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 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 July 27, 2015. |
Net Income Reconciliation | Three Months Ended | |||||||
July 4, 2015 | June 28, 2014 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Net income on a GAAP basis | $ | 58,160 | $ | 23,263 | ||||
Amortization of acquired intangibles | 16,224 | 14,192 | ||||||
Stock-based compensation expense | 21,703 | 19,077 | ||||||
Non-qualified deferred compensation expenses | 37 | 1,047 | ||||||
Restructuring and other charges (credits) | (498 | ) | (26 | ) | ||||
Acquisition and integration-related costs | 1,681 | 8,787 | ||||||
Special charges* | — | 10,357 | ||||||
Amortization of debt discount on convertible notes | 2,470 | 4,241 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | (311 | ) | (1,480 | ) | ||||
Income tax effect of non-GAAP adjustments | (14,091 | ) | (15,849 | ) | ||||
Net income on a non-GAAP basis | $ | 85,375 | $ | 63,609 |
* | 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 | |||||||
July 4, 2015 | June 28, 2014 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Diluted net income per share on a GAAP basis | $ | 0.19 | $ | 0.08 | ||||
Amortization of acquired intangibles | 0.05 | 0.05 | ||||||
Stock-based compensation expense | 0.07 | 0.06 | ||||||
Non-qualified deferred compensation expenses | — | — | ||||||
Restructuring and other charges (credits) | — | — | ||||||
Acquisition and integration-related costs | — | 0.03 | ||||||
Special charges* | — | 0.03 | ||||||
Amortization of debt discount on convertible notes | 0.01 | 0.01 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | — | — | ||||||
Income tax effect of non-GAAP adjustments | (0.05 | ) | (0.05 | ) | ||||
Diluted net income per share on a non-GAAP basis | $ | 0.27 | $ | 0.21 | ||||
Shares used in calculation of diluted net income per share — GAAP*** | 313,665 | 305,755 | ||||||
Shares used in calculation of diluted net income per share — non-GAAP*** | 313,665 | 305,755 |
* | 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. |
July 4, 2015 | January 3, 2015 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 647,851 | $ | 932,161 | ||||
Short-term investments | 96,560 | 90,445 | ||||||
Receivables, net | 131,325 | 122,492 | ||||||
Inventories | 62,172 | 56,394 | ||||||
2015 notes hedges | — | 523,930 | ||||||
Prepaid expenses and other | 129,320 | 126,313 | ||||||
Total current assets | 1,067,228 | 1,851,735 | ||||||
Property, plant and equipment, net of accumulated depreciation of $569,202 and $552,551, respectively | 229,838 | 230,112 | ||||||
Goodwill | 553,831 | 553,767 | ||||||
Acquired intangibles, net of accumulated amortization of $185,382 and $154,814, respectively | 328,338 | 360,932 | ||||||
Long-term receivables | 1,628 | 3,644 | ||||||
Other assets | 199,790 | 209,366 | ||||||
Total assets | $ | 2,380,653 | $ | 3,209,556 | ||||
Current liabilities: | ||||||||
Convertible notes | $ | — | $ | 342,499 | ||||
2015 notes embedded conversion derivative | — | 523,930 | ||||||
Accounts payable and accrued liabilities | 202,794 | 225,375 | ||||||
Current portion of deferred revenue | 324,569 | 301,287 | ||||||
Total current liabilities | 527,363 | 1,393,091 | ||||||
Long-term liabilities: | ||||||||
Long-term portion of deferred revenue | 36,402 | 54,726 | ||||||
Long-term debt | 348,733 | 348,676 | ||||||
Other long-term liabilities | 70,940 | 79,489 | ||||||
Total long-term liabilities | 456,075 | 482,891 | ||||||
Stockholders’ equity | 1,397,215 | 1,333,574 | ||||||
Total liabilities and stockholders’ equity | $ | 2,380,653 | $ | 3,209,556 |
Three Months Ended | Six Months Ended | |||||||||||||||
July 4, 2015 | June 28, 2014 | July 4, 2015 | June 28, 2014 | |||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 384,951 | $ | 354,468 | $ | 768,588 | $ | 711,818 | ||||||||
Services | 30,932 | 24,320 | 58,661 | 45,520 | ||||||||||||
Total revenue | 415,883 | 378,788 | 827,249 | 757,338 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 31,715 | 37,707 | 73,774 | 79,904 | ||||||||||||
Cost of services | 20,040 | 16,706 | 38,566 | 31,608 | ||||||||||||
Marketing and sales | 96,662 | 98,611 | 196,930 | 196,934 | ||||||||||||
Research and development | 157,974 | 152,672 | 320,970 | 299,138 | ||||||||||||
General and administrative | 27,467 | 32,042 | 55,109 | 60,786 | ||||||||||||
Amortization of acquired intangibles | 6,119 | 5,579 | 12,350 | 10,789 | ||||||||||||
Restructuring and other charges (credits) | (498 | ) | (26 | ) | 3,861 | 370 | ||||||||||
Total costs and expenses | 339,479 | 343,291 | 701,560 | 679,529 | ||||||||||||
