EX-99.1 2 f37505exv99w1.htm EXHIBIT 99.1 exv99w1
 

EXHIBIT 99.1
For more information, please contact:
Investors and Shareholders
Jennifer Jordan
Cadence Design Systems, Inc.
408-944-7100
investor_relations@cadence.com
Media and Industry Analysts
Adolph Hunter
Cadence Design Systems, Inc.
408-914-6016
publicrelations@cadence.com
Cadence Reports Q4 Revenue Up 6% Over Q4 2006
     SAN JOSE, Calif.—Jan. 30, 2008—Cadence Design Systems, Inc. (NASDAQ: CDNS) today reported fourth quarter 2007 revenue of $458 million, an increase of 6 percent over the $431 million reported for the same period in 2006. On a GAAP basis, Cadence recognized net income of $120 million, or $0.41 per share on a diluted basis, in the fourth quarter of 2007, compared to $48 million, or $0.16 per share on a diluted basis, in the same period in 2006. Revenues for the fiscal year 2007 totaled $1.62 billion, an increase of 9 percent over 2006 total revenues of $1.48 billion. Net income for the fiscal year 2007 was $296 million, or $1.01 per share, compared to net income of $143 million, or $0.46 per share for the year 2006. Net income on a GAAP basis for the fourth quarter and fiscal year 2007 includes the income tax benefit of a settlement with the Internal Revenue Service of $28 million, or $0.10 per share on a diluted basis for the fourth quarter of 2007, and $0.09 per share on a diluted basis for the fiscal year 2007.
     In addition to using GAAP results in evaluating Cadence’s business, management believes it is useful to measure results using a non-GAAP measure of net income, which excludes, as applicable, amortization of intangible assets, stock-based compensation expense, in-process research and development charges, certain termination and legal costs, integration and acquisition-related costs, gains and expenses related to non-qualified deferred compensation plan assets, executive severance payments, restructuring charges and credits, losses on extinguishment of debt and equity in losses (income) from investments. Non-GAAP net income is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it

Page 1

 

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 the non-GAAP measure.
     Using this non-GAAP measure, net income in the fourth quarter of 2007 was $133 million, or $0.46 per share on a diluted basis, as compared to $116 million, or $0.38 per share on a diluted basis, in the same period in 2006. For the fiscal year 2007, non-GAAP net income was $397 million, or $1.35 per share, compared to $336 million and $1.08 per share in 2006.
     “Our strategy is on track, our technology has never been stronger, and we continue to focus on delivering solutions to help our customers manage their businesses in a challenging environment,” said Mike Fister, president and CEO of Cadence.
     “We achieved our long standing goal for operating margin for the year, and will keep our focus on improving our operating efficiency through 2008,” added Bill Porter, executive vice president and chief financial officer.
     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 completed after Dec. 29, 2007.
Business Outlook
     For the first quarter of 2008, the company expects total revenue in the range of $280 million to $290 million. First quarter GAAP net loss per diluted share is expected to be in the range of $(0.06) to $(0.04). Diluted earnings per share using the non-GAAP measure defined below are expected to be in the range of $0.03 to $0.05.
     For the full year 2008, the company expects total revenue in the range of $1.490 billion to $1.540 billion. On a GAAP basis, net income per diluted share for fiscal 2007 is expected to be in the range of $0.69 to $0.77. Using the non-GAAP measure defined below, diluted earnings per share for fiscal 2008 are expected to be in the range of $1.11 to $1.19.

