Operating Margin Reconciliation | Three Months Ended | |||
December 28, 2019 | December 29, 2018 | |||
(unaudited) | ||||
GAAP operating margin as a percent of total revenue | 18% | 20% | ||
Reconciling items to non-GAAP operating margin as a percent of total revenue: | ||||
Amortization of acquired intangibles | 2% | 2% | ||
Stock-based compensation expense | 8% | 7% | ||
Non-qualified deferred compensation expenses (credits) | 0% | 0% | ||
Restructuring and other charges | 2% | 2% | ||
Acquisition and integration-related costs (credits) | 1% | 0% | ||
Special charges | 0% | 0% | ||
Non-GAAP operating margin as a percent of total revenue | 31% | 31% |
Operating Margin Reconciliation | Years Ended | |||
December 28, 2019 | December 29, 2018 | |||
(unaudited) | ||||
GAAP operating margin as a percent of total revenue | 21% | 19% | ||
Reconciling items to non-GAAP operating margin as a percent of total revenue: | ||||
Amortization of acquired intangibles | 2% | 2% | ||
Stock-based compensation expense | 8% | 8% | ||
Non-qualified deferred compensation expenses (credits) | 0% | 0% | ||
Restructuring and other charges | 1% | 0% | ||
Acquisition and integration-related costs | 0% | 1% | ||
Special charges | 0% | 0% | ||
Non-GAAP operating margin as a percent of total revenue | 32% | 30% |
Net Income Reconciliation | Three Months Ended | |||||||
December 28, 2019 | December 29, 2018 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Net income on a GAAP basis | $ | 659,675 | $ | 98,425 | ||||
Amortization of acquired intangibles | 12,660 | 12,942 | ||||||
Stock-based compensation expense | 46,758 | 42,594 | ||||||
Non-qualified deferred compensation expenses (credits) | 1,948 | (3,186 | ) | |||||
Restructuring and other charges | 9,809 | 13,699 | ||||||
Acquisition and integration-related costs (credits) | 3,466 | (1,360 | ) | |||||
Special charges | 875 | — | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | (513 | ) | 1,356 | |||||
Income tax benefit related to intercompany transfers of certain intellectual property rights | (575,618 | ) | — | |||||
Income tax effect of non-GAAP adjustments | (7,500 | ) | (17,737 | ) | ||||
Net income on a non-GAAP basis | $ | 151,560 | $ | 146,733 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
Net Income Reconciliation | Years Ended | |||||||
December 28, 2019 | December 29, 2018 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Net income on a GAAP basis | $ | 988,979 | $ | 345,777 | ||||
Amortization of acquired intangibles | 53,079 | 53,333 | ||||||
Stock-based compensation expense | 181,547 | 167,715 | ||||||
Non-qualified deferred compensation expenses (credits) | 5,402 | (1,471 | ) | |||||
Restructuring and other charges | 8,621 | 11,089 | ||||||
Acquisition and integration-related costs | 8,107 | 19,858 | ||||||
Special charges | 875 | — | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | (1,314 | ) | (1,278 | ) | ||||
Income tax benefit related to intercompany transfers of certain intellectual property rights | (575,618 | ) | — | |||||
Income tax effect of non-GAAP adjustments | (52,037 | ) | (69,489 | ) | ||||
Net income on a non-GAAP basis | $ | 617,641 | $ | 525,534 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
Diluted Net Income Per Share Reconciliation | Three Months Ended | |||||||
December 28, 2019 | December 29, 2018 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Diluted net income per share on a GAAP basis | $ | 2.36 | $ | 0.35 | ||||
Amortization of acquired intangibles | 0.05 | 0.05 | ||||||
Stock-based compensation expense | 0.17 | 0.15 | ||||||
Non-qualified deferred compensation expenses (credits) | 0.01 | (0.01 | ) | |||||
Restructuring and other charges | 0.03 | 0.05 | ||||||
