x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 00-0000000 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
2655 Seely Avenue, Building 5, San Jose, California | 95134 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | o | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | o |
Page | ||
PART I. | FINANCIAL INFORMATION | |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. | OTHER INFORMATION | |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
As of | |||||||
July 2, 2016 | January 2, 2016 | ||||||
As Adjusted (Note 1) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 669,573 | $ | 616,686 | |||
Short-term investments | 34,745 | 94,498 | |||||
Receivables, net | 156,444 | 164,848 | |||||
Inventories | 61,932 | 56,762 | |||||
Prepaid expenses and other | 39,485 | 31,441 | |||||
Total current assets | 962,179 | 964,235 | |||||
Property, plant and equipment, net of accumulated depreciation of $604,532 and $581,345, respectively | 235,911 | 228,599 | |||||
Goodwill | 573,714 | 551,772 | |||||
Acquired intangibles, net of accumulated amortization of $239,170 and $216,589, respectively | 287,888 | 296,482 | |||||
Long-term receivables | 17,368 | 4,498 | |||||
Other assets | 300,813 | 299,929 | |||||
Total assets | $ | 2,377,873 | $ | 2,345,515 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Revolving credit facility | $ | 50,000 | $ | — | |||
Accounts payable and accrued liabilities | 224,685 | 238,022 | |||||
Current portion of deferred revenue | 289,786 | 298,285 | |||||
Total current liabilities | 564,471 | 536,307 | |||||
Long-term liabilities: | |||||||
Long-term portion of deferred revenue | 38,094 | 30,209 | |||||
Long-term debt | 643,073 | 343,288 | |||||
Other long-term liabilities | 56,842 | 59,596 | |||||
Total long-term liabilities | 738,009 | 433,093 | |||||
Commitments and contingencies (Note 12) | |||||||
Stockholders’ equity: | |||||||
Common stock and capital in excess of par value | 1,851,724 | 1,863,086 | |||||
Treasury stock, at cost | (800,059 | ) | (400,555 | ) | |||
Retained earnings (accumulated deficit) | 33,713 | (73,991 | ) | ||||
Accumulated other comprehensive loss | (9,985 | ) | (12,425 | ) | |||
Total stockholders’ equity | 1,075,393 | 1,376,115 | |||||
Total liabilities and stockholders’ equity | $ | 2,377,873 | $ | 2,345,515 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Revenue: | |||||||||||||||
Product and maintenance | $ | 419,963 | $ | 384,951 | $ | 831,707 | $ | 768,588 | |||||||
Services | 33,058 | 30,932 | 69,176 | 58,661 | |||||||||||
Total revenue | 453,021 | 415,883 | 900,883 | 827,249 | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of product and maintenance | 42,960 | 31,715 | 87,141 | 73,774 | |||||||||||
Cost of services | 18,823 | 20,040 | 36,696 | 38,566 | |||||||||||
Marketing and sales | 101,110 | 96,662 | 200,310 | 196,930 | |||||||||||
Research and development | 182,371 | 157,974 | 362,277 | 320,970 | |||||||||||
General and administrative | 36,388 | 27,467 | 64,688 | 55,109 | |||||||||||
Amortization of acquired intangibles | 4,537 | 6,119 | 10,317 | 12,350 | |||||||||||
Restructuring and other charges (credits) | (74 | ) | (498 | ) | 14,512 | 3,861 | |||||||||
Total costs and expenses | 386,115 | 339,479 | 775,941 | 701,560 | |||||||||||
Income from operations | 66,906 | 76,404 | 124,942 | 125,689 | |||||||||||
Interest expense | (5,896 | ) | (8,180 | ) | (11,253 | ) | (19,934 | ) | |||||||
Other income, net | 2,842 | 1,347 | 7,605 | 6,128 | |||||||||||
Income before provision for income taxes | 63,852 | 69,571 | 121,294 | 111,883 | |||||||||||
Provision for income taxes | 14,517 | 11,411 | 21,397 | 17,464 | |||||||||||
Net income | $ | 49,335 | $ | 58,160 | $ | 99,897 | $ | 94,419 | |||||||
Net income per share - basic | $ | 0.17 | $ | 0.20 | 0.34 | 0.33 | |||||||||
Net income per share - diluted | $ | 0.17 | $ | 0.19 | 0.33 | 0.30 | |||||||||
Weighted average common shares outstanding – basic | 288,191 | 285,297 | 292,403 | 284,910 | |||||||||||
Weighted average common shares outstanding – diluted | 295,201 | 313,665 | 299,318 | 312,756 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Net income | $ | 49,335 | $ | 58,160 | $ | 99,897 | $ | 94,419 | |||||||
Other comprehensive income (loss), net of tax effects: | |||||||||||||||
Foreign currency translation adjustments | (2,307 | ) | (4,528 | ) | 1,907 | (13,418 | ) | ||||||||
Changes in unrealized holding gains or losses on available-for-sale securities, net of reclassification adjustment for realized gains and losses | (304 | ) | (52 | ) | 560 | 13 | |||||||||
Changes in defined benefit plan liabilities | (109 | ) | 26 | (27 | ) | 317 | |||||||||
Total other comprehensive income (loss), net of tax effects | (2,720 | ) | (4,554 | ) | 2,440 | (13,088 | ) | ||||||||
Comprehensive income | $ | 46,615 | $ | 53,606 | $ | 102,337 | $ | 81,331 |
Six Months Ended | |||||||
July 2, 2016 | July 4, 2015 | ||||||
Cash and cash equivalents at beginning of period | $ | 616,686 | $ | 932,161 | |||
Cash flows from operating activities: | |||||||
Net income | 99,897 | 94,419 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 62,759 | 58,963 | |||||
Amortization of debt discount and fees | 527 | 8,971 | |||||
Stock-based compensation | 49,988 | 43,564 | |||||
Gain on investments, net | (3,265 | ) | (1,590 | ) | |||
Deferred income taxes | 10,252 | 7,097 | |||||
Other non-cash items | 750 | 1,142 | |||||
Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||
Receivables | (3,532 | ) | (8,078 | ) | |||
Inventories | (10,296 | ) | (6,243 | ) | |||
Prepaid expenses and other | (8,690 | ) | (8,036 | ) | |||
Other assets | (8,709 | ) | 1,117 | ||||
Accounts payable and accrued liabilities | (14,012 | ) | (20,653 | ) | |||
Deferred revenue | (7,412 | ) | 5,827 | ||||
Other long-term liabilities | (4,700 | ) | (8,058 | ) | |||
Net cash provided by operating activities | 163,557 | 168,442 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (20,525 | ) | (59,516 | ) | |||
Proceeds from the sale of available-for-sale securities | 55,168 | 37,586 | |||||
Proceeds from the maturity of available-for-sale securities | 26,115 | 15,600 | |||||
Proceeds from the sale of long-term investments | 2,583 | 2,293 | |||||
Purchases of property, plant and equipment | (28,287 | ) | (24,067 | ) | |||
Cash paid in business combinations and asset acquisitions, net of cash acquired | (41,627 | ) | — | ||||
Net cash used for investing activities | (6,573 | ) | (28,104 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from term loans | 300,000 | — | |||||
Proceeds from revolving credit facility | 50,000 | — | |||||
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 debt issuance costs | (622 | ) | — | ||||
Excess tax benefits from stock-based compensation | — | 10,097 | |||||
Proceeds from issuance of common stock | 36,296 | 38,167 | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (17,490 | ) | (15,814 | ) | |||
Payments for repurchases of common stock | (480,100 | ) | (93,076 | ) | |||
Net cash used for financing activities | (111,916 | ) | (410,625 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 7,819 | (14,023 | ) | ||||
Increase (decrease) in cash and cash equivalents | 52,887 | (284,310 | ) | ||||
Cash and cash equivalents at end of period | $ | 669,573 | $ | 647,851 | |||
Supplemental cash flow information: | |||||||
Cash paid for interest | $ | 9,423 | $ | 12,006 | |||
Cash paid for taxes, net | $ | 13,730 | $ | 16,373 |
July 2, 2016 | January 2, 2016 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Principal | Unamortized Discount and Debt Issuance Costs | Carrying Value | Principal | Unamortized Discount and Debt Issuance Costs | Carrying Value | ||||||||||||||||||
Revolving Credit Facility | $ | 50,000 | — | $ | 50,000 | — | $ | — | $ | — | |||||||||||||
2019 Term Loan | 300,000 | (531 | ) | 299,469 | — | $ | — | — | |||||||||||||||
2024 Notes | 350,000 | (6,396 | ) | 343,604 | 350,000 | (6,712 | ) | 343,288 | |||||||||||||||
Total outstanding debt | $ | 700,000 | $ | (6,927 | ) | $ | 693,073 | $ | 350,000 | $ | (6,712 | ) | $ | 343,288 |
As of | |||||||
July 2, 2016 | January 2, 2016 | ||||||
(In thousands) | |||||||
Cash and cash equivalents | $ | 669,573 | $ | 616,686 | |||
Short-term investments | 34,745 | 94,498 | |||||
Cash, cash equivalents and short-term investments | $ | 704,318 | $ | 711,184 |
As of | |||||||
July 2, 2016 | January 2, 2016 | ||||||
(In thousands) | |||||||
Cash and interest bearing deposits | $ | 274,631 | $ | 255,995 | |||
Money market funds | 387,641 | 360,691 | |||||
Commercial paper | 1,999 | — | |||||
Bank certificates of deposit | 5,302 | — | |||||
Total cash and cash equivalents | $ | 669,573 | $ | 616,686 |
As of July 2, 2016 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(In thousands) | |||||||||||||||
Corporate debt securities | $ | 1,998 | $ | — | $ | — | $ | 1,998 | |||||||
Bank certificates of deposit | 6,750 | 3 | — | 6,753 | |||||||||||
United States Treasury securities | 21,411 | 7 | — | 21,418 | |||||||||||
Commercial paper | 1,497 | 1 | — | 1,498 | |||||||||||
Marketable debt securities | 31,656 | 11 | — | 31,667 | |||||||||||
Marketable equity securities | 2,319 | 759 | — | 3,078 | |||||||||||
Total short-term investments | $ | 33,975 | $ | 770 | $ | — | $ | 34,745 |
As of January 2, 2016 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(In thousands) | |||||||||||||||
Corporate debt securities | $ | 34,905 | $ | 1 | $ | (77 | ) | $ | 34,829 | ||||||
Bank certificates of deposit | 15,049 | 1 | (4 | ) | 15,046 | ||||||||||
United States Treasury securities | 36,372 | 2 | (88 | ) | 36,286 | ||||||||||
United States government agency securities | 4,151 | 1 | — | 4,152 | |||||||||||
Commercial paper | 1,993 | — | — | 1,993 | |||||||||||
Marketable debt securities | 92,470 | 5 | (169 | ) | 92,306 | ||||||||||
Marketable equity securities | 1,817 | 375 | — | 2,192 | |||||||||||
Total short-term investments | $ | 94,287 | $ | 380 | $ | (169 | ) | $ | 94,498 |
As of | |||||||
July 2, 2016 | January 2, 2016 | ||||||
(In thousands) | |||||||
Accounts receivable | $ | 77,760 | $ | 107,041 | |||
Unbilled accounts receivable | 78,684 | 57,807 | |||||
Long-term receivables | 17,368 | 4,498 | |||||
Total receivables | 173,812 | 169,346 | |||||
Less allowance for doubtful accounts | — | — | |||||
Total receivables, net | $ | 173,812 | $ | 169,346 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(In thousands) | |||||||||||||||
Shares repurchased | 10,026 | 2,887 | 21,581 | 4,889 | |||||||||||
Total cost of repurchased shares | $ | 240,100 | $ | 56,279 | $ | 480,100 | $ | 93,076 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(In thousands) | |||||||||||||||
Cost of product and maintenance | $ | 447 | $ | 558 | $ | 911 | $ | 1,127 | |||||||
Cost of services | 653 | 815 | 1,334 | 1,647 | |||||||||||
Marketing and sales | 5,305 | 5,236 | 10,841 | 10,683 | |||||||||||
Research and development | 14,477 | 11,401 | 28,374 | 22,778 | |||||||||||
General and administrative | 4,474 | 3,693 | 8,528 | 7,329 | |||||||||||
Total stock-based compensation expense | $ | 25,356 | $ | 21,703 | $ | 49,988 | $ | 43,564 |
Gross Carrying Amount | |||
(In thousands) | |||
Balance as of January 2, 2016 | $ | 551,772 | |
Goodwill resulting from acquisitions | 23,579 | ||
Effect of foreign currency translation | (1,637 | ) | |
Balance as of July 2, 2016 | $ | 573,714 |
Gross Carrying Amount | Accumulated Amortization | Acquired Intangibles, Net | |||||||||
(In thousands) | |||||||||||
Existing technology | $ | 342,575 | $ | (139,895 | ) | $ | 202,680 | ||||
Agreements and relationships | 174,677 | (93,156 | ) | 81,521 | |||||||
Tradenames, trademarks and patents | 9,806 | (6,119 | ) | 3,687 | |||||||
Total acquired intangibles | $ | 527,058 | $ | (239,170 | ) | $ | 287,888 |