Page 2

 

     A schedule showing a reconciliation of the business outlook from GAAP net income and diluted net income per share to the non-GAAP net income and diluted net income per share is included with this release.
Audio Webcast Scheduled
     Fister and Porter will host a fourth quarter 2007 financial results audio webcast today, Jan. 30, 2008, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the Web site at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting Jan. 30, 2008, at 5 p.m. Pacific time and ending at 5 p.m. Pacific time on Feb. 6, 2008. Webcast access is available at www.cadence.com/company/investor_relations.
About Cadence
     Cadence enables global electronic-design innovation and plays an essential role in the creation of today’s integrated circuits and electronics. Customers use Cadence® software and hardware, methodologies, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. Cadence reported 2007 revenues of approximately $1.6 billion, and has approximately 5,300 employees. The company is headquartered in San Jose, Calif., with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about the company, its products, and services is available at www.cadence.com.
     Cadence is a registered trademark and the Cadence logo is a trademark of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
     The statements contained above regarding the company’s fourth quarter and fiscal year 2007 results, those contained in the Business Outlook section above and the statements by Mike Fister and Bill Porter 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

Page 3

 

technologies 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 Dec. 30, 2006 and the company’s Quarterly Report on Form 10-Q for the quarter ended Sept. 29, 2007.

Page 4

 

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, 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 excluding, as applicable, amortization of intangible assets, stock-based compensation expense, in-process research and development charges, certain termination and legal costs, integration and acquisition-related costs, gains and expenses related to non-qualified deferred compensation plan assets, executive severance payments, restructuring charges and credits (primarily related to excess facilities), losses on extinguishment of debt and equity in losses (income) from investments. Intangible assets consist primarily of purchased or licensed technology, backlog, patents, trademarks, distribution rights, customer contracts and related relationships and non-compete agreements. Non-GAAP net income is adjusted 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, in-process research and development and integration and acquisition-related costs because these costs are primarily fixed at the time of an acquisition and generally cannot be changed by management in the short term. In addition, management believes it is useful to exclude stock-based compensation expense because it enhances investors’ ability to review Cadence’s business from the same perspective as Cadence’s management, which believes that stock-based compensation expense is not directly attributable to the underlying performance of the company’s business operations. Management also believes that it is useful to exclude restructuring charges and credits. Cadence has dramatically reduced the size of its design services business and portions of its product and maintenance businesses over the past several years. As a result, in 2001, 2002 and 2003, Cadence’s GAAP statements of operations included significant charges relating to such restructurings. Management believes that in measuring the company’s operations it is useful to exclude any such restructuring charges and credits because its level of restructuring activities has significantly decreased. Management also believes it is useful to exclude executive severance costs and certain termination and legal costs as these costs do not occur frequently. Management also believes it is useful to exclude gains and expenses related to its non-qualified deferred compensation plan assets as these gains and expenses are not part of Cadence’s direct costs of operations, but reflect changes in the value of assets held in the plan. Finally, management also believes it is useful to exclude the equity in losses (income) from investments, as these items are not part of Cadence’s direct cost of operations. Rather, these are non-operating items that are included in other income (expense) and are part of the company’s investment activities.
     In the fourth quarter of 2007, Cadence’s non-GAAP measure also excluded the income tax benefit of settling a dispute with the Internal Revenue Service related to Cadence’s tax years 1997-1999. This benefit had no impact on Cadence’s non-GAAP measure of net income for 2007. Management believes it is useful to exclude the income tax benefit associated with this settlement from Cadence’s non-GAAP measure of net income as this tax benefit resulted from an

Page 5

 

event which is not expected to occur frequently.
     In the fourth quarter of 2006, Cadence’s non-GAAP measure also excluded the loss associated with retiring a portion of its previously-issued convertible notes at a premium, and writing off related debt issuance costs. Management believes that in measuring Cadence’s operations it is useful to exclude the loss on extinguishment of debt as the loss is not directly related to Cadence’s operating performance and the associated transaction does not occur frequently.
     Management believes that non-GAAP net income 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 tables reconcile the specific items excluded from GAAP net income in the calculation of non-GAAP net income for the periods shown below:

Page 6

 

                         
 
  Net Income Reconciliation     Quarters Ended    
         
        December 29, 2007       December 30, 2006    
         
        (unaudited)    
 
(in thousands)
                      
 
Net income on a GAAP basis
     $ 119,503       $ 48,365    
 
Amortization of acquired intangibles
       12,488         12,801    
 
Stock-based compensation expense
       22,587         23,549    
 
Non-qualified deferred compensation expense
       1,759         1,698    
 
Certain termination costs
       15,097         —    
 
Certain legal costs
       8,070         —    
 
Restructuring and other charges (credits)
       (102 )       (71 )  
 
