||
Acquisition and integration-related costs | 2 | 8 | ||
Amortization of debt discount on convertible notes | 2 | 7 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | — | (1) | ||
Income tax effect of non-GAAP adjustments | (15) | (64) | ||
Net income on a non-GAAP basis | $73 to $79 | $300 to $332 |
* | 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. |
2014 | 2015 | |||||||||||||||||
GEOGRAPHY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | ||||||||||||
Americas | 45 | % | 44 | % | 46 | % | 47 | % | 45 | % | 47 | % | ||||||
Asia | 23 | % | 23 | % | 22 | % | 22 | % | 23 | % | 24 | % | ||||||
Europe, Middle East and Africa | 20 | % | 22 | % | 21 | % | 21 | % | 21 | % | 19 | % | ||||||
Japan | 12 | % | 11 | % | 11 | % | 10 | % | 11 | % | 10 | % | ||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
2014 | 2015 | |||||||||||||||||
PRODUCT GROUP | Q1 | Q2 | Q3 | Q4 | Year | Q1 | ||||||||||||
Functional Verification, including Emulation Hardware | 23 | % | 21 | % | 23 | % | 21 | % | 22 | % | 23 | % | ||||||
Digital IC Design and Signoff | 30 | % | 30 | % | 29 | % | 28 | % | 29 | % | 28 | % | ||||||
Custom IC Design | 27 | % | 28 | % | 27 | % | 28 | % | 27 | % | 27 | % | ||||||
System Interconnect and Analysis | 10 | % | 11 | % | 10 | % | 11 | % | 11 | % | 11 | % | ||||||
IP | 10 | % | 10 | % | 11 | % | 12 | % | 11 | % | 11 | % | ||||||
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 April 4, 2015 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
April 4, 2015 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 383,637 | $ | — | $ | 383,637 | ||||||||||
Services | 27,729 | — | 27,729 | |||||||||||||
Total revenue | 411,366 | — | 411,366 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 42,059 | (10,746 | ) | (A) | 31,313 | |||||||||||
Cost of services | 18,526 | (838 | ) | (A) | 17,688 | |||||||||||
Marketing and sales | 100,268 | (5,756 | ) | (A) | 94,512 | |||||||||||
Research and development | 162,996 | (15,153 | ) | (A) | 147,843 | |||||||||||
General and administrative | 27,642 | (3,818 | ) | (A) | 23,824 | |||||||||||
Amortization of acquired intangibles | 6,231 | (6,231 | ) | (A) | — | |||||||||||
Restructuring and other charges | 4,359 | (4,359 | ) | — | ||||||||||||
Total costs and expenses | 362,081 | (46,901 | ) | 315,180 | ||||||||||||
Income from operations | 49,285 | 46,901 | 96,186 | |||||||||||||
Interest expense | (11,754 | ) | 5,026 | (B) | (6,728 | ) | ||||||||||
Other income, net | 4,781 | (1,263 | ) | (C) | 3,518 | |||||||||||
Income before provision for income taxes | 42,312 | 50,664 | 92,976 | |||||||||||||
Provision for income taxes | 6,053 | 15,331 | (D) | 21,384 | ||||||||||||
Net income | $ | 36,259 | $ | 35,333 | $ | 71,592 |
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 | $ | 10,173 | $ | 569 | $ | 4 | $ | — | $ | 10,746 | |||||||||||||
Cost of services | — | 832 | 6 | — | 838 | ||||||||||||||||||
Marketing and sales | — | 5,447 | 34 | 275 | 5,756 | ||||||||||||||||||
Research and development | — | 11,377 | 362 | 3,414 | 15,153 | ||||||||||||||||||
General and administrative | — | 3,636 | 121 | 61 | 3,818 | ||||||||||||||||||
Amortization of acquired intangibles | 6,231 | — | — | — | 6,231 | ||||||||||||||||||
Total | $ | 16,404 | $ | 21,861 | $ | 527 | $ | 3,750 | $ | 42,542 |
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 | ) | (E) | 34,115 | |||||||||||
Cost of services | 14,902 | (739 | ) | (E) | 14,163 | |||||||||||
Marketing and sales | 98,323 | (5,695 | ) | (E) | 92,628 | |||||||||||
Research and development | 146,466 | (15,751 | ) | (E) | 130,715 | |||||||||||
General and administrative | 28,744 | (5,354 | ) | (E) | 23,390 | |||||||||||
Amortization of acquired intangibles | 5,210 | (5,210 | ) | (E) | — | |||||||||||
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 | (F) | (3,059 | ) | ||||||||||
Other income (expense), net | 3,382 | (3,609 | ) | (G) | (227 | ) | ||||||||||
Income before provision for income taxes | 38,426 | 41,827 | 80,253 | |||||||||||||
Provision for income taxes | 5,356 | 15,510 | (H) | 20,866 | ||||||||||||
Net income | $ | 33,070 | $ | 26,317 | $ | 59,387 |
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 | $ | 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 |