Gross Carrying Amount | Accumulated Amortization | Acquired Intangibles, Net | |||||||||
(In thousands) | |||||||||||
Existing technology | $ | 329,627 | $ | (124,097 | ) | $ | 205,530 | ||||
Agreements and relationships | 173,325 | (86,808 | ) | 86,517 | |||||||
Tradenames, trademarks and patents | 10,119 | (5,684 | ) | 4,435 | |||||||
Total acquired intangibles | $ | 513,071 | $ | (216,589 | ) | $ | 296,482 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(In thousands) | |||||||||||||||
Cost of product and maintenance | $ | 10,546 | $ | 10,105 | $ | 21,209 | $ | 20,278 | |||||||
Amortization of acquired intangibles | 4,537 | 6,119 | 10,317 | 12,350 | |||||||||||
Total amortization of acquired intangibles | $ | 15,083 | $ | 16,224 | $ | 31,526 | $ | 32,628 |
(In thousands) | |||
2016 – remaining period | $ | 28,966 | |
2017 | 56,093 | ||
2018 | 52,280 | ||
2019 | 45,241 | ||
2020 | 40,035 | ||
Thereafter | 65,273 | ||
Total estimated amortization expense | $ | 287,888 |
Severance and Benefits | Excess Facilities | Total | |||||||||
(In thousands) | |||||||||||
Balance, January 2, 2016 | $ | 751 | $ | 386 | $ | 1,137 | |||||
Restructuring and other charges (credits): | |||||||||||
2016 Restructuring Plan | 14,216 | — | 14,216 | ||||||||
Prior restructuring plans | 21 | 275 | 296 | ||||||||
Non-cash charges | — | (91 | ) | (91 | ) | ||||||
Cash payments | (12,025 | ) | (348 | ) | (12,373 | ) | |||||
Effect of foreign currency translation | 281 | (25 | ) | 256 | |||||||
Balance, July 2, 2016 | $ | 3,244 | $ | 197 | $ | 3,441 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
Net income | $ | 49,335 | $ | 58,160 | $ | 99,897 | $ | 94,419 | |||||||
Weighted average common shares used to calculate basic net income per share | 288,191 | 285,297 | 292,403 | 284,910 | |||||||||||
2015 Warrants | — | 20,635 | — | 19,773 | |||||||||||
Stock-based awards | 7,010 | 7,733 | 6,915 | 8,073 | |||||||||||
Weighted average common shares used to calculate diluted net income per share | 295,201 | 313,665 | 299,318 | 312,756 | |||||||||||
Net income per share - basic | $ | 0.17 | $ | 0.20 | $ | 0.34 | $ | 0.33 | |||||||
Net income per share - diluted | $ | 0.17 | $ | 0.19 | $ | 0.33 | $ | 0.30 |
Three Months Ended | Six Months Ended | ||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||
(In thousands) | |||||||||||
Options to purchase shares of common stock | 1,279 | 1,503 | 1,014 | 1,308 | |||||||
Non-vested shares of restricted stock | 19 | 23 | 51 | 18 | |||||||
Total potential common shares excluded | 1,298 | 1,526 | 1,065 | 1,326 |
• | Level 1 – Quoted prices for identical instruments in active markets; |
• | Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and |
• | Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Fair Value Measurements as of July 2, 2016 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
(In thousands) | |||||||||||||||
Assets | |||||||||||||||
Cash equivalents: | |||||||||||||||
Money market funds | $ | 387,641 | $ | 387,641 | $ | — | $ | — | |||||||
Bank certificates of deposit | 5,302 | — | 5,302 | — | |||||||||||
Commercial paper | 1,999 | — | 1,999 | — | |||||||||||
Short-term investments: | |||||||||||||||
Corporate debt securities | 1,998 | — | 1,998 | — | |||||||||||
Bank certificates of deposit | 6,753 | — | 6,753 | — | |||||||||||
United States Treasury securities | 21,418 | 21,418 | — | — | |||||||||||
Commercial paper | 1,498 | — | 1,498 | — | |||||||||||
Marketable equity securities | 3,078 | 3,078 | — | — | |||||||||||
Trading securities held in Non-Qualified Deferred Compensation, or NQDC, trust | 23,786 | 23,786 | — | — | |||||||||||
Total Assets | $ | 453,473 | $ | 435,923 | $ | 17,550 | $ | — | |||||||
As of July 2, 2016, Cadence did not have any financial liabilities requiring a recurring fair value measurement. | |||||||||||||||
Fair Value Measurements as of January 2, 2016 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
(In thousands) | |||||||||||||||
Assets | |||||||||||||||
Cash equivalents: | |||||||||||||||
Money market funds | $ | 360,691 | $ | 360,691 | $ | — | $ | — | |||||||
Short-term investments: | |||||||||||||||
Corporate debt securities | 34,829 | — | 34,829 | — | |||||||||||
Bank certificates of deposit | 15,046 | — | 15,046 | — | |||||||||||
United States Treasury securities | 36,286 | 36,286 | — | — | |||||||||||
United States government agency securities | 4,152 | 4,152 | — | — | |||||||||||
Commercial paper | 1,993 | — | 1,993 | — | |||||||||||
Marketable equity securities | 2,192 | 2,192 | — | — | |||||||||||
Trading securities held in NQDC trust | 24,905 | 24,905 | — | — | |||||||||||
Total Assets | $ | 480,094 | $ | 428,226 | $ | 51,868 | $ | — | |||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
(In thousands) | |||||||||||||||
Liabilities | |||||||||||||||
Foreign currency exchange contracts | 362 | — | 362 | — | |||||||||||
Total Liabilities | $ | 362 | $ | — | $ | 362 | $ | — |
As of | |||||||
July 2, 2016 | January 2, 2016 | ||||||
(In thousands) | |||||||
Foreign currency translation loss | $ | (7,662 | ) | $ | (9,569 | ) | |
Changes in defined benefit plan liabilities | (3,093 | ) | (3,066 | ) | |||
Unrealized holding gains on available-for-sale securities | 770 | 210 | |||||
Total accumulated other comprehensive loss | $ | (9,985 | ) | $ | (12,425 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(In thousands) | |||||||||||||||
Americas: | |||||||||||||||
United States | $ | 206,416 | $ | 192,176 | $ | 416,438 | $ | 379,383 | |||||||
Other Americas | 7,196 | 7,425 | 16,437 | 12,839 | |||||||||||
Total Americas | 213,612 | 199,601 | 432,875 | 392,222 | |||||||||||
Asia | 111,032 | 96,426 | 210,211 | 195,208 | |||||||||||
Europe, Middle East and Africa | 88,720 | 82,014 | 174,184 | 160,584 | |||||||||||
Japan | 39,657 | 37,842 | 83,613 | 79,235 | |||||||||||
Total | $ | 453,021 | $ | 415,883 | $ | 900,883 | $ | 827,249 |
As of | |||||||
July 2, 2016 | January 2, 2016 | ||||||
(In thousands) | |||||||
Americas: | |||||||
United States | $ | 191,920 | $ | 189,665 | |||
Other Americas | 618 | 387 | |||||
Total Americas | 192,538 | 190,052 | |||||
Asia | 29,571 | 24,767 | |||||
Europe, Middle East and Africa | 12,898 | 12,832 | |||||
Japan | 904 | 948 | |||||
Total | $ | 235,911 | $ | 228,599 |
• | Functional Verification, including Emulation and Prototyping Hardware; |
• | Digital IC Design and Signoff; |
• | Custom IC Design; |
• | System Interconnect and Analysis; and |
• | IP. |
• | increased product and maintenance and services revenue, primarily because of increased demand for our software, emulation and prototyping hardware and services; |
• | increased cost of product and maintenance, primarily due to increased emulation and prototyping hardware costs; |
• | continued investment in research and development activities; |
• | restructuring activities; and |
• | decreased interest expense. |
Three Months Ended | Change | |||||||||||||
July 2, 2016 | July 4, 2015 | Amount | Percentage | |||||||||||
(In millions, except percentages) | ||||||||||||||
Product and maintenance | $ | 420.0 | $ | 385.0 | $ | 35.0 | 9 | % | ||||||
Services | 33.0 | 30.9 | 2.1 | 7 | % | |||||||||
Total revenue | $ | 453.0 | $ | 415.9 | $ | 37.1 | 9 | % |
Six Months Ended | Change | |||||||||||||
July 2, 2016 | July 4, 2015 | Amount | Percentage | |||||||||||
(In millions, except percentages) | ||||||||||||||
Product and maintenance | $ | 831.7 | $ | 768.6 | $ | 63.1 | 8 | % | ||||||
Services | 69.2 | 58.6 | 10.6 | 18 | % | |||||||||
Total revenue | $ | 900.9 | $ | 827.2 | $ | 73.7 | 9 | % |
Three Months Ended | ||||||||||||||
July 4, 2015 | October 3, 2015 | January 2, 2016 | April 2, 2016 | July 2, 2016 | ||||||||||
Functional Verification, including Emulation and Prototyping Hardware | 21 | % | 23 | % | 25 | % | 26 | % | 27 | % | ||||
Digital IC Design and Signoff | 29 | % | 28 | % | 28 | % | 30 | % | 27 | % | ||||
Custom IC Design | 27 | % | 26 | % | 25 | % | 25 | % | 26 | % | ||||
System Interconnect and Analysis | 11 | % | 10 | % | 10 | % | 9 | % | 10 | % | ||||
IP | 12 | % | 13 | % | 12 | % | 10 | % | 10 | % | ||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Three Months Ended | Change | |||||||||||||
July 2, 2016 | July 4, 2015 | Amount | Percentage | |||||||||||
(In millions, except percentages) | ||||||||||||||
United States | $ | 206.4 | $ | 192.2 | $ | 14.2 | 7 | % | ||||||
Other Americas | 7.2 | 7.4 | (0.2 | ) | (3 | )% | ||||||||
Asia | 111.0 | 96.4 | 14.6 | 15 | % | |||||||||
Europe, Middle East and Africa | 88.7 | 82.0 | 6.7 | 8 | % | |||||||||
Japan | 39.7 | 37.9 | 1.8 | 5 | % | |||||||||
Total revenue | $ | 453.0 | $ | 415.9 | $ | 37.1 | 9 | % |
Six Months Ended | Change | |||||||||||||
July 2, 2016 | July 4, 2015 | Amount | Percentage | |||||||||||
(In millions, except percentages) | ||||||||||||||
United States | $ | 416.5 | $ | 379.4 | $ | 37.1 | 10 | % | ||||||
Other Americas | 16.4 | 12.8 | 3.6 | 28 | % | |||||||||
Asia | 210.2 | 195.2 | 15.0 | 8 | % | |||||||||
Europe, Middle East and Africa | 174.2 | 160.6 | 13.6 | 8 | % | |||||||||
Japan | 83.6 | 79.2 | 4.4 | 6 | % | |||||||||
Total revenue | $ | 900.9 | $ | 827.2 | $ | 73.7 | 9 | % |
Three Months Ended | Six Months Ended | ||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||
United States | 45 | % | 46 | % | 46 | % | 46 | % | |||
Other Americas | 2 | % | 2 | % | 2 | % | 1 | % | |||
Asia | 24 | % | 23 | % | 24 | % | 24 | % | |||
Europe, Middle East and Africa | 20 | % | 20 | % | 19 | % | 19 | % | |||
Japan | 9 | % | 9 | % | 9 | % | 10 | % | |||
Total | 100 | % | 100 | % | 100 | % | 100 | % |
Three Months Ended | Change | |||||||||||||
July 2, 2016 | July 4, 2015 | Amount | Percentage | |||||||||||
(In millions, except percentages) | ||||||||||||||
Cost of product and maintenance | $ | 43.0 | $ | 31.7 | $ | 11.3 | 36 | % | ||||||
Cost of services | 18.8 | 20.0 | (1.2 | ) | (6 | )% |
Six Months Ended | Change | |||||||||||||
July 2, 2016 | July 4, 2015 | Amount | Percentage | |||||||||||
(In millions, except percentages) | ||||||||||||||
Cost of product and maintenance | $ | 87.1 | $ | 73.8 | $ | 13.3 | 18 | % | ||||||
Cost of services | 36.7 | 38.6 | (1.9 | ) | (5 | )% |
Three Months Ended | Change | |||||||||||||
July 2, 2016 | July 4, 2015 | Amount | Percentage | |||||||||||
(In millions, except percentages) | ||||||||||||||
Product and maintenance-related costs | $ | 32.5 | $ | 21.6 | $ | 10.9 | 50 | % | ||||||
Amortization of acquired intangibles | 10.5 | 10.1 | 0.4 | 4 | % | |||||||||
Total cost of product and maintenance | $ | 43.0 | $ | 31.7 | $ | 11.3 | 36 | % |
Six Months Ended | Change | |||||||||||||
July 2, 2016 | July 4, 2015 | Amount | Percentage | |||||||||||
(In millions, except percentages) | ||||||||||||||
Product and maintenance-related costs | $ | 65.9 | $ | 53.5 | $ | 12.4 | 23 | % | ||||||
Amortization of acquired intangibles | 21.2 | 20.3 | 0.9 | 4 | % | |||||||||
Total cost of product and maintenance | $ | 87.1 | $ | 73.8 | $ | 13.3 | 18 | % |
Change | |||||||
Three Months Ended | Six Months Ended | ||||||
(In millions) | |||||||
Emulation and prototyping hardware costs | $ | 10.5 | $ | 12.5 | |||
Other items | 0.4 | (0.1 | ) | ||||
Total change in product and maintenance-related costs | $ | 10.9 | $ | 12.4 |
Three Months Ended | Change | |||||||||||||
July 2, 2016 | July 4, 2015 | Amount | Percentage | |||||||||||
(In millions, except percentages) | ||||||||||||||
Marketing and sales | $ | 101.1 | $ | 96.7 | $ | 4.4 | 5 | % | ||||||
Research and development | 182.4 | 158.0 | 24.4 | 15 | % | |||||||||
General and administrative | 36.4 | 27.5 | 8.9 | 32 | % | |||||||||
Total operating expenses | $ | 319.9 | $ | 282.2 | $ | 37.7 | 13 | % |
Six Months Ended | Change | |||||||||||||
July 2, 2016 | July 4, 2015 | Amount | Percentage | |||||||||||
(In millions, except percentages) | ||||||||||||||