Integration and acquisition-related costs
       289         360    
 
Equity in losses from investments, gain on non-qualified deferred compensation plan assets — recorded in Other income, net
       (558 )       (54 )  
 
Loss on extinguishment of debt
       —         40,768    
 
Income tax benefit from settlement of IRS dispute
       (27,771 )       —    
 
Income tax effect of non-GAAP adjustments
       (18,394 )       (11,576 )  
 
Net income on a non-GAAP basis
     $ 132,968       $ 115,840    
 

Page 7

 

                         
 
  Net Income Reconciliation     Years Ended    
         
        December 29, 2007       December 30, 2006    
         
        (unaudited)    
 
(in thousands)
                      
 
Net income on a GAAP basis
     $ 296,252       $ 142,592    
 
Amortization of acquired intangibles
       46,639         63,251    
 
Stock-based compensation expense
       101,415         103,986    
 
Non-qualified deferred compensation expense
       8,786         5,829    
 
Certain termination costs
       15,097         —    
 
Certain legal costs
       8,070         —    
 
Restructuring and other charges (credits)
       (9,686 )       (797 )  
 
Write-off of acquired in-process technology
       2,678         900    
 
Integration and acquisition-related costs
       1,274         1,748    
 
Equity in losses from investments, gain on non-qualified deferred compensation plan assets — recorded in Other income, net
       (2,066 )       (3,744 )  
 
Loss on extinguishment of debt
       —         40,768    
 
Income tax benefit from settlement of IRS dispute
       (27,771 )       —    
 
Income tax effect of non-GAAP adjustments
       (43,843 )       (18,289 )  
 
Cumulative effect of change in accounting principle
       —         (418 )  
 
Net income on a non-GAAP basis
     $ 396,845       $ 335,826    
 

Page 8

 

                         
 
  Diluted Net Income per Share Reconciliation     Quarters Ended    
         
        December 29, 2007       December 30, 2006    
         
        (unaudited)    
 
(in thousands, except per share data)
                      
 
Diluted net income per share on a GAAP basis
     $ 0.41       $ 0.16    
 
Amortization of acquired intangibles
       0.04         0.04    
 
Stock-based compensation expense
       0.08         0.08    
 
Non-qualified deferred compensation expense
       0.01         0.01    
 
Certain termination costs
       0.05         —    
 
Certain legal costs
       0.03         —    
 
Restructuring and other charges (credits)
       —         —    
 
Integration and acquisition-related costs
       —         —    
 
Equity in losses from investments, gain on non-qualified deferred compensation plan assets — recorded in Other income, net
       —         —    
 
Loss on extinguishment of debt
       —         0.13    
 
Income tax benefit from settlement of IRS dispute
       (0.10 )       —    
 
Income tax effect of non-GAAP adjustments
       (0.06 )       (0.04 )  
 
Diluted net income per share on a non-GAAP basis
     $ 0.46       $ 0.38    
 
Shares used in calculation of diluted net income per share —GAAP
       290,970         307,472    
 
Shares used in calculation of diluted net income per share —non-GAAP (A)
       290,970         307,472    
 

Page 9

 

                         
 
  Diluted Net Income per Share Reconciliation     Years Ended    
         
        December 29, 2007       December 30, 2006    
         
        (unaudited)    
 
(in thousands, except per share data)
                      
 
Diluted net income per share on a GAAP basis
     $ 1.01       $ 0.46    
 
Amortization of acquired intangibles
       0.16         0.20    
 
Stock-based compensation expense
       0.34         0.33    
 
Non-qualified deferred compensation expense
       0.03         0.02    
 
Certain termination costs
       0.05         —    
 
Certain legal costs
       0.03         —    
 
Restructuring and other charges (credits)
       (0.03 )       —    
 
Write-off of acquired in-process technology
       0.01         —    
 
Integration and acquisition-related costs
       —         0.01    
 
Equity in losses from investments, gain on non-qualified deferred compensation plan assets – recorded in Other income, net
       (0.01 )       (0.01 )  
 
Loss on extinguishment of debt
       —         0.13    
 
Income tax benefit from settlement of IRS dispute
       (0.09 )       —    
 
Income tax effect of non-GAAP adjustments
       (0.15 )       (0.06 )  
 
Cumulative effect of change in accounting principle
       —         —    
 
Diluted net income per share on a non-GAAP basis
     $ 1.35       $ 1.08    
 
Shares used in calculation of diluted net income per share —GAAP
       295,591         312,457    
 
Shares used in calculation of diluted net income per share —non-GAAP (A)
       295,591         312,457    
  (A)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.  
 

Page 10

 

Investors are encouraged to look at GAAP results as the best measure of financial performance. For example, amortization of intangibles or in-process technology are important to consider because they may represent initial expenditures that under GAAP are reported across future fiscal periods. Likewise, stock-based 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. Losses on extinguishment of debt can be incurred on remaining convertible notes. All of these metrics are important to financial performance generally.
Though Cadence management finds its non-GAAP measure is useful in evaluating 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 baseline 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 reconciliation to GAAP, it may provide additional insight into its 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.
Prior to the start of the Quiet Period (described below), the public may continue to rely on the Business Outlook contained herein as still being Cadence’s current expectations on matters covered unless Cadence publishes a notice stating otherwise.
Beginning Mar. 14, 2008, Cadence will observe a “Quiet Period” during which the Business Outlook as provided in this press release and the company’s most recent annual report on Form 10-K and 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 First Quarter 2008 Earnings Release is published, which is currently scheduled for Apr. 23, 2008.

Page 11

 

Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
December 29, 2007 and December 30, 2006
(In thousands)
(Unaudited)
                 
    December 29, 2007     December 30, 2006  
Current Assets:
                
Cash and cash equivalents
   $ 1,062,920     $ 934,342  
Short-term investments
     15,193       24,089  
Receivables, net of allowances of $2,895 and $3,804, respectively
     326,211       238,438  
Inventories
     31,003       37,179  
Prepaid expenses and other
     94,236       77,957  
 
            
Total current assets
     1,529,563       1,312,005  
 
                
Property, plant and equipment, net of accumulated depreciation of $624,680 and $615,768, respectively
     339,463       354,575  
Goodwill
     1,310,211       1,267,579  
Acquired intangibles, net
     127,072       112,738  
Installment contract receivables
     238,010       149,584  
Other assets
     326,831       246,341  
 
            
Total Assets
   $ 3,871,150     $ 3,442,822  
 
            
 
                
Current Liabilities:
                
Convertible notes
   $ 230,385     $ —  
Current portion of long-term debt
     —       28,000  
Accounts payable and accrued liabilities
     289,934       259,790  
Current portion of deferred revenue
     265,168       260,275  
 
            
Total current liabilities
     785,487       548,065  
 
            
 
                
Long-term Liabilities:
                
Long-term portion of deferred revenue
     136,655       95,018  
Convertible notes
     500,000       730,385  
Other long-term liabilities
     368,942       370,063  
 
            
Total long-term liabilities
     1,005,597       1,195,466  
 
            
 
                
Stockholders’ Equity
     2,080,066       1,699,291  
 
            
Total Liabilities and Stockholders’ Equity
   $ 3,871,150     $ 3,442,822  
 
            

 

 

Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Quarters and Years Ended December 29, 2007 and December 30, 2006
(In thousands, except per share amounts)
(Unaudited)
                                 
    Quarters Ended     Years Ended  
    December 29,     December 30,     December 29,     December 30,  
    2007     2006     2007     2006  
Revenue:
                                
Product
   $ 328,474     $ 297,847     $ 1,103,970     $ 982,673  
Services
     29,875       35,097       125,838       134,895  
Maintenance
     99,594       98,076       385,205       366,327  
 
                        
 
                                
Total revenue
     457,943       431,020       1,615,013       1,483,895  
 
                        
 
                                
Costs and Expenses:
                                