Acquisition and integration-related costs (credits) | 0.01 | (0.01 | ) | |||||
Special charges | — | — | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | — | — | ||||||
Income tax benefit related to intercompany transfers of certain intellectual property rights | (2.06 | ) | — | |||||
Income tax effect of non-GAAP adjustments | (0.03 | ) | (0.06 | ) | ||||
Diluted net income per share on a non-GAAP basis | $ | 0.54 | $ | 0.52 | ||||
Shares used in calculation of diluted net income per share — GAAP** | 279,557 | 280,321 | ||||||
Shares used in calculation of diluted net income per share — non-GAAP** | 279,557 | 280,321 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
** | Shares used in the calculation of GAAP net income per share are expected to be the same as shares used in the calculation of non-GAAP net income per share, except when the company reports a GAAP net loss and non-GAAP net income, or GAAP net income and a non-GAAP net loss. |
Diluted Net Income Per Share Reconciliation | Years Ended | |||||||
December 28, 2019 | December 29, 2018 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Diluted net income per share on a GAAP basis | $ | 3.53 | $ | 1.23 | ||||
Amortization of acquired intangibles | 0.19 | 0.19 | ||||||
Stock-based compensation expense | 0.65 | 0.60 | ||||||
Non-qualified deferred compensation expenses (credits) | 0.02 | (0.01 | ) | |||||
Restructuring and other charges | 0.03 | 0.04 | ||||||
Acquisition and integration-related costs | 0.03 | 0.07 | ||||||
Special charges | — | — | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | (0.01 | ) | — | |||||
Income tax benefit related to intercompany transfers of certain intellectual property rights | (2.05 | ) | — | |||||
Income tax effect of non-GAAP adjustments | (0.19 | ) | (0.25 | ) | ||||
Diluted net income per share on a non-GAAP basis | $ | 2.20 | $ | 1.87 | ||||
Shares used in calculation of diluted net income per share — GAAP** | 280,515 | 281,144 | ||||||
Shares used in calculation of diluted net income per share — non-GAAP** | 280,515 | 281,144 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
** | Shares used in the calculation of GAAP net income per share are expected to be the same as shares used in the calculation of non-GAAP net income per share, except when the company reports a GAAP net loss and non-GAAP net income, or GAAP net income and a non-GAAP net loss. |
December 28, 2019 | December 29, 2018 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 705,210 | $ | 533,298 | ||||
Receivables, net | 304,546 | 297,082 | ||||||
Inventories | 55,802 | 28,162 | ||||||
Prepaid expenses and other | 103,785 | 92,550 | ||||||
Total current assets | 1,169,343 | 951,092 | ||||||
Property, plant and equipment, net | 275,855 | 252,630 | ||||||
Goodwill | 661,856 | 662,272 | ||||||
Acquired intangibles, net | 172,375 | 225,457 | ||||||
Deferred taxes | 732,367 | 154,894 | ||||||
Other assets | 345,429 | 222,309 | ||||||
Total assets | $ | 3,357,225 | $ | 2,468,654 | ||||
Current liabilities: | ||||||||
Revolving credit facility | $ | — | $ | 100,000 | ||||
Accounts payable and accrued liabilities | 316,908 | 256,526 | ||||||
Current portion of deferred revenue | 355,483 | 352,456 | ||||||
Total current liabilities | 672,391 | 708,982 | ||||||
Long-term liabilities: | ||||||||
Long-term portion of deferred revenue | 73,400 | 48,718 | ||||||
Long-term debt | 346,019 | 345,291 | ||||||
Other long-term liabilities | 162,521 | 77,262 | ||||||
Total long-term liabilities | 581,940 | 471,271 | ||||||
Stockholders’ equity | 2,102,894 | 1,288,401 | ||||||
Total liabilities and stockholders’ equity | $ | 3,357,225 | $ | 2,468,654 |
Three Months Ended | Years Ended | |||||||||||||||