Income from operations | 76,404 | 35,497 | 125,689 | 77,809 | ||||||||||||
Interest expense | (8,180 | ) | (7,369 | ) | (19,934 | ) | (14,637 | ) | ||||||||
Other income, net | 1,347 | 1,635 | 6,128 | 5,017 | ||||||||||||
Income before provision for income taxes | 69,571 | 29,763 | 111,883 | 68,189 | ||||||||||||
Provision for income taxes | 11,411 | 6,500 | 17,464 | 11,856 | ||||||||||||
Net income | $ | 58,160 | $ | 23,263 | $ | 94,419 | $ | 56,333 | ||||||||
Net income per share - basic | $ | 0.20 | $ | 0.08 | $ | 0.33 | $ | 0.20 | ||||||||
Net income per share - diluted | $ | 0.19 | $ | 0.08 | $ | 0.30 | $ | 0.19 | ||||||||
Weighted average common shares outstanding - basic | 285,297 | 283,344 | 284,910 | 282,480 | ||||||||||||
Weighted average common shares outstanding - diluted | 313,665 | 305,755 | 312,756 | 303,395 |
Six Months Ended | |||||||
July 4, 2015 | June 28, 2014 | ||||||
Cash and cash equivalents at beginning of period | $ | 932,161 | $ | 536,260 | |||
Cash flows from operating activities: | |||||||
Net income | 94,419 | 56,333 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 58,963 | 53,609 | |||||
Amortization of debt discount and fees | 8,971 | 9,814 | |||||
Stock-based compensation | 43,564 | 37,941 | |||||
Gain on investments, net | (1,590 | ) | (5,128 | ) | |||
Deferred income taxes | 7,097 | 4,778 | |||||
Other non-cash items | 1,142 | 3,694 | |||||
Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||
Receivables | (8,078 | ) | 5,336 | ||||
Inventories | (6,243 | ) | (12,266 | ) | |||
Prepaid expenses and other | (8,036 | ) | (13,602 | ) | |||
Other assets | 1,117 | (1,273 | ) | ||||
Accounts payable and accrued liabilities | (20,653 | ) | (13,550 | ) | |||
Deferred revenue | 5,827 | (23,740 | ) | ||||
Other long-term liabilities | (8,058 | ) | (4,983 | ) | |||
Net cash provided by operating activities | 168,442 | 96,963 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (59,516 | ) | (77,490 | ) | |||
Proceeds from the sale of available-for-sale securities | 37,586 | 54,601 | |||||
Proceeds from the maturity of available-for-sale securities | 15,600 | 23,799 | |||||
Proceeds from the sale of long-term investments | 2,293 | — | |||||
Purchases of property, plant and equipment | (24,067 | ) | (17,715 | ) | |||
Cash paid in business combinations and asset acquisitions, net of cash acquired | — | (163,685 | ) | ||||
Net cash used for investing activities | (28,104 | ) | (180,490 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility | — | 100,000 | |||||
Payment of convertible notes | (349,999 | ) | — | ||||
Payment of convertible notes embedded conversion derivative liability | (530,643 | ) | — | ||||
Proceeds from convertible notes hedges | 530,643 | — | |||||
Payment of acquisition-related contingent consideration | — | (1,835 | ) | ||||
Excess tax benefits from stock-based compensation | 10,097 | 2,642 | |||||
Proceeds from issuance of common stock | 38,167 | 36,482 | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (15,814 | ) | (12,292 | ) | |||
Payments for repurchases of common stock | (93,076 | ) | (25,032 | ) | |||
Net cash provided by (used for) financing activities | (410,625 | ) | 99,965 | ||||
Effect of exchange rate changes on cash and cash equivalents | (14,023 | ) | 4,718 | ||||
Increase (decrease) in cash and cash equivalents | (284,310 | ) | 21,156 | ||||
Cash and cash equivalents at end of period | $ | 647,851 | $ | 557,416 |
2014 | 2015 | ||||||||||||||||||
GEOGRAPHY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | ||||||||||||
Americas | 45 | % | 44 | % | 46 | % | 47 | % | 45 | % | 47 | % | 48 | % | |||||
Asia | 23 | % | 23 | % | 22 | % | 22 | % | 23 | % | 24 | % | 23 | % | |||||
Europe, Middle East and Africa | 20 | % | 22 | % | 21 | % | 21 | % | 21 | % | 19 | % | 20 | % | |||||
Japan | 12 | % | 11 | % | 11 | % | 10 | % | 11 | % | 10 | % | 9 | % | |||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
2014 | 2015 | |||||||||||||||||||
PRODUCT GROUP | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | |||||||||||||
Functional Verification, including Emulation Hardware | 23 | % | 21 | % | 23 | % | 21 | % | 22 | % | 23 | % | 21 | % | ||||||
Digital IC Design and Signoff | 30 | % | 30 | % | 29 | % | 28 | % | 29 | % | 28 | % | 29 | % | ||||||
Custom IC Design | 27 | % | 28 | % | 27 | % | 28 | % | 27 | % | 27 | % | 27 | % | ||||||
System Interconnect and Analysis | 10 | % | 11 | % | 10 | % | 11 | % | 11 | % | 11 | % | 11 | % | ||||||