Cost of product
     17,767       12,100       60,069       66,769  
Cost of services
     22,939       25,502       93,360       96,497  
Cost of maintenance
     15,444       16,319       61,079       63,833  
Marketing and sales
     109,224       116,515       407,148       405,579  
Research and development
     128,614       117,931       494,032       460,064  
General and administrative
     45,831       34,050       168,997       143,317  
Amortization of acquired intangibles
     5,760       5,159       19,421       23,141  
Restructuring and other charges (credits)
     (102 )     (71 )     (9,686 )     (797 )
Write-off of acquired in-process technology
     —       —       2,678       900  
 
                        
 
                                
Total costs and expenses
     345,477       327,505       1,297,098       1,259,303  
 
                        
 
                                
Income from operations
     112,466       103,515       317,915       224,592  
 
                                
Loss on extinguishment of debt
     —       (40,768 )     —       (40,768 )
Interest expense
     (3,001 )     (2,468 )     (12,374 )     (12,348 )
Other income, net
     10,592       17,211       58,530       70,402  
 
                        
 
                                
Income before provision for income taxes and cumulative effect of change in accounting principle
     120,057       77,490       364,071       241,878  
 
                                
Provision for income taxes
     554       29,125       67,819       99,704  
 
                        
 
                                
Net income before cumulative effect of change in accounting principle
     119,503       48,365       296,252       142,174  
 
                                
Cumulative effect of change in accounting principle, net of tax
     —       —       —       418  
 
                        
 
                                
Net income
   $ 119,503     $ 48,365     $ 296,252     $ 142,592  
 
                        
 
                                
Net income per share before cumulative effect of change in accounting principle:
                                
Basic
   $ 0.44     $ 0.18     $ 1.09     $ 0.51  
 
                        
Diluted
   $ 0.41     $ 0.16     $ 1.01     $ 0.46  
 
                        
 
                                
Net income per share after cumulative effect of change in accounting principle:
                                
Basic
   $ 0.44     $ 0.18     $ 1.09     $ 0.51  
 
                        
Diluted
   $ 0.41     $ 0.16     $ 1.01     $ 0.46  
 
                        
 
                                
Weighted average common shares outstanding — basic
     268,659       274,164       271,455       279,354  
 
                        
 
                                
Weighted average common shares outstanding — diluted
     290,970       307,472       295,591       312,457  
 
                        

 

 

Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Years Ended December 29, 2007 and December 30, 2006
(In thousands)
(Unaudited)
                 
    Years Ended  
    December 29,     December 30,  
    2007     2006  
Cash and Cash Equivalents at Beginning of Period
   $ 934,342     $ 861,315  
 
            
Cash Flows from Operating Activities:
                
Net income
     296,252       142,592  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Cumulative effect of change in accounting principle
     —       (418 )
Depreciation and amortization
     130,649       147,117  
Loss on extinguishment of debt
     —       40,768  
Stock-based compensation
     101,415       103,986  
Equity in loss from investments, net
     3,027       1,200  
Gain on investments, net
     (18,090 )     (32,903 )
Gain on sale and leaseback of land and buildings
     (13,141 )     —  
Write-down of investment securities
     2,550       2,467  
Write-off of acquired in-process technology
     2,678       900  
Non-cash restructuring and other charges (credits)
     (7,106 )     194  
Tax benefit (expense) from call options
     11,346       (6,159 )
Deferred income taxes
     12,811       29,535  
Proceeds from the sale of receivables, net
     215,444       180,580  
Recoveries for gains on trade accounts receivable and sales returns
     (586 )     (6,777 )
Other non-cash items
     11,219       4,630  
Changes in operating assets and liabilities, net of effect of acquired businesses:
                
Receivables
     15,762       92,977  
Installment contract receivables
     (393,658 )     (261,983 )
Inventories
     6,197       (10,872 )
Prepaid expenses and other
     (603 )     6,128  
Other assets
     (628 )     749  
Accounts payable and accrued liabilities
     20,352       (51,462 )
Deferred revenue
     44,775       24,444  
Other long-term liabilities
     (38,227 )     13,523  
 