December 28, 2019 | December 29, 2018 | December 28, 2019 | December 29, 2018 | |||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 564,964 | $ | 534,418 | $ | 2,204,615 | $ | 1,997,887 | ||||||||
Services | 34,591 | 35,432 | 131,704 | 140,135 | ||||||||||||
Total revenue | 599,555 | 569,850 | 2,336,319 | 2,138,022 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 53,521 | 54,748 | 189,146 | 173,011 | ||||||||||||
Cost of services | 19,807 | 21,376 | 77,211 | 85,736 | ||||||||||||
Marketing and sales | 127,267 | 112,613 | 481,673 | 439,669 | ||||||||||||
Research and development | 235,372 | 218,271 | 935,938 | 884,816 | ||||||||||||
General and administrative | 42,093 | 31,985 | 139,806 | 133,406 | ||||||||||||
Amortization of acquired intangibles | 2,787 | 3,468 | 12,128 | 14,086 | ||||||||||||
Restructuring and other charges | 9,809 | 13,699 | 8,621 | 11,089 | ||||||||||||
Total costs and expenses | 490,656 | 456,160 | 1,844,523 | 1,741,813 | ||||||||||||
Income from operations | 108,899 | 113,690 | 491,796 | 396,209 | ||||||||||||
Interest expense | (4,222 | ) | (4,318 | ) | (18,829 | ) | (23,139 | ) | ||||||||
Other income (expense), net | 748 | (735 | ) | 6,001 | 3,320 | |||||||||||
Income before provision (benefit) for income taxes | 105,425 | 108,637 | 478,968 | 376,390 | ||||||||||||
Provision (benefit) for income taxes | (554,250 | ) | 10,212 | (510,011 | ) | 30,613 | ||||||||||
Net income | $ | 659,675 | $ | 98,425 | $ | 988,979 | $ | 345,777 | ||||||||
Net income per share - basic | $ | 2.41 | $ | 0.36 | $ | 3.62 | $ | 1.26 | ||||||||
Net income per share - diluted | $ | 2.36 | $ | 0.35 | $ | 3.53 | $ | 1.23 | ||||||||
Weighted average common shares outstanding - basic | 273,234 | 273,680 | 273,239 | 273,729 | ||||||||||||
Weighted average common shares outstanding - diluted | 279,557 | 280,321 | 280,515 | 281,144 |
Years Ended | |||||||
December 28, 2019 | December 29, 2018 | ||||||
Cash and cash equivalents at beginning of year | $ | 533,298 | $ | 688,087 | |||
Cash flows from operating activities: | |||||||
Net income | 988,979 | 345,777 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 122,789 | 118,721 | |||||
Amortization of debt discount and fees | 1,001 | 1,196 | |||||
Stock-based compensation | 181,547 | 167,715 | |||||
(Gain) loss on investments, net | 4,090 | (2,732 | ) | ||||
Deferred income taxes | (576,738 | ) | (11,676 | ) | |||
Provisions for losses on receivables | 632 | 5,102 | |||||
ROU asset amortization and change in operating lease liabilities | 562 | — | |||||
Other non-cash items | 428 | 2,607 | |||||
Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||
Receivables | (4,718 | ) | (87,083 | ) | |||
Inventories | (33,024 | ) | 752 | ||||
Prepaid expenses and other | (11,031 | ) | (19,622 | ) | |||
Other assets | (8,011 | ) | (14,606 | ) | |||
Accounts payable and accrued liabilities | 33,915 | 1,553 | |||||
Deferred revenue | 27,498 | 100,696 | |||||
Other long-term liabilities | 1,681 | (3,649 | ) | ||||
Net cash provided by operating activities | 729,600 | 604,751 | |||||
Cash flows from investing activities: | |||||||
Purchases of non-marketable investments | (33,717 | ) | (115,839 | ) | |||
Proceeds from the sale of non-marketable investments | 2,952 | 3,497 | |||||
Purchases of property, plant and equipment | (74,605 | ) | (61,503 | ) | |||
Cash paid in business combinations | (338 | ) | — | ||||
Net cash used for investing activities | (105,708 | ) | (173,845 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility | 150,000 | 100,000 | |||||
Payment on revolving credit facility | (250,000 | ) | (85,000 | ) | |||
Principal payments on term loan | — | (300,000 | ) | ||||
Proceeds from issuance of common stock | 52,842 | 40,908 | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (90,580 | ) | (69,921 | ) | |||