IP | 10 | % | 10 | % | 11 | % | 12 | % | 11 | % | 11 | % | 12 | % | ||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Three Months Ending October 3, 2015 | Year Ending January 2, 2016 | |||
Forecast | Forecast | |||
Diluted net income per share on a GAAP basis | $0.17 to $0.19 | $0.63 to $0.69 | ||
Amortization of acquired intangibles | 0.05 | 0.21 | ||
Stock-based compensation expense | 0.08 | 0.30 | ||
Non-qualified deferred compensation expenses | — | — | ||
Restructuring and other charges | — | 0.01 | ||
Acquisition and integration-related costs | — | 0.02 | ||
Amortization of debt discount on convertible notes | — | 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) | (0.19) | ||
Diluted net income per share on a non-GAAP basis† | $0.25 to $0.27 | $1.00 to $1.06 |
† | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
Three Months Ending October 3, 2015 | Year Ending January 2, 2016 | |||
($ in millions) | Forecast | Forecast | ||
Net income on a GAAP basis | $52 to $58 | $195 to $214 | ||
Amortization of acquired intangibles | 16 | 64 | ||
Stock-based compensation expense | 24 | 93 | ||
Non-qualified deferred compensation expenses | — | 1 | ||
Restructuring and other charges | — | 4 | ||
Acquisition and integration-related costs | 1 | 8 | ||
Amortization of debt discount on convertible notes | — | 7 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | — | (2) | ||
Income tax effect of non-GAAP adjustments | (15) | (59) | ||
Net income on a non-GAAP basis† | $78 to $84 | $311 to $330 |
† | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
* | 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. |
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Three Months Ended July 4, 2015 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
July 4, 2015 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP* | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 384,951 | $ | — | $ | 384,951 | ||||||||||
Services | 30,932 | — | 30,932 | |||||||||||||
Total revenue | 415,883 | — | 415,883 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 31,715 | (10,660 | ) | (A) | 21,055 | |||||||||||
Cost of services | 20,040 | (810 | ) | (A) | 19,230 | |||||||||||
Marketing and sales | 96,662 | (5,338 | ) | (A) | 91,324 | |||||||||||
Research and development | 157,974 | (12,974 | ) | (A) | 145,000 | |||||||||||
General and administrative | 27,467 | (3,744 | ) | (A) | 23,723 | |||||||||||
Amortization of acquired intangibles | 6,119 | (6,119 | ) | (A) | — | |||||||||||
Restructuring and other charges (credits) | (498 | ) | 498 | — | ||||||||||||
Total costs and expenses | 339,479 | (39,147 | ) | 300,332 | ||||||||||||
Income from operations | 76,404 | 39,147 | 115,551 | |||||||||||||
Interest expense | (8,180 | ) | 2,470 | (B) | (5,710 | ) | ||||||||||
Other income, net | 1,347 | (311 | ) | (C) | 1,036 | |||||||||||
Income before provision for income taxes | 69,571 | 41,306 | 110,877 | |||||||||||||
Provision for income taxes | 11,411 | 14,091 | (D) | 25,502 | ||||||||||||
Net income | $ | 58,160 | $ | 27,215 | $ | 85,375 |
Amortization of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation expenses (credits) | Acquisition and integration-related costs | Total adjustments | |||||||||||||||||||
Cost of product and maintenance | $ | 10,105 | $ | 558 | $ | (3 | ) | $ | — | $ | 10,660 | ||||||||||||
Cost of services | — | 815 | (5 | ) | — | 810 | |||||||||||||||||
Marketing and sales | — | 5,236 | (12 | ) | 114 | 5,338 | |||||||||||||||||
Research and development | — | 11,401 | 22 | 1,551 | 12,974 | ||||||||||||||||||
General and administrative | — | 3,693 | 35 | 16 | 3,744 | ||||||||||||||||||
Amortization of acquired intangibles | 6,119 | — | — | — | 6,119 | ||||||||||||||||||
Total | $ | 16,224 | $ | 21,703 | $ | 37 | $ | 1,681 | $ | 39,645 |
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 | ) | (E) | 28,203 | |||||||||||
Cost of services | 16,706 | (1,384 | ) | (E) | 15,322 | |||||||||||
Marketing and sales | 98,611 | (6,992 | ) | (E) | 91,619 | |||||||||||
Research and development | 152,672 | (21,177 | ) | (E) | 131,495 | |||||||||||
General and administrative | 32,042 | (8,824 | ) | (E) | 23,218 | |||||||||||
Amortization of acquired intangibles | 5,579 | (5,579 | ) | (E) | — | |||||||||||
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 | (F) | (3,128 | ) | ||||||||||
Other income, net | 1,635 | (1,480 | ) | (G) | 155 | |||||||||||
Income before provision for income taxes | 29,763 | 56,195 | 85,958 | |||||||||||||
Provision for income taxes | 6,500 | 15,849 | (H) | 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 (I) | 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 |