Marketing and sales | $ | 200.3 | $ | 196.9 | $ | 3.4 | 2 | % | ||||||
Research and development | 362.3 | 321.0 | 41.3 | 13 | % | |||||||||
General and administrative | 64.7 | 55.1 | 9.6 | 17 | % | |||||||||
Total operating expenses | $ | 627.3 | $ | 573.0 | $ | 54.3 | 9 | % |
Three Months Ended | Six Months Ended | ||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||
Marketing and sales | 22 | % | 23 | % | 22 | % | 24 | % | |||
Research and development | 40 | % | 38 | % | 40 | % | 39 | % | |||
General and administrative | 8 | % | 7 | % | 7 | % | 7 | % | |||
Total operating expenses | 70 | % | 68 | % | 69 | % | 70 | % |
Change | |||||||
Three Months Ended | Six Months Ended | ||||||
(In millions) | |||||||
Salary, benefits and other employee-related costs | $ | 3.0 | 1.6 | ||||
Other items | 1.4 | 1.8 | |||||
Total change in marketing and sales expense | $ | 4.4 | $ | 3.4 |
Change | |||||||
Three Months Ended | Six Months Ended | ||||||
(In millions) | |||||||
Salary, benefits and other employee-related costs | $ | 20.0 | 34.5 | ||||
Stock-based compensation | 3.1 | 5.6 | |||||
Facilities and other infrastructure costs | 1.8 | 4.1 | |||||
Materials and other pre-production costs | (1.9 | ) | (5.8 | ) | |||
Other items | 1.4 | 2.9 | |||||
Total change in research and development expense | $ | 24.4 | $ | 41.3 |
Change | |||||||
Three Months Ended | Six Months Ended | ||||||
(In millions) | |||||||
Acquisition-related costs | $ | 6.2 | $ | 6.1 | |||
Salary, benefits and other employee-related costs | 1.5 | 1.7 | |||||
Other items | 1.2 | 1.8 | |||||
Total change in general and administrative expense | $ | 8.9 | $ | 9.6 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(In millions) | |||||||||||||||
Contractual interest expense: | |||||||||||||||
2015 Notes | $ | — | $ | 1.2 | $ | — | $ | 3.0 | |||||||
2019 Term Loan | 1.4 | — | 2.4 | — | |||||||||||
Revolving credit facility | 0.4 | 0.1 | 0.6 | 0.3 | |||||||||||
2024 Notes | 3.8 | 3.8 | 7.6 | 7.6 | |||||||||||
Amortization of debt discount: | |||||||||||||||
2015 Notes | — | 2.5 | — | 7.5 | |||||||||||
2024 Notes | — | — | — | 0.1 | |||||||||||
Amortization of deferred financing costs: | |||||||||||||||
2015 Notes | — | 0.3 | — | 1.0 | |||||||||||
2019 Term Loan | 0.1 | — | 0.1 | — | |||||||||||
2024 Notes | 0.2 | 0.1 | 0.3 | 0.3 | |||||||||||
Other | — | 0.2 | 0.3 | 0.1 | |||||||||||
Total interest expense | $ | 5.9 | $ | 8.2 | $ | 11.3 | $ | 19.9 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(In millions, except percentages) | |||||||||||||||
Provision for income taxes | $ | 14.5 | $ | 11.4 | $ | 21.4 | $ | 17.5 | |||||||
Effective tax rate | 22.7 | % | 16.4 | % | 17.6 | % | 15.6 | % |
As of | |||||||||||
July 2, 2016 | January 2, 2016 | Change | |||||||||
(In millions) | |||||||||||
Cash, cash equivalents and short-term investments | $ | 704.3 | $ | 711.2 | $ | (6.9 | ) | ||||
Net working capital | $ | 397.7 | $ | 427.9 | $ | (30.2 | ) |
Six Months Ended | |||||||||||
July 2, 2016 | July 4, 2015 | Change | |||||||||
(In millions) | |||||||||||
Cash provided by operating activities | $ | 163.6 | $ | 168.4 | $ | (4.8 | ) |
Six Months Ended | |||||||||||
July 2, 2016 | July 4, 2015 | Change | |||||||||
(In millions) | |||||||||||
Cash used for investing activities | $ | (6.6 | ) | $ | (28.1 | ) | $ | 21.5 |
Six Months Ended | |||||||||||
July 2, 2016 | July 4, 2015 | Change | |||||||||
(In millions) | |||||||||||
Cash used for financing activities | $ | (111.9 | ) | $ | (410.6 | ) | $ | 298.7 |
Notional Principal | Weighted Average Contract Rate | |||||
(In millions) | ||||||
Forward Contracts: | ||||||
European Union euro | $ | 56.5 | 0.89 | |||
Japanese yen | 29.2 | 104.78 | ||||
Canadian dollar | 10.1 | 1.28 | ||||
Chinese renminbi | 7.6 | 6.61 | ||||
Israeli shekel | 7.2 | 3.87 | ||||
British pound | 7.1 | 0.71 | ||||
South Korean won | 6.7 | 1,170.29 | ||||
Taiwan dollar | 6.6 | 32.34 | ||||
Hong Kong dollar | 6.4 | 7.76 | ||||
Indian rupee | 6.3 | 67.65 | ||||
Other | 3.2 | N/A | ||||
Total | $ | 146.9 | ||||
Estimated fair value | $ | — |
• | changes in the design and manufacturing of ICs, including migration to advanced process nodes and the introduction of three dimensional transistors, such as fin-based, multigate transistors, or FinFETs, present major challenges to the semiconductor industry, particularly in IC design, design automation, design of manufacturing equipment, and the manufacturing process itself. With migration to advanced process nodes, the industry must adapt to more complex physics and manufacturing challenges such as the need to draw features on silicon that are many times smaller than the wavelength of light used to draw the features via lithography. Models of each component’s electrical properties and behavior also become more complex as do requisite analysis, design, verification and manufacturing capabilities. Novel design tools and methodologies must be invented and enhanced quickly to remain competitive in the design of electronics in the smallest nanometer ranges; |
• | the challenges of advanced node design are leading some customers to work with more mature, less risky manufacturing processes that may reduce their need to upgrade or enhance their EDA products and design flows; |
• | a potential slowdown in “Moore’s Law,” which may reduce or slow the need for customers to upgrade or enhance their EDA products and design flows; |
• | the ability to design SoCs increases the complexity of managing a design that, at the lowest level, is represented by billions of shapes on fabrication masks. In addition, SoCs typically incorporate microprocessors and digital signal processors that are programmed with software, requiring simultaneous design of the IC and the related software embedded on the IC; |
• | with the availability of seemingly endless gate capacity, there is an increase in design reuse, or the combining of off-the-shelf design IP with custom logic to create ICs or SoCs. The unavailability of a broad range of high-quality design IP (including our own) that can be reliably incorporated into a customer’s design with our software products and services could lead to reduced demand for our products and services; |
• | increased technological capability of the FPGA, which is a programmable logic chip, creates an alternative to IC implementation for some electronics companies. This could reduce demand for our IC implementation products and services; |
• | a growing number of low-cost engineering services businesses could reduce the need for some IC companies to invest in EDA products; and |
• | adoption of cloud computing technologies with accompanying new business models for an increasing number of software categories, including EDA. |
• | the failure to realize anticipated benefits such as cost savings and revenue enhancements; |
• | overlapping customers and product sets that impact our ability to maintain revenue at historical rates; |
• | the failure to integrate and manage acquired products and businesses effectively; |
• | the failure to retain key employees of the acquired company or business; |
• | difficulties in combining previously separate companies or businesses into a single unit; |
• | the substantial diversion of management’s attention from day-to-day business when evaluating and negotiating these transactions and integrating an acquired company or business; |
• | the discovery, after completion of the acquisition, of unanticipated liabilities assumed from the acquired company, business or assets, such that we cannot realize the anticipated value of the acquisition; |
• | difficulties related to integrating the products of an acquired company or business in, for example, distribution, engineering, licensing models or customer support areas; |
• | unanticipated costs; |
• | customer dissatisfaction with existing license agreements with us, possibly dissuading customers from licensing or buying products acquired by us after the expiration date of the existing license; or |
• | the failure to understand, compete and operate effectively in markets where we have limited experience. |
• | the development by others of competitive EDA products or platforms and engineering services, possibly resulting in a shift of customer preferences away from our products and services and significantly decreased revenue; |
• | aggressive pricing competition by some of our competitors may cause us to lose our competitive position, which could result in lower revenues or profitability and could adversely impact our ability to realize the revenue and profitability forecasts for our software or emulation and prototyping hardware systems products; |
• | the challenges of developing (or acquiring externally developed) technology solutions, including hardware and IP offerings, that are adequate and competitive in meeting the rapidly evolving requirements of next-generation design challenges; |
• | the low cost of entry in EDA; |
• | intense competition to attract acquisition targets, possibly making it more difficult for us to acquire companies or technologies at an acceptable price, or at all; |
• | the combination of our EDA competitors or collaboration among many EDA companies to deliver more comprehensive offerings than they could individually; and |
• | decisions by electronics manufacturers to perform engineering services or IP development internally, rather than purchase these services from outside vendors due to budget constraints or excess engineering capacity. |
• | changes in tax laws or the interpretation of such tax laws in the United States, Ireland, Hungary, the United Kingdom, China, India or other international locations where we have operations; |
• | earnings being lower than anticipated in countries where we are taxed at lower rates as compared to the United States federal and state statutory tax rates; |
• | an increase in expenses not deductible for tax purposes, including certain stock-based compensation and impairment of goodwill; |
• | changes in the valuation allowance against our deferred tax assets; |
• | changes in judgment from the evaluation of new information that results in a recognition, derecognition or change in measurement of a tax position taken in a prior period; |
• | increases to interest or penalty expenses classified in the financial statements as income taxes; |
• | new accounting standards or interpretations of such standards; |
• | a change in our decision to indefinitely reinvest foreign earnings outside the United States; or |
• | results of tax examinations by the Internal Revenue Service, or IRS, state, and foreign tax authorities. |
• | quarterly or annual operating or financial results or forecasts that fail to meet or are inconsistent with earlier projections or the expectations of our securities analysts or investors; |
• | changes in our forecasted bookings, revenue, earnings or operating cash flow estimates; |
• | an increase in our debt or other liabilities; |
• | market conditions in the IC, electronics systems and semiconductor industries; |
• | announcements of a restructuring plan; |
• | changes in management; |
• | repurchases of shares of our common stock or changes to plans to repurchase shares of our common stock; |
• | a gain or loss of a significant customer or market segment share; |
• | litigation; and |
• | announcements of new products or acquisitions of new technologies by us, our competitors or our customers. |
• | pay damages (including the potential for treble damages), license fees or royalties (including royalties for past periods) to the party claiming infringement; |
• | stop licensing products or providing services that use the challenged intellectual property; |
• | obtain a license from the owner of the infringed intellectual property to sell or use the relevant technology, which license may not be available on reasonable terms, or at all; or |