Payments for repurchases of common stock | (306,148 | ) | (250,059 | ) | |||
Change in book overdraft | — | (3,867 | ) | ||||
Net cash used for financing activities | (443,886 | ) | (567,939 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (8,094 | ) | (17,756 | ) | |||
Increase (decrease) in cash and cash equivalents | 171,912 | (154,789 | ) | ||||
Cash and cash equivalents at end of year | $ | 705,210 | $ | 533,298 |
2018 | 2019 | ||||||||||||||||||||||||||||
GEOGRAPHY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 | Q4 | Year | |||||||||||||||||||
Americas | 45 | % | 46 | % | 44 | % | 44 | % | 45 | % | 44 | % | 42 | % | 44 | % | 46 | % | 44 | % | |||||||||
China | 9 | % | 8 | % | 9 | % | 13 | % | 10 | % | 10 | % | 12 | % | 10 | % | 9 | % | 10 | % | |||||||||
Other Asia | 18 | % | 18 | % | 20 | % | 18 | % | 18 | % | 19 | % | 19 | % | 21 | % | 20 | % | 20 | % | |||||||||
Europe, Middle East and Africa | 20 | % | 20 | % | 19 | % | 17 | % | 19 | % | 18 | % | 20 | % | 18 | % | 18 | % | 18 | % | |||||||||
Japan | 8 | % | 8 | % | 8 | % | 8 | % | 8 | % | 9 | % | 7 | % | 7 | % | 7 | % | 8 | % | |||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
2018 | 2019 | ||||||||||||||||||||||||||||
PRODUCT GROUP | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 | Q4 | Year | |||||||||||||||||||
Functional Verification, including hardware for emulation and prototyping | 26 | % | 23 | % | 22 | % | 25 | % | 24 | % | 24 | % | 22 | % | 20 | % | 24 | % | 23 | % | |||||||||
Digital IC Design and Signoff | 30 | % | 30 | % | 30 | % | 28 | % | 29 | % | 30 | % | 31 | % | 30 | % | 29 | % | 30 | % | |||||||||
Custom IC Design and Simulation | 26 | % | 26 | % | 26 | % | 25 | % | 26 | % | 25 | % | 26 | % | 26 | % | 25 | % | 25 | % | |||||||||
System Interconnect and Analysis | 9 | % | 9 | % | 9 | % | 9 | % | 9 | % | 9 | % | 10 | % | 9 | % | 9 | % | 9 | % | |||||||||
IP | 9 | % | 12 | % | 13 | % | 13 | % | 12 | % | 12 | % | 11 | % | 15 | % | 13 | % | 13 | % | |||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Three Months Ending March 28, 2020 | Year Ending January 2, 2021 | |||
Forecast | Forecast | |||
GAAP operating margin as a percent of total revenue | ~19% | 21% - 22% | ||
Reconciling items to non-GAAP operating margin as a percent of total revenue: | ||||
Amortization of acquired intangibles | 2% | 2% | ||
Stock-based compensation expense | 8% | 8% | ||
Acquisition and integration-related costs | 1% | 1% | ||
Non-GAAP operating margin as a percent of total revenue† | ~30% | 32% - 33% |
† | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
Three Months Ending March 28, 2020 | Year Ending January 2, 2021 | |||
Forecast | Forecast | |||
Diluted net income per share on a GAAP basis | $0.32 to $0.34 | $1.46 to $1.56 | ||
Amortization of acquired intangibles | 0.05 | 0.23 | ||
Stock-based compensation expense | 0.17 | 0.71 | ||
Acquisition and integration-related costs | 0.01 | 0.07 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | 0.01 | 0.01 | ||
Income tax effect of non-GAAP adjustments | (0.03) | (0.08) | ||
Diluted net income per share on a non-GAAP basis† | $0.53 to $0.55 | $2.40 to $2.50 |
Three Months Ending March 28, 2020 | Year Ending January 2, 2021 | |||
($ in millions) | Forecast | Forecast | ||
Net income on a GAAP basis | $91 to $97 | $410 to $438 | ||
Amortization of acquired intangibles | 15 | 65 | ||
Stock-based compensation expense | 47 | 198 | ||
Acquisition and integration-related costs | 4 | 18 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | 2 | 4 | ||
Income tax effect of non-GAAP adjustments | (10) | (23) | ||
Net income on a non-GAAP basis† | $149 to $155 | $672 to $700 |
† | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |