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-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NUQ8KvXYMawTJS6rlCBvDYy8GfpNRRW6FXx9DAXEl7zbqeTqMSipgBY1XylOlW7V 6Ek1vGbdBtfSd++bSgSshA== 0000950134-04-010343.txt : 20040721 0000950134-04-010343.hdr.sgml : 20040721 20040721163528 ACCESSION NUMBER: 0000950134-04-010343 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040721 ITEM INFORMATION: FILED AS OF DATE: 20040721 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CADENCE DESIGN SYSTEMS INC CENTRAL INDEX KEY: 0000813672 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770148231 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10606 FILM NUMBER: 04924700 BUSINESS ADDRESS: STREET 1: 2655 SEELY ROAD BLDG 5 CITY: SAN JOSE STATE: CA ZIP: 95134 BUSINESS PHONE: 4089431234 MAIL ADDRESS: STREET 1: 555 RIVER OAKS PARKWAY CITY: SAN JOSE STATE: CA ZIP: 95134 FORMER COMPANY: FORMER CONFORMED NAME: ECAD INC /DE/ DATE OF NAME CHANGE: 19880609 8-K 1 f00415e8vk.htm FORM 8-K e8vk

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): July 21, 2004

CADENCE DESIGN SYSTEMS, INC.

(Exact Name of Registrant as Specified in its Charter)


DELAWARE		1-10606		77-0148231

(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

2655 SEELY AVENUE, BUILDING 5
SAN JOSE, CALIFORNIA 95134
(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (408) 943-1234

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Item 12. Results of Operations and Financial Condition
SIGNATURE
EXHIBIT INDEX
EXHIBIT 99.1

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Item 12. Results of Operations and Financial Condition

On July 21, 2004, Cadence Design Systems, Inc. issued a press release announcing its financial results for the second quarter of 2004. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated as of July 21, 2004

CADENCE DESIGN SYSTEMS, INC.

By: /s/ William Porter
William Porter
Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX


Exhibit No.		Description
99.1		Press Release issued by Cadence Design Systems, Inc., dated July 21, 2004.

EX-99.1 2 f00415exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 FOR MORE INFORMATION, PLEASE CONTACT: Alan Lindstrom Investors and Shareholders Cadence Design Systems, Inc. 408-944-7100 investor_relations@cadence.com Adolph Hunter Media and Industry Analysts Cadence Design Systems, Inc. 408-914-6016 publicrelations@cadence.com CADENCE REPORTS SOLID SECOND QUARTER RESULTS SAN JOSE, Calif., July 21, 2004 -- Cadence Design Systems, Inc. (NYSE and NASDAQ: CDN) today announced total revenue for the second quarter of 2004 of $287 million compared to $277 million in the same period last year. On a GAAP basis, Cadence(R) recognized net income of $4 million, or $0.01 per share in the second quarter of 2004, compared to a net loss of $5 million, or $0.02 per share in the same period last year. In addition to using GAAP results in evaluating Cadence's business, management also believes it is useful to measure results using a non-GAAP measure of net income (loss), which excludes as applicable amortization of intangible assets and deferred stock compensation, in-process research and development charges, integration and other acquisition-related expenses, restructuring charges and equity in losses (income) from investments. Non-GAAP net income (loss) is reduced by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company's tax liability. See "GAAP to non-GAAP Reconciliation" below for further information on our non-GAAP measure. Using this non-GAAP measure, earnings in the second quarter were $42 million, or $0.15 per share, on a fully diluted basis as compared to $29 million, or $0.10 per share, on a fully diluted basis, in the same period last year. "We had solid financial results demonstrated by growth in the second quarter and we delivered innovative new technology," said Mike Fister, Cadence President and CEO. "Through collaboration and innovation, we have continued to help our customers address their most important design and manufacturing challenges." BUSINESS HIGHLIGHTS OF Q2 2004 Cadence made significant gains in digital design with the release of Encounter(TM) 4.1 and First Encounter(R) Global Physical Synthesis (GPS), a second-generation global physical synthesis solution. GPS enables larger and more complex chips to be created, and in less time, than is possible using first generation methods. The company also introduced NanoRoute(TM) with super-threaded route acceleration, giving what was already the industry's fastest router another 10 to 20 times performance boost. Cadence continued to drive collaboration to solve complex design and design-to-manufacturing challenges. A partnership was created with ASML to develop advanced resolution enhancement, or RET, solutions that operate seamlessly with Cadence custom design flows. Cadence also signed an agreement with Rambus, which underscored the company's strategy of providing differentiated design intellectual property (IP) through extensive collaboration with world-class third-party IP providers. The agreement will provide customers with first-time access to industry-leading serial-link IP and design services from a single source, lowering design-in cost and design-cycle time. "Our new technology is being adopted by companies ranging from our premier design partners to leading-edge new ventures like Digeo, Inc.," Fister said. "Moving forward, our focus will be on developing even deeper partnerships with our customers to help them achieve their business goals." The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not include the impact of any mergers, acquisitions or other business combinations that may be completed after July 21, 2004. BUSINESS OUTLOOK For the third quarter of 2004, the company expects total revenue in the range of $300 million to $310 million. Third quarter GAAP earnings per fully diluted share are expected to be in the range of $0.08 to $0.10. Diluted earnings per share using our non-GAAP measure defined below are expected to be in the range of $0.18 to $0.20. For the full year 2004, the company expects total revenue in the range of $1.175 billion to $1.225 billion. On a GAAP basis, we expect net income per fully diluted share for fiscal 2004 in the range of $0.25 to $0.32. Using our non-GAAP measure defined below, we expect fully diluted earnings per share for fiscal 2004 to be in the range of $0.70 to $0.77. A schedule showing a reconciliation of the business outlook from GAAP net income (loss) and diluted net income (loss) per share to our non-GAAP net income (loss) and diluted net income (loss) per share is included with this release. AUDIO WEBCAST SCHEDULED Cadence Design Systems, Inc.'s Ray Bingham, Chairman of the Board, Mike Fister, President and CEO, and Bill Porter, Chief Financial Officer, will host a second quarter Financial Results audio webcast today, July 21, 2004, at 2:00 p.m. (Pacific) / 5:00 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting July 21 at 5:00 p.m. Pacific time and ending at 5:00 p.m. Pacific time on July 28. Webcast access is available at www.cadence.com/company/investor_relations. ABOUT CADENCE Cadence is the largest supplier of electronic design technologies, methodology services, and design services. Cadence solutions are used to accelerate and manage the design of semiconductors, computer systems, networking and telecommunications equipment, consumer electronics, and a variety of other electronics based products. With approximately 4,850 employees and 2003 revenues of approximately $1.1 billion, Cadence has sales offices, design centers, and research facilities around the world. The company is headquartered in San Jose, Calif., and is listed for trading on both the New York Stock Exchange and the NASDAQ under the symbol CDN. More information about the company, its products and services is available at www.cadence.com. Cadence, First Encounter and the Cadence logo are registered trademarks, and Encounter and NanoRoute are trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners. The statements contained above regarding the company's second quarter 2004 results, those contained in the Business Outlook section above and the statements by Mike Fister include forward looking statements based on current expectations or beliefs, as well as a number of preliminary assumptions about future events that are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward looking statements. Readers are cautioned not to put undue reliance on these forward looking statements, which are not a guarantee of future performance and are subject to a number of uncertainties and other factors, many of which are outside Cadence's control, including, among others: Cadence's ability to compete successfully in the design automation product and the commercial electronic design and methodology services industries; the mix of products and services sold and the timing of significant orders for its products; economic uncertainty; fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries in which Cadence does business; and the acquisition of other companies or the failure to successfully integrate those it acquires. For a detailed discussion of these and other cautionary statements, please refer to the company's filings with the Securities and Exchange Commission. These include the company's Annual Report on Form 10-K for the year ended January 3, 2004 and Quarterly Report on Form 10-Q for the quarter ended April 3, 2004. GAAP TO NON-GAAP RECONCILIATION Cadence management evaluates and makes operating decisions using various operating measures. These measures are generally based on the revenues of its product, maintenance and services business operations and certain costs of those operations, such as cost of revenues, research and development, sales and marketing and general and administrative expenses. One such measure is non-GAAP net income (loss), which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended. This measure consists of GAAP net income (loss) excluding, as applicable, amortization of intangible assets and deferred stock compensation, in-process research and development charges, integration and other acquisition-related expenses, restructuring charges (severance and benefits, excess facilities and asset-related restructuring charges) and equity in losses (income) from investments. Intangible assets consist primarily of purchased technology, backlog, patents, trademarks, distribution rights, customer contracts and related relationships and non-compete agreements. Non-GAAP net income (loss) is reduced by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company's tax liability. Management believes it is useful in measuring Cadence's operations to exclude amortization of intangibles, deferred stock compensation, in-process research and development and acquisition-related expenses because these costs are primarily fixed at the time of an acquisition and generally cannot be changed by management in the short term. Management believes that it also is useful to exclude restructuring costs. Cadence has dramatically reduced the size of its design services business and portions of its product and maintenance businesses over the past three years. As a result, in 2001, 2002 and 2003, Cadence's GAAP statements of operations have included significant charges relating to such restructurings. Cadence believes that in measuring its operations it is useful to exclude such restructuring costs because the company's level of restructuring activities is expected to significantly decrease in the foreseeable future. Management also believes it is useful to exclude the equity in losses (income) from investments and investment write-downs, as these costs are not part of the company's direct cost of operations. Rather, these are non-operating costs that are included in other income (expense) and are part of the company's investment activities. Management believes that non-GAAP net income (loss) provides useful supplemental information to management and investors regarding the performance of the company's business operations and facilitates comparisons to our historical operating results. Management also uses this information internally for forecasting and budgeting. Non-GAAP financial measures should not be considered as a substitute for measures of financial performance prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with their most directly comparable GAAP financial results. The following table reconciles the specific items excluded from GAAP in the calculation of non-GAAP net income for the periods shown below:

*Shares used in the calculation of GAAP earnings per share are expected to be the same as shares used in the calculation of non-GAAP earnings per share except when the company reports a GAAP loss and non-GAAP income, or GAAP income and a non-GAAP loss. Investors are encouraged to look at GAAP results as the best measure of financial performance. For example, amortization of intangibles or amortization of deferred stock compensation or in-process technology are important to consider because they may represent initial expenditures that under GAAP are reported across future fiscal periods. Likewise, deferred stock compensation expense is an obligation of the company that should be considered. Restructuring charges can be triggered by acquisitions or product adjustments as well as overall company performance within a given business environment. All of these metrics are important to financial performance generally. Though Cadence management finds its non-GAAP measure useful to evaluate the performance of Cadence's business, its reliance on this measure is limited because items excluded from such measures often have a material effect on Cadence's earnings and earnings per share calculated in accordance with GAAP. Therefore, Cadence management typically uses its non-GAAP earnings and earnings per share measures in conjunction with GAAP earnings and earnings per share measures, to address these limitations. Cadence believes that presenting its non-GAAP measure of earnings and earnings per share provides investors with an additional tool for evaluating the performance of the company's business, which management uses in its own evaluation of performance, and an additional base line for assessing the future earnings potential of the company. While the GAAP results are more complete, the company prefers to allow investors to have this supplemental measure since, with a reconciliation to GAAP, it may provide additional insight into our financial results. Cadence expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings, Cadence may reiterate the Business Outlook published in this press release. At the same time, Cadence will keep this press release, including the outlook, publicly available on its Web site (www.cadence.com/company/investor_relations/index.html). Prior to the start of the Quiet Period (described below), the public may continue to rely on the Business Outlook herein as still being Cadence's current expectations on matters covered unless Cadence publishes a notice stating otherwise. Beginning September 17, 2004, Cadence will observe a "Quiet Period" during which the Business Outlook as provided in this press release and the company's most recent quarterly report on Form 10-Q no longer constitute the company's current expectations. During the Quiet Period, the Business Outlook in these documents should be considered to be historical, speaking as of prior to the Quiet Period only and not subject to update by the company. During the Quiet Period, Cadence representatives will not comment on Cadence's business outlook or its financial results or expectations. The Quiet Period will extend until the day when Cadence's Third Quarter 2004 Earnings Release is published, currently scheduled for October 20, 2004. # # # CADENCE DESIGN SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS JULY 3, 2004 AND JANUARY 3, 2004 (IN THOUSANDS)

CADENCE DESIGN SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE QUARTERS AND SIX MONTHS ENDED JULY 3, 2004 AND JUNE 28, 2003 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)

CADENCE DESIGN SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JULY 3, 2004 AND JUNE 28, 2003 (IN THOUSANDS) (UNAUDITED)

CADENCE DESIGN SYSTEMS, INC. AS OF JULY 21, 2004 IMPACT OF NON-GAAP ADJUSTMENTS ON FORWARD LOOKING DILUTED NET INCOME PER SHARE (UNAUDITED)

CADENCE DESIGN SYSTEMS, INC. AS OF JULY 21, 2004 IMPACT OF NON-GAAP ADJUSTMENTS ON FORWARD LOOKING NET INCOME (UNAUDITED)

CADENCE DESIGN SYSTEMS, INC. (UNAUDITED) REVENUE MIX BY GEOGRAPHY (% OF TOTAL REVENUE)

REVENUE MIX BY PRODUCT GROUP (% OF TOTAL REVENUE)

Note: Product Group total revenue includes Product + Maintenance -----END PRIVACY-ENHANCED MESSAGE-----