• | redesign the challenged technology, which could be time consuming and costly, or impossible. |
• | the adoption or expansion of government trade restrictions, including tariffs and other trade barriers; |
• | limitations on repatriation of earnings; |
• | limitations on the conversion of foreign currencies; |
• | reduced protection of intellectual property rights in some countries; |
• | performance of national economies; |
• | longer collection periods for receivables and greater difficulty in collecting accounts receivable; |
• | difficulties in managing foreign operations; |
• | political and economic instability; for example, any direct or follow-on effects from the United Kingdom’s vote to leave the European Union; |
• | unexpected changes in regulatory requirements; |
• | inability to continue to offer competitive compensation in certain growing regions; |
• | differing employment practices and labor issues; |
• | United States’ and other governments’ licensing requirements for exports, which may lengthen the sales cycle or restrict or prohibit the sale or licensing of certain products; and |
• | variations in costs or expenses associated with our international operations, including as a result of changes in foreign tax laws or devaluation of the U.S. dollar relative to other foreign currencies. |
• | loss of customers; |
• | loss of market share; |
• | damage to our reputation; |
• | failure to attract new customers or achieve market acceptance; |
• | diversion of development resources to resolve the problem; |
• | loss of or delay in revenue; |
• | increased service costs; and |
• | liability for damages. |
• | the timing of customers’ competitive evaluation processes; or |
• | customers’ budgetary constraints and budget cycles. |
• | Our certificate of incorporation allows our Board of Directors to issue, at any time and without stockholder approval, preferred stock with such terms as it may determine. No shares of preferred stock are currently outstanding. However, the rights of holders of any of our preferred stock that may be issued in the future may be superior to the rights of holders of our common stock. |
• | Section 203 of the Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in any business combination with a person owning 15% or more of its voting stock, or who is affiliated with the corporation and owned 15% or more of its voting stock at any time within three years prior to the proposed business combination, for a period of three years from the date the person became a 15% owner, unless specified conditions are met. |
• | making it more difficult for us to satisfy our obligations to service our debt as described above; |
• | limiting our ability to obtain additional financing to fund future working capital, capital expenditures, |
• | requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other |
• | utilizing large portions of our U.S. cash to service our debt obligations because those payments are made in the United States, which may require us to repatriate cash from outside the United States and incur unanticipated or unfavorable tax expenses; |
• | increasing our vulnerability to general adverse economic and industry conditions; |
• | exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under |
• | limiting our flexibility in planning for and reacting to changes in the industry in which we compete; |
• | placing us at a disadvantage compared to other, less leveraged competitors and competitors that have greater access to capital resources; and |
• | increasing our cost of borrowing. |
• | pay dividends or make other distributions or repurchase or redeem capital stock; |
• | prepay, redeem or repurchase certain debt; |
• | issue certain preferred stock or similar equity securities; |
• | make certain investments; |
• | sell assets; |
• | incur liens; |
• | incur additional indebtedness and guarantee indebtedness; |
• | enter into sale and leaseback transactions; |
• | enter into transactions with affiliates; |
• | alter the businesses we conduct; |
• | enter into agreements restricting our subsidiaries’ ability to pay dividends; and |
• | consolidate, merge or sell all or substantially all of our assets. |
• | limited in how we conduct our business; |
• | unable to raise additional debt or equity financing to operate during general economic or business downturns; or |
• | unable to compete effectively or to take advantage of new business opportunities. |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan or Program | Maximum Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plan or Program (1) (In millions) | ||||||||||
April 3, 2016 – May 7, 2016 | 3,730,743 | $ | 23.45 | 3,693,320 | $ | 633.3 | ||||||||
May 8, 2016 – June 4, 2016 | 3,133,822 | $ | 24.03 | 3,112,025 | $ | 558.5 | ||||||||
June 5, 2016 – July 2, 2016 | 3,240,018 | $ | 24.44 | 3,220,413 | $ | 479.8 | ||||||||
Total | 10,104,583 | $ | 23.95 | 10,025,758 |
(1) | Shares purchased that were not part of our publicly announced repurchase programs represent employee surrender of shares of restricted stock to satisfy employee income tax withholding obligations due upon vesting, and do not reduce the dollar value that may yet be purchased under our publicly announced repurchase programs. |
(a) | The following exhibits are filed herewith: |
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Title | Form | File No. | Exhibit No. | Filing Date | Provided Herewith | ||||||
10.01 | Form of Indemnity Agreement between the Registrant and its directors and executive officers, as amended and restated. | X | ||||||||||
10.02 | The Registrant’s Executive Severance Plan. | 8-K | 001-15867 | 10.01 | 5/11/2016 | |||||||
10.03 | The Registrant’s Omnibus Equity Incentive Plan, as amended and restated. | Def 14A | 001-15867 | Appendix A | 3/25/2016 | |||||||
10.04 | The Senior Executive Bonus Plan. | X | ||||||||||
31.01 | Certification of the Registrant’s Chief Executive Officer, Lip-Bu Tan, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934. | X | ||||||||||
31.02 | Certification of the Registrant’s Chief Financial Officer, Geoffrey G. Ribar, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934. | X | ||||||||||
32.01 | Certification of the Registrant’s Chief Executive Officer, Lip-Bu Tan, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||
32.02 | Certification of the Registrant’s Chief Financial Officer, Geoffrey G. Ribar, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||
101.INS | XBRL Instance Document. | X | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | X | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||||
101.DEF | XBRL Definition Linkbase Document. | X | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | X |
CADENCE DESIGN SYSTEMS, INC. (Registrant) | |||||
DATE: | July 25, 2016 | By: | /s/ Lip-Bu Tan | ||
Lip-Bu Tan | |||||
President, Chief Executive Officer and Director | |||||
DATE: | July 25, 2016 | By: | /s/ Geoffrey G. Ribar | ||
Geoffrey G. Ribar | |||||
Senior Vice President and Chief Financial Officer |
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Title | Form | File No. | Exhibit No. | Filing Date | Provided Herewith | ||||||
10.01 | Form of Indemnity Agreement between the Registrant and its directors and executive officers, as amended and restated. | X | ||||||||||
10.02 | The Registrant’s Executive Severance Plan. | 8-K | 001-15867 | 10.01 | 5/11/2016 | |||||||
10.03 | The Registrant’s Omnibus Equity Incentive Plan, as amended and restated. | Def 14A | 001-15867 | Appendix A | 3/25/2016 | |||||||
10.04 | The Senior Executive Bonus Plan. | X | ||||||||||
31.01 | Certification of the Registrant’s Chief Executive Officer, Lip-Bu Tan, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934. | X | ||||||||||
31.02 | Certification of the Registrant’s Chief Financial Officer, Geoffrey G. Ribar, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934. | X | ||||||||||
32.01 | Certification of the Registrant’s Chief Executive Officer, Lip-Bu Tan, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||
32.02 | Certification of the Registrant’s Chief Financial Officer, Geoffrey G. Ribar, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||
101.INS | XBRL Instance Document. | X | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | X | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||||
101.DEF | XBRL Definition Linkbase Document. | X | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | X |
CADENCE DESIGN SYSTEMS, INC. | ||
By: Name: Title: Address: | __________________________ | |
INDEMNITEE | ||
By: Name: Address: | __________________________ |
__________________________ [Name] Date: _____________________ |
1. | I have reviewed this Quarterly Report on Form 10-Q of Cadence Design Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Lip-Bu Tan | ||
Lip-Bu Tan | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Cadence Design Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Geoffrey G. Ribar | ||
Geoffrey G. Ribar | |||
Senior Vice President and Chief Financial Officer | |||
(Principal Accounting and Financial Officer) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Lip-Bu Tan | |||
Lip-Bu Tan | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: | July 25, 2016 |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Geoffrey G. Ribar | |||
Geoffrey G. Ribar | |||
Senior Vice President and Chief Financial Officer | |||
(Principal Accounting and Financial Officer) | |||
Date: | July 25, 2016 |
Document and Entity Information |
6 Months Ended |
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Jul. 02, 2016
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Document and Entity Information [Abstract] | |
Entity Registrant Name | CADENCE DESIGN SYSTEMS INC |
Entity Central Index Key | 0000813672 |
Document Type | 10-Q |
Document Period End Date | Jul. 02, 2016 |
Amendment Flag | false |
Document Fiscal Year Focus | 2016 |
Document Fiscal Period Focus | Q2 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 292,339,000 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Jan. 02, 2016 |
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Statement of Financial Position [Abstract] | ||
Accumulated depreciation on property, plant and equipment | $ 604,532 | $ 581,345 |
Accumulated amortization on acquired intangibles assets | $ 239,170 | $ 216,589 |
Condensed Consolidated Income Statements (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
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Revenue: | ||||
Product and maintenance | $ 419,963 | $ 384,951 | $ 831,707 | $ 768,588 |
Services | 33,058 | 30,932 | 69,176 | 58,661 |
Total revenue | 453,021 | 415,883 | 900,883 | 827,249 |
Costs and Expenses: | ||||
Cost of product and maintenance | 42,960 | 31,715 | 87,141 | 73,774 |
Cost of services | 18,823 | 20,040 | 36,696 | 38,566 |
Marketing and sales | 101,110 | 96,662 | 200,310 | 196,930 |
Research and development | 182,371 | 157,974 | 362,277 | 320,970 |
General and administrative | 36,388 | 27,467 | 64,688 | 55,109 |
Amortization of acquired intangibles | 4,537 | 6,119 | 10,317 | 12,350 |
Restructuring and other charges (credits) | (74) | (498) | 14,512 | 3,861 |
Total costs and expenses | 386,115 | 339,479 | 775,941 | 701,560 |
Income from operations | 66,906 | 76,404 | 124,942 | 125,689 |
Interest expense | (5,896) | (8,180) | (11,253) | (19,934) |
Other income, net | 2,842 | 1,347 | 7,605 | 6,128 |
Income before provision for income taxes | 63,852 | 69,571 | 121,294 | 111,883 |
Provision for income taxes | 14,517 | 11,411 | 21,397 | 17,464 |
Net income | $ 49,335 | $ 58,160 | $ 99,897 | $ 94,419 |
Net income per share - basic (in usd per share) | $ 0.17 | $ 0.20 | $ 0.34 | $ 0.33 |
Net income per share - diluted (in usd per share) | $ 0.17 | $ 0.19 | $ 0.33 | $ 0.30 |
Weighted average common shares outstanding - basic (in shares) | 288,191 | 285,297 | 292,403 | 284,910 |
Weighted average common shares outstanding - diluted (in shares) | 295,201 | 313,665 | 299,318 | 312,756 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 49,335 | $ 58,160 | $ 99,897 | $ 94,419 |
Other comprehensive income (loss), net of tax effects: | ||||
Foreign currency translation adjustments | (2,307) | (4,528) | 1,907 | (13,418) |
Changes in unrealized holding gains or losses on available-for-sale securities, net of reclassification adjustment for realized gains and losses | (304) | (52) | 560 | 13 |
Changes in defined benefit plan liabilities | (109) | 26 | (27) | 317 |
Total other comprehensive income (loss), net of tax effects | (2,720) | (4,554) | 2,440 | (13,088) |
Comprehensive income | $ 46,615 | $ 53,606 | $ 102,337 | $ 81,331 |
Basis of Presentation |
6 Months Ended |
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Jul. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by Cadence Design Systems, Inc., or Cadence, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission, or the SEC. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, have been condensed or omitted pursuant to such rules and regulations. However, Cadence believes that the disclosures contained in this Quarterly Report on Form 10-Q comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These condensed consolidated financial statements are meant to be, and should be, read in conjunction with the consolidated financial statements and the Notes thereto included in Cadence’s Annual Report on Form 10-K for the fiscal year ended January 2, 2016. Certain prior period balances have been reclassified to conform to current period presentation. The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q reflect all adjustments (which include only normal, recurring adjustments and those items discussed in these Notes) that are, in the opinion of management, necessary to state fairly the results of operations, cash flows and financial position for the periods and dates presented. The results for such periods are not necessarily indicative of the results to be expected for the full fiscal year. Management has evaluated subsequent events through the issuance date of the unaudited condensed consolidated financial statements. Use of Estimates Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. New Accounting Standards In March 2016, the Financial Accounting Standards Board, or FASB, issued a new accounting standard intended to simplify various aspects related to how stock-based awards are accounted for and presented in the financial statements. The new standard: (a) requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled, (b) requires classification of excess tax benefits as an operating activity in the statement of cash flows rather than a financing activity, (c) eliminates the requirement to defer recognition of an excess tax benefit until the benefit is realized through a reduction to taxes payable, (d) modifies statutory withholding tax requirements, and (e) provides for a policy election to account for forfeitures as they occur. The guidance is effective in the first quarter of fiscal 2017 and early adoption is permitted if all amendments are adopted in the same period. Cadence elected to early adopt the new standard during the first quarter of fiscal 2016. As a result of early adoption, Cadence recorded all income tax effects of share-based awards in its provision for income taxes in the condensed consolidated income statements. Cadence also recorded a cumulative effect adjustment of approximately $7.8 million as a reduction of opening accumulated deficit on Cadence’s condensed consolidated balance sheets. The cumulative effect adjustment was comprised of approximately $8.1 million related to the recognition of income tax benefits in excess of compensation expense, offset by $0.3 million related to the policy election to recognize the impact of forfeitures on stock-based compensation expense as they occur. Additionally, Cadence adopted the change in presentation in the condensed consolidated statement of cash flows related to excess tax benefits on a prospective basis. Accordingly, prior periods have not been adjusted. There was no impact for the change in presentation in the statement of cash flows related to statutory tax withholding requirements as Cadence has historically classified the statutory tax withholding as a financing activity in its consolidated statement of cash flows. In April 2015, the FASB issued a new accounting standard requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the associated debt liability. The new standard became effective for Cadence in the first quarter of fiscal 2016 and required retrospective application. As a result, prior period balances have been reclassified to conform to the current period presentation. Adoption of this standard did not have a material impact on Cadence’s consolidated balance sheets. In May 2014, the FASB issued a comprehensive revenue recognition standard for revenue associated with the delivery of goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB deferred the effective date of the new revenue standard for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date of December 15, 2016. Accordingly, the updated standard is effective for Cadence in the first quarter of fiscal 2018. In March 2016, the FASB finalized its amendments to the guidance in the new standard on assessing whether an entity is a principal or an agent in a revenue transaction. This conclusion impacts whether an entity reports revenue on a gross or net basis. In April 2016, the FASB finalized additional amendments to the guidance in the new revenue standard on identifying performance obligations and accounting for licenses of intellectual property. Cadence has not yet selected a transition method and is currently evaluating the effect that the updated standard, and the recently issued amendments, will have on its consolidated financial statements and related disclosures. In January 2016, the FASB issued a new accounting standard that will impact certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The updated standard is effective for Cadence in the first quarter of fiscal 2018, and early adoption is permitted. Cadence is currently evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued a new accounting standard requiring, among other things, the recognition of lease assets and lease liabilities on the balance sheet by lessees for certain lease arrangements that are classified as operating leases under the previous standard. The updated standard is effective for Cadence in the first quarter of fiscal 2019, and early adoption is permitted. Cadence is currently evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued a new accounting standard intended to simplify the accounting for equity method investments when there is an increase in the level of ownership interest or degree of influence. The new standard is effective for Cadence in the first quarter of fiscal 2017 and requires prospective application. Adoption of this standard is not expected to have a material impact on Cadence’s consolidated financial statements. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Cadence’s outstanding debt as of July 2, 2016 and January 2, 2016 was as follows:
Revolving Credit Facility Cadence maintains a senior unsecured revolving credit facility with a group of lenders led by Bank of America, N.A., as administrative agent. The credit facility provides for borrowings up to $250.0 million, with the right to request increased capacity up to an additional $150.0 million upon the receipt of lender commitments, for total maximum borrowings of $400.0 million. The credit facility, as amended, expires on September 19, 2019 and has no subsidiary guarantors. Any outstanding loans drawn under the credit facility are due at maturity on September 19, 2019. Outstanding borrowings may be paid at any time prior to maturity. Interest accrues on borrowings under the credit facility at either LIBOR plus a margin between 1.25% and 2.0% per annum or at the base rate plus a margin between 0.25% and 1.0% per annum. The interest rate applied to borrowings is determined by Cadence’s consolidated leverage ratio as specified by the credit facility agreement. As of July 2, 2016, the interest rate on Cadence’s revolving credit facility was 2.16%. Interest is payable quarterly. A commitment fee ranging from 0.20% to 0.35% is assessed on the daily average undrawn portion of revolving commitments. The credit facility contains customary negative covenants that, among other things, restrict Cadence’s ability to incur additional indebtedness, grant liens, make certain investments (including acquisitions), dispose of certain assets and make certain payments, including share repurchases and dividends. In addition, the credit facility contains financial covenants that require Cadence to maintain a leverage ratio not to exceed 2.75 to 1, and a minimum interest coverage ratio of 3.00 to 1. As of July 2, 2016 and January 2, 2016, Cadence was in compliance with all financial covenants associated with the revolving credit facility. 2019 Term Loan On January 28, 2016, Cadence entered into a $300.0 million three-year senior unsecured non-amortizing term loan facility due on January 28, 2019, or the 2019 Term Loan, with a group of lenders led by JPMorgan Chase Bank, N.A., as administrative agent. The 2019 Term Loan is unsecured, and the proceeds will be used for general corporate purposes, including the repurchase of common stock. Amounts outstanding under the 2019 Term Loan initially accrue interest at a rate equal to LIBOR plus a margin of 1.125% per annum, which may increase to a rate equal to LIBOR plus a margin of up to 1.875% per annum, depending on Cadence’s leverage ratio. As of July 2, 2016, the interest rate on Cadence’s 2019 Term Loan was 1.90%. The covenants of the 2019 Term Loan are generally consistent with Cadence’s existing five-year senior unsecured revolving credit facility. In addition, the term loan agreement contains certain financial covenants that require Cadence to maintain a funded debt to EBITDA ratio not greater than 2.75 to 1, with a step-up to 3.25 to 1 for one year following an acquisition by Cadence of at least $250.0 million that results in a pro forma leverage ratio between 2.50 to 1 and 3.00 to 1. As of July 2, 2016, Cadence was in compliance with all financial covenants associated with the 2019 Term Loan. 2024 Notes In October 2014, Cadence issued $350.0 million aggregate principal amount of 4.375% Senior Notes due October 15, 2024, or the 2024 Notes. Cadence received net proceeds of $342.4 million from the issuance of the 2024 Notes, net of a discount of $1.4 million and issuance costs of $6.2 million. Both the discount and issuance costs are being amortized to interest expense over the term of the 2024 Notes using the effective interest method. Interest is payable in cash semi-annually in April and October. The 2024 Notes are unsecured and rank equal in right of payment to all of Cadence’s existing and future senior indebtedness. Cadence may redeem the 2024 Notes, in whole or in part, at a redemption price equal to the greater of (a) 100% of the principal amount of the notes to be redeemed and (b) the sum of the present values of the remaining scheduled payments of principal and interest, plus any accrued and unpaid interest, as more particularly described in the indenture governing the 2024 Notes. The indenture governing the 2024 Notes includes customary representations, warranties and restrictive covenants, including, but not limited to, restrictions on Cadence’s ability to grant liens on assets, enter into sale and lease-back transactions, or merge, consolidate or sell assets, and also includes customary events of default. For information regarding the impact of new accounting standards on the presentation of debt issuance costs, see Note 1 under the heading “New Accounting Standards.” |
Cash, Cash Equivalents and Investments |
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Cash, Cash Equivalents and Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CASH, CASH EQUIVALENTS AND INVESTMENTS | CASH, CASH EQUIVALENTS AND INVESTMENTS Cadence’s cash, cash equivalents and short-term investments at fair value as of July 2, 2016 and January 2, 2016 were as follows:
Cash and Cash Equivalents Cadence considers all highly liquid investments with original maturities of three months or less on the date of purchase to be cash equivalents. The amortized cost of Cadence’s cash equivalents approximates fair value. The following table summarizes Cadence’s cash and cash equivalents at fair value as of July 2, 2016 and January 2, 2016:
Short-Term Investments The following tables summarize Cadence’s short-term investments as of July 2, 2016 and January 2, 2016:
The marketable debt securities included in short-term investments as of July 2, 2016 have contractual maturities of less than one year. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.
Realized gains and losses from the sale of marketable debt and equity securities are recorded in other income, net in the condensed consolidated income statements. |
Receivables, net |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RECEIVABLES, NET | RECEIVABLES, NET Cadence’s current and long-term receivables balances as of July 2, 2016 and January 2, 2016 were as follows:
Cadence’s customers are primarily concentrated within the semiconductor and electronics systems industries. As of July 2, 2016, no one customer accounted for 10% or more of Cadence’s total receivables. As of January 2, 2016, one customer accounted for 12% of Cadence’s total receivables, and no other customer accounted for 10% or more of Cadence’s total receivables. As of July 2, 2016 and January 2, 2016, approximately 45% of Cadence’s total receivables were attributable to the ten customers with the largest balances of total receivables. |
Stock Repurchase Programs |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK REPURCHASE PROGRAMS | STOCK REPURCHASE PROGRAMS In July 2015, Cadence’s Board of Directors approved an 18-month plan to repurchase shares of Cadence common stock of up to an aggregate of $1.2 billion, beginning in the third quarter of fiscal 2015. The actual timing and amount of repurchases are subject to business and market conditions, corporate and regulatory requirements, acquisition opportunities and other factors. The stock repurchase program may be suspended, modified or discontinued at any time. As of July 2, 2016, the remaining amount authorized for the repurchase of shares was $480 million. The shares repurchased under Cadence’s repurchase authorizations and the total cost of repurchased shares, including commissions, during the three and six months ended July 2, 2016 and July 4, 2015 were as follows:
For additional information regarding share repurchases, see the discussion under Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds.” |
Stock Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION [Text Block] | STOCK-BASED COMPENSATION Stock-based compensation expense is reflected in Cadence’s condensed consolidated income statements for the three and six months ended July 2, 2016 and July 4, 2015 as follows:
Cadence had total unrecognized compensation expense related to stock option and restricted stock grants of $148.6 million as of July 2, 2016, which will be recognized over the remaining vesting period. The remaining weighted-average vesting period of unvested awards is 2.2 years. For information regarding the impact of new accounting standards impacting stock-based compensation, see Note 1 under the heading “New Accounting Standards.” |
Acquisitions |
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Jul. 02, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | ACQUISITIONS During the six months ended July 2, 2016, Cadence completed two business combinations for total cash consideration of $42.4 million, after taking into account cash acquired of $1.8 million. The total purchase consideration was preliminarily allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition dates. Cadence will also make payments to certain employees over a period of up to four years subject to continued employment and other conditions. Cadence recorded a total of $23.6 million of goodwill, $23.2 million of acquired intangible assets and $2.6 million of net liabilities consisting primarily of deferred revenue. The recorded goodwill is primarily related to expected synergies from combining operations of the acquired companies. The weighted-average amortization period for definite-lived intangible assets acquired is approximately 8.0 years. Results of operations and the estimated fair value of acquired assets and assumed liabilities are recorded in the consolidated financial statements from the date of acquisition. Pro forma results of operations for the business combinations completed during the six months ended July 2, 2016 have not been presented because the effects of these acquisitions, individually and in the aggregate, would not have been material to Cadence’s financial results. The fair values of acquired intangible assets and assumed liabilities were determined using significant inputs that are not observable in the market. For an additional description of these fair value calculations, see Note 11 in the notes to condensed consolidated financial statements. A trust for the benefit of the children of Lip-Bu Tan, Cadence’s President, Chief Executive Officer, or CEO, and director, owned less than 2% of Rocketick Technologies Ltd., one of the acquired companies, and Mr. Tan and his wife serve as co-trustees of the trust and disclaim pecuniary and economic interest in the trust. The Board of Directors of Cadence reviewed the transaction and concluded that it was in the best interests of Cadence to proceed with the transaction. Mr. Tan recused himself from the Board of Directors’ discussion of the valuation of Rocketick Technologies Ltd. and on whether to proceed with the transaction. A financial advisor provided a fairness opinion to Cadence in connection with the transaction. |
Goodwill and Acquired Intangibles |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND ACQUIRED INTANGIBLES | GOODWILL AND ACQUIRED INTANGIBLES Goodwill The changes in the carrying amount of goodwill during the six months ended July 2, 2016 were as follows:
Acquired Intangibles, Net Acquired intangibles as of July 2, 2016 were as follows, excluding intangibles that were fully amortized as of January 2, 2016:
Acquired intangibles as of January 2, 2016 were as follows, excluding intangibles that were fully amortized as of January 3, 2015:
Amortization expense from existing technology and maintenance agreements is included in cost of product and maintenance. Amortization of acquired intangibles for the three and six months ended July 2, 2016 and July 4, 2015 was as follows:
Estimated amortization expense for intangible assets with definite lives for the following five fiscal years and thereafter is as follows:
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Restructuring and Other Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING AND OTHER CHARGES | RESTRUCTURING AND OTHER CHARGES Cadence has initiated various restructuring plans in an effort to better align its resources with its business strategy. These restructuring plans have primarily been comprised of severance payments and termination benefits related to headcount reductions, estimated lease losses related to facilities vacated under the restructuring plans and charges related to assets abandoned as part of the restructuring plans. During the six months ended July 2, 2016, Cadence initiated a restructuring plan, or the 2016 Restructuring Plan, and recorded restructuring and other charges of approximately $14.2 million related to severance payments and termination benefits. As of July 2, 2016, total liabilities related to the 2016 Restructuring Plan were $3.0 million. Cadence expects to make cash payments for severance and related benefits for the 2016 Restructuring Plan through fiscal 2016. The following table presents activity relating to Cadence’s restructuring plans during the six months ended July 2, 2016:
The remaining accrual for Cadence’s restructuring plans is recorded in accounts payable and accrued liabilities in the condensed consolidated balance sheet. |
Net Income per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER SHARE | NET INCOME PER SHARE Basic net income per share is computed by dividing net income during the period by the weighted average number of shares of common stock outstanding during that period, less unvested restricted stock awards. Diluted net income per share is impacted by equity instruments considered to be potential common shares, if dilutive, computed using the treasury stock method of accounting. The calculations for basic and diluted net income per share for the three and six months ended July 2, 2016 and July 4, 2015 are as follows:
The 2015 Warrants expired in December 2015. For an additional description of the 2015 Warrants, see Note 3 in the notes to consolidated financial statements in Cadence’s Annual Report on Form 10-K for the fiscal year ended January 2, 2016. The following table presents shares of Cadence’s common stock outstanding for the three and six months ended July 2, 2016 and July 4, 2015 that were excluded from the computation of diluted net income per share because the effect of including these shares in the computation of diluted net income per share would have been anti-dilutive:
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE | FAIR VALUE Inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Cadence’s market assumptions. These two types of inputs have created the following fair value hierarchy:
This hierarchy requires Cadence to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. Cadence recognizes transfers between levels of the hierarchy based on the fair values of the respective financial instruments at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the six months ended July 2, 2016. On a quarterly basis, Cadence measures at fair value certain financial assets and liabilities. The fair value of financial assets and liabilities was determined using the following levels of inputs as of July 2, 2016 and January 2, 2016:
Level 3 Measurements During the six months ended July 2, 2016, Cadence acquired intangible assets of $23.2 million. The fair value of the intangible assets acquired was determined using the income and cost approaches and level 3 inputs. Key assumptions include the amount and timing of expected future cash flows, market conditions, projected costs, assumed profit margins, discount rates and the economy in general. The fair value of these intangible assets was affected most significantly by the projected income associated with the intangible assets and the anticipated timing of the projected income, but was also impacted by the discount rate used to adjust the outcomes to their present values. Cadence used discount rates ranging from 14.0% to 17.5% to value the intangible assets acquired. As part of its acquisitions during the six months ended July 2, 2016, Cadence also assumed obligations related to deferred revenue, which were estimated using the cost build-up approach. The cost build-up approach determines fair value using estimates of the costs required to fulfill the contracted obligations plus an assumed profit. Cadence assumed a profit margin of 14.5% when valuing these liabilities, which were then adjusted to present value using a discount rate of 3.5%. The resulting fair value using this approach approximates the amount that Cadence would be required to pay a third party to assume the obligation. The fair value of the deferred revenue obligations assumed was affected most significantly by the estimated costs required to fulfill the obligation, but was also affected by the assumed profit margin and the discount rate. Cadence believes that its estimates and assumptions related to the fair value of its acquired intangible assets and deferred revenue obligations are reasonable, but significant judgment is involved. |
Contingencies |
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Jul. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES Legal Proceedings From time to time, Cadence is involved in various disputes and litigation that arise in the ordinary course of business. These include disputes and lawsuits related to intellectual property, indemnification obligations, mergers and acquisitions, licensing, contracts, distribution arrangements and employee relations matters. At least quarterly, Cadence reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on Cadence’s judgments using the best information available at the time. As additional information becomes available, Cadence reassesses the potential liability related to pending claims and litigation matters and may revise estimates. Other Contingencies Cadence provides its customers with a warranty on sales of hardware products, generally for a 90-day period. Cadence did not incur any significant costs related to warranty obligations during the three and six months ended July 2, 2016 and July 4, 2015. Cadence’s product license and services agreements typically include a limited indemnification provision for claims from third parties relating to Cadence’s intellectual property. If the potential loss from any indemnification claim is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. The indemnification is generally limited to the amount paid by the customer. Cadence did not incur any significant losses from indemnification claims during the three and six months ended July 2, 2016 and July 4, 2015. |
Other Comprehensive Income |
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Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER COMPREHENSIVE INCOME | OTHER COMPREHENSIVE LOSS Cadence’s other comprehensive loss is comprised of foreign currency translation losses, changes in defined benefit plan liabilities, and changes in unrealized holding gains and losses on available-for-sale securities net of reclassifications for realized gains and losses, as presented in Cadence’s condensed consolidated statements of comprehensive income. Accumulated other comprehensive loss was comprised of the following as of July 2, 2016 and January 2, 2016:
For the three and six months ended July 2, 2016 and July 4, 2015 there were no significant amounts reclassified from accumulated other comprehensive loss to net income. |
Segment Reporting |
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SEGMENT REPORTING | SEGMENT REPORTING Segment reporting is based on the “management approach,” following the method that management organizes the company’s reportable segments for which separate financial information is made available to, and evaluated regularly by, the chief operating decision maker in allocating resources and in assessing performance. Cadence’s chief operating decision maker is its President and CEO, who reviews Cadence’s consolidated results as one operating segment. In making operating decisions, the CEO primarily considers consolidated financial information, accompanied by disaggregated information about revenues by geographic region. Outside the United States, Cadence markets and supports its products and services primarily through its subsidiaries. Revenue is attributed to geography based upon the country in which the product is used or services are delivered. Long-lived assets are attributed to geography based on the country where the assets are located. The following table presents a summary of revenue by geography for the three and six months ended July 2, 2016 and July 4, 2015:
The following table presents a summary of long-lived assets by geography as of July 2, 2016 and January 2, 2016:
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Basis of Presentation (Policies) |
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Jul. 02, 2016 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Basis of Presentation | Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
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Cash and Cash Equivalents and Short Term Investments | Cadence considers all highly liquid investments with original maturities of three months or less on the date of purchase to be cash equivalents. |
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Fair Value of Financial Instruments | Inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Cadence’s market assumptions. These two types of inputs have created the following fair value hierarchy:
This hierarchy requires Cadence to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. Cadence recognizes transfers between levels of the hierarchy based on the fair values of the respective financial instruments at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the six months ended July 2, 2016. |
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Contingencies | At least quarterly, Cadence reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on Cadence’s judgments using the best information available at the time. As additional information becomes available, Cadence reassesses the potential liability related to pending claims and litigation matters and may revise estimates. |
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New Accounting Standards | In March 2016, the Financial Accounting Standards Board, or FASB, issued a new accounting standard intended to simplify various aspects related to how stock-based awards are accounted for and presented in the financial statements. The new standard: (a) requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled, (b) requires classification of excess tax benefits as an operating activity in the statement of cash flows rather than a financing activity, (c) eliminates the requirement to defer recognition of an excess tax benefit until the benefit is realized through a reduction to taxes payable, (d) modifies statutory withholding tax requirements, and (e) provides for a policy election to account for forfeitures as they occur. The guidance is effective in the first quarter of fiscal 2017 and early adoption is permitted if all amendments are adopted in the same period. Cadence elected to early adopt the new standard during the first quarter of fiscal 2016. As a result of early adoption, Cadence recorded all income tax effects of share-based awards in its provision for income taxes in the condensed consolidated income statements. Cadence also recorded a cumulative effect adjustment of approximately $7.8 million as a reduction of opening accumulated deficit on Cadence’s condensed consolidated balance sheets. The cumulative effect adjustment was comprised of approximately $8.1 million related to the recognition of income tax benefits in excess of compensation expense, offset by $0.3 million related to the policy election to recognize the impact of forfeitures on stock-based compensation expense as they occur. Additionally, Cadence adopted the change in presentation in the condensed consolidated statement of cash flows related to excess tax benefits on a prospective basis. Accordingly, prior periods have not been adjusted. There was no impact for the change in presentation in the statement of cash flows related to statutory tax withholding requirements as Cadence has historically classified the statutory tax withholding as a financing activity in its consolidated statement of cash flows. In April 2015, the FASB issued a new accounting standard requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the associated debt liability. The new standard became effective for Cadence in the first quarter of fiscal 2016 and required retrospective application. As a result, prior period balances have been reclassified to conform to the current period presentation. Adoption of this standard did not have a material impact on Cadence’s consolidated balance sheets. In May 2014, the FASB issued a comprehensive revenue recognition standard for revenue associated with the delivery of goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB deferred the effective date of the new revenue standard for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date of December 15, 2016. Accordingly, the updated standard is effective for Cadence in the first quarter of fiscal 2018. In March 2016, the FASB finalized its amendments to the guidance in the new standard on assessing whether an entity is a principal or an agent in a revenue transaction. This conclusion impacts whether an entity reports revenue on a gross or net basis. In April 2016, the FASB finalized additional amendments to the guidance in the new revenue standard on identifying performance obligations and accounting for licenses of intellectual property. Cadence has not yet selected a transition method and is currently evaluating the effect that the updated standard, and the recently issued amendments, will have on its consolidated financial statements and related disclosures. In January 2016, the FASB issued a new accounting standard that will impact certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The updated standard is effective for Cadence in the first quarter of fiscal 2018, and early adoption is permitted. Cadence is currently evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued a new accounting standard requiring, among other things, the recognition of lease assets and lease liabilities on the balance sheet by lessees for certain lease arrangements that are classified as operating leases under the previous standard. The updated standard is effective for Cadence in the first quarter of fiscal 2019, and early adoption is permitted. Cadence is currently evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued a new accounting standard intended to simplify the accounting for equity method investments when there is an increase in the level of ownership interest or degree of influence. The new standard is effective for Cadence in the first quarter of fiscal 2017 and requires prospective application. Adoption of this standard is not expected to have a material impact on Cadence’s consolidated financial statements. |
Debt (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of debt outstanding | Cadence’s outstanding debt as of July 2, 2016 and January 2, 2016 was as follows:
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Cash, Cash Equivalents and Investments (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of cash, cash equivalents and short-term investments | Cadence’s cash, cash equivalents and short-term investments at fair value as of July 2, 2016 and January 2, 2016 were as follows:
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Summary of cash and cash equivalents | The following table summarizes Cadence’s cash and cash equivalents at fair value as of July 2, 2016 and January 2, 2016:
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Summary of short-term investments | The following tables summarize Cadence’s short-term investments as of July 2, 2016 and January 2, 2016:
The marketable debt securities included in short-term investments as of July 2, 2016 have contractual maturities of less than one year. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.
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Receivables, net (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current and long-term accounts receivable balances | Cadence’s current and long-term receivables balances as of July 2, 2016 and January 2, 2016 were as follows:
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Stock Repurchase Programs (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased and the total cost of shares repurchased | The shares repurchased under Cadence’s repurchase authorizations and the total cost of repurchased shares, including commissions, during the three and six months ended July 2, 2016 and July 4, 2015 were as follows:
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Stock Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense and allocation by cost [Table Text Block] | Stock-based compensation expense is reflected in Cadence’s condensed consolidated income statements for the three and six months ended July 2, 2016 and July 4, 2015 as follows:
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Goodwill and Acquired Intangibles (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill during the six months ended July 2, 2016 were as follows:
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Schedule of acquired intangibles with finite and indefinite lives (excluding goodwill) | Acquired intangibles as of July 2, 2016 were as follows, excluding intangibles that were fully amortized as of January 2, 2016:
Acquired intangibles as of January 2, 2016 were as follows, excluding intangibles that were fully amortized as of January 3, 2015:
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Amortization of acquired intangibles | Amortization of acquired intangibles for the three and six months ended July 2, 2016 and July 4, 2015 was as follows:
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Estimated amortization expense | Estimated amortization expense for intangible assets with definite lives for the following five fiscal years and thereafter is as follows:
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Restructuring and Other Charges (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring reserve rollforward by major type of cost | The following table presents activity relating to Cadence’s restructuring plans during the six months ended July 2, 2016:
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Net Income Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted net income per share | The calculations for basic and diluted net income per share for the three and six months ended July 2, 2016 and July 4, 2015 are as follows:
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Potential shares of Cadence's common stock excluded | The following table presents shares of Cadence’s common stock outstanding for the three and six months ended July 2, 2016 and July 4, 2015 that were excluded from the computation of diluted net income per share because the effect of including these shares in the computation of diluted net income per share would have been anti-dilutive:
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Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of financial assets and liabilities | The fair value of financial assets and liabilities was determined using the following levels of inputs as of July 2, 2016 and January 2, 2016:
|
Other Comprehensive Income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss) net of tax | Accumulated other comprehensive loss was comprised of the following as of July 2, 2016 and January 2, 2016:
|
Segment Reporting (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of revenue by geography | The following table presents a summary of revenue by geography for the three and six months ended July 2, 2016 and July 4, 2015:
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Summary of long-lived assets by geography | The following table presents a summary of long-lived assets by geography as of July 2, 2016 and January 2, 2016:
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Debt (Details) - USD ($) |
Jul. 02, 2016 |
Jan. 28, 2016 |
Jan. 02, 2016 |
Oct. 09, 2014 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Principal | $ 700,000,000 | $ 350,000,000 | ||
Unamortized discount and debt issuance costs | (6,927,000) | (6,712,000) | ||
Carrying value | 643,073,000 | 343,288,000 | ||
Carrying value | 693,073,000 | 343,288,000 | ||
Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal | 50,000,000 | 0 | ||
Line of Credit, Current | 50,000,000 | 0 | ||
Long-term Debt [Member] | Term Loan Due Twenty-Nineteen [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal | 300,000,000 | $ 300,000,000 | 0 | |
Unamortized discount and debt issuance costs | (531,000) | 0 | ||
Carrying value | 299,469,000 | 0 | ||
Senior Notes [Member] | Senior Notes Due 2024 [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal | 350,000,000 | 350,000,000 | $ 350,000,000 | |
Unamortized discount and debt issuance costs | (6,396,000) | (6,712,000) | $ (1,400,000) | |
Carrying value | $ 343,604,000 | $ 343,288,000 |
Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Jan. 02, 2016 |
Jul. 04, 2015 |
Jan. 03, 2015 |
---|---|---|---|---|
Cash, Cash Equivalents and Investments [Abstract] | ||||
Cash and cash equivalents | $ 669,573 | $ 616,686 | $ 647,851 | $ 932,161 |
Short-term investments | 34,745 | 94,498 | ||
Cash, cash equivalents, and short-term investments | $ 704,318 | $ 711,184 |
Cash, Cash Equivalents and Investments (Details 1) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Jan. 02, 2016 |
Jul. 04, 2015 |
Jan. 03, 2015 |
---|---|---|---|---|
Classified as cash and cash equivalents | ||||
Cash and interest bearing deposits | $ 274,631 | $ 255,995 | ||
Money market funds | 387,641 | 360,691 | ||
Commercial Paper, at Carrying Value | 1,999 | 0 | ||
Certificates of Deposit, at Carrying Value | 5,302 | 0 | ||
Total cash and cash equivalents | $ 669,573 | $ 616,686 | $ 647,851 | $ 932,161 |
Receivables, net (Details) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Jan. 02, 2016 |
---|---|---|
Current and long-term receivables balances | ||
Accounts receivable | $ 77,760 | $ 107,041 |
Unbilled accounts receivable | 78,684 | 57,807 |
Long-term receivables | 17,368 | 4,498 |
Total receivables | 173,812 | 169,346 |
Less allowance for doubtful accounts | 0 | 0 |
Total receivables, net | $ 173,812 | $ 169,346 |
Receivables, net (Details Textual) - Customer |
Jul. 02, 2016 |
Jan. 02, 2016 |
---|---|---|
Accounts Receivable and Allowances for Doubtful Accounts (Textual) [Abstract] | ||
Percentage of receivables, net attributable to single customer | 10.00% | 12.00% |
Number of customers with receivables balance greater than ten percent of total balance | 0 | 1 |
Percentage of receivables, net attributable to the ten customers with largest balance | 45.00% | 45.00% |
Number of customers with largest balance of receivables | 10 | 10 |
Stock Repurchase Programs (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Equity, Class of Treasury Stock [Line Items] | |||||
Approved treasury stock repurchase, term | 18 months | ||||
Treasury stock repurchase approved | $ 1,200,000 | ||||
Share Repurchased and Cost of Repurchased Shares [Abstract] | |||||
Shares repurchased | (10,026) | (2,887) | (21,581) | (4,889) | |
Total cost of repurchased shares | $ 240,100 | $ 56,279 | $ 480,100 | $ 93,076 | |
July 2015 [Member] | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Remaining authorized repurchase amount | $ 480,000 | $ 480,000 |
Stock Based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Share-based compensation expense and allocation by cost [Line Items] | ||||
Share-based Compensation | $ 25,356 | $ 21,703 | $ 49,988 | $ 43,564 |
Cost of product and maintenance | ||||
Share-based compensation expense and allocation by cost [Line Items] | ||||
Share-based Compensation | 447 | 558 | 911 | 1,127 |
Cost of services | ||||
Share-based compensation expense and allocation by cost [Line Items] | ||||
Share-based Compensation | 653 | 815 | 1,334 | 1,647 |
Marketing and sales | ||||
Share-based compensation expense and allocation by cost [Line Items] | ||||
Share-based Compensation | 5,305 | 5,236 | 10,841 | 10,683 |
Research and development | ||||
Share-based compensation expense and allocation by cost [Line Items] | ||||
Share-based Compensation | 14,477 | 11,401 | 28,374 | 22,778 |
General and administrative | ||||
Share-based compensation expense and allocation by cost [Line Items] | ||||
Share-based Compensation | $ 4,474 | $ 3,693 | $ 8,528 | $ 7,329 |
Stock Based Compensation (Details Textual) - Stock option and restricted stock grants [Member] $ in Millions |
6 Months Ended |
---|---|
Jul. 02, 2016
USD ($)
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total unrecognized compensation expense | $ 148.6 |
Weighted-average vesting period over which unrecognized compensation expense will be recognized | 2 years 2 months |
Acquisitions (Details Textual) $ in Thousands |
6 Months Ended |
---|---|
Jul. 02, 2016
USD ($)
acquisition
| |
Business Acquisition [Line Items] | |
Goodwill acquired during period | $ 23,579 |
Acquired definite-lived intangible assets, weighted average useful life | 8 years |
2016 Acquisitions [Member] | |
Business Acquisition [Line Items] | |
Number of businesses acquired | acquisition | 2 |
Total cash consideration, net of cash acquired | $ 42,400 |
Cash acquired from acquisition | 1,800 |
Goodwill acquired during period | 23,600 |
Finite-lived intangible assets acquired | 23,200 |
Recognized identifiable assets acquired and liabilities assumed, net | $ (2,600) |
Trust For Benefit Of Children of Chief Executive Officer [Member] | Rocketick Technologies [Member] | |
Business Acquisition [Line Items] | |
Related party, ownership percentage in acquired company | 2.00% |
Goodwill and Acquired Intangibles (Details) $ in Thousands |
6 Months Ended |
---|---|
Jul. 02, 2016
USD ($)
| |
Changes in the carrying amount of goodwill | |
Balance as of January 2, 2016 | $ 551,772 |
Goodwill resulting from acquisitions | 23,579 |
Effect of foreign currency translation | (1,637) |
Balance as of July 2, 2016 | $ 573,714 |
Goodwill and Acquired Intangibles (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Amortization of acquired intangibles | ||||
Cost of product and maintenance | $ 10,546 | $ 10,105 | $ 21,209 | $ 20,278 |
Amortization of acquired intangibles | 4,537 | 6,119 | 10,317 | 12,350 |
Total amortization of acquired intangibles | $ 15,083 | $ 16,224 | $ 31,526 | $ 32,628 |
Goodwill and Acquired Intangibles (Details 3) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Jan. 02, 2016 |
---|---|---|
Estimated amortization expense | ||
2016 – remaining period | $ 28,966 | |
2017 | 56,093 | |
2018 | 52,280 | |
2019 | 45,241 | |
2020 | 40,035 | |
Thereafter | 65,273 | |
Acquired intangibles, net | $ 287,888 | $ 296,482 |
Restructuring and Other Charges (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Jan. 02, 2016 |
|
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | $ (74) | $ (498) | $ 14,512 | $ 3,861 | |
Restructuring reserve | 3,441 | 3,441 | $ 1,137 | ||
2016 Restructuring Plan [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | 14,216 | ||||
Restructuring reserve | $ 3,000 | $ 3,000 |
Restructuring and Other Charges (Details 1) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Jan. 02, 2016 |
---|---|---|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring reserve | $ 3,441 | $ 1,137 |
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Net income | $ 49,335 | $ 58,160 | $ 99,897 | $ 94,419 |
Weighted-average common shares used to calculate basic net income per share (in shares) | 288,191 | 285,297 | 292,403 | 284,910 |
2015 Warrants | 0 | 20,635 | 0 | 19,773 |
Stock-based awards | 7,010 | 7,733 | 6,915 | 8,073 |
Weighted average common shares used to calculate diluted net income per share (in shares) | 295,201 | 313,665 | 299,318 | 312,756 |
Net income per share - basic (in usd per share) | $ 0.17 | $ 0.20 | $ 0.34 | $ 0.33 |
Net income per share - diluted (in usd per share) | $ 0.17 | $ 0.19 | $ 0.33 | $ 0.30 |
Net Income Per Share (Details 1) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Potential shares of Cadence's common stock excluded | ||||
Total potential common shares excluded | 1,298 | 1,526 | 1,065 | 1,326 |
Options to purchase shares of common stock | ||||
Potential shares of Cadence's common stock excluded | ||||
Total potential common shares excluded | 1,279 | 1,503 | 1,014 | 1,308 |
Non-vested shares of restricted stock | ||||
Potential shares of Cadence's common stock excluded | ||||
Total potential common shares excluded | 19 | 23 | 51 | 18 |
Contingencies (Details Textual) |
6 Months Ended |
---|---|
Jul. 02, 2016 | |
Contingencies (Textual) [Abstract] | |
General period of warranty on sales of hardware products | 90 days |
Other Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Jan. 02, 2016 |
|
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | $ 0 | $ 0 | $ 0 | $ 0 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||
Foreign currency translation gain | (7,662) | (7,662) | $ (9,569) | ||
Changes in defined benefit plan liabilities | (3,093) | (3,093) | (3,066) | ||
Unrealized holding gains on available-for-sale securities | 770 | 770 | 210 | ||
Total accumulated other comprehensive loss | $ (9,985) | $ (9,985) | $ (12,425) |
Segment Reporting (Details 1) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Jan. 02, 2016 |
---|---|---|
Summary of long-lived assets by geography | ||
Total long-lived assets | $ 235,911 | $ 228,599 |
Americas: | ||
Total Americas | 192,538 | 190,052 |
United States [Member] | ||
Summary of long-lived assets by geography | ||
Long-Lived Assets in Individual Foreign Countries | 191,920 | 189,665 |
Other Americas [Member] | ||
Summary of long-lived assets by geography | ||
Long-Lived Assets in Individual Foreign Countries | 618 | 387 |
Asia [Member] | ||
Summary of long-lived assets by geography | ||
Long-Lived Assets in Individual Foreign Countries | 29,571 | 24,767 |
EMEA [Member] | ||
Summary of long-lived assets by geography | ||
Long-Lived Assets in Individual Foreign Countries | 12,898 | 12,832 |
Japan [Member] | ||
Summary of long-lived assets by geography | ||
Long-Lived Assets in Individual Foreign Countries | $ 904 | $ 948 |
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