            
Net cash provided by operating activities
     402,438       421,216  
 
            
 
                
Cash Flows from Investing Activities:
                
Proceeds from sale of available-for-sale securities
     6,271       7,637  
Proceeds from sale of short-term investments
     197       —  
Purchases of short-term investments
     —       (147 )
Proceeds from the sale of long-term investments
     6,323       26,054  
Proceeds from the sale of property, plant and equipment
     46,500       317  
Purchases of property, plant and equipment
     (81,795 )     (67,636 )
Purchases of software licenses
     (2,000 )     (8,409 )
Investment in venture capital partnerships and equity investments
     (3,214 )     (3,800 )
Cash paid in business combinations and asset acquisitions, net of cash acquired, and acquisition of intangibles
     (80,725 )     (65,778 )
 
            
Net cash used for investing activities
     (108,443 )     (111,762 )
 
            
 
                
Cash Flows from Financing Activities:
                
Principal payments on term loan
     (28,000 )     (132,000 )
Proceeds from issuance of convertible notes due 2011 and 2013
     —       500,000  
Payment of convertible notes due 2023
     —       (228,480 )
Payment of convertible notes issuance costs
     —       (12,032 )
Purchase of call options in connection with convertible notes due 2011 and 2013
     —       (119,750 )
Proceeds from sale of call options in connection with convertible notes due 2023
     —       55,864  
Proceeds from sale of common stock warrants in connection with convertible notes due 2011 and 2013
     —       39,400  
Purchase of common stock warrants in connection with convertible notes due 2023
     —       (10,201 )
Tax benefit from employee stock transactions
     21,090       10,712  
Proceeds from issuance of common stock
     255,462       156,648  
Purchases of treasury stock
     (418,618 )     (494,088 )
 
            
Net cash used for financing activities
     (170,066 )     (233,927 )
 
            
 
                
Effect of exchange rate changes on cash and cash equivalents
     4,649       (2,500 )
 
            
 
                
Increase in cash and cash equivalents
     128,578       73,027  
 
            
 
                
Cash and Cash Equivalents at End of Period
   $ 1,062,920     $ 934,342  
 
            

 

 

Cadence Design Systems, Inc.
As of January 30, 2008
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income (Loss) Per Share
(Unaudited)
         
    Quarter ended   Year ended
    March 29, 2008   January 3, 2009
    Forecast   Forecast
Diluted net income (loss) per share on a GAAP basis
   $(0.06) to $(0.04)   $0.69 to $0.77
 
        
Amortization of acquired intangibles
   0.04   0.15
Stock-based compensation expense
   0.08   0.31
Integration and acquisition-related costs
   —   —
Equity in losses from investments, gain on non-qualified deferred compensation plan assets
   —   0.01
Income tax effect of non-GAAP adjustments
   (0.03)   (0.05)
 
        
 
        
Diluted net income per share on a non-GAAP basis
   $0.03 to $0.05   $1.11 to $1.19
 
        
Cadence Design Systems, Inc.
As of January 30, 2008
Impact of Non-GAAP Adjustments on Forward Looking Net Income (Loss)
(Unaudited)
         
    Quarter ended   Year ended
    March 29, 2008   January 3, 2009
($ in Millions)   Forecast   Forecast
Net income (loss) on a GAAP basis
   $(17) to $(11)   $192 to $216
 
        
Amortization of acquired intangibles
   11   43
Stock-based compensation expense
   23   89
Integration and acquisition-related costs
   —   1
Equity in losses from investments, gain on non-qualified deferred compensation plan assets
   1   4
Income tax effect of non-GAAP adjustments
   (11)   (14)
 
        
 
        
Net income on a non-GAAP basis
   $7 to $13   $315 to $339
 
        

 

Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
                                                                                                                         
    2005   2006   2007
GEOGRAPHY   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year
North America
     46 %     49 %     53 %     42 %     48 %     51 %     48 %     54 %     60 %     54 %     48 %     52 %     41 %     50 %     49 %
Europe
     16 %     17 %     21 %     20 %     18 %     19 %     18 %     22 %     19 %     19 %     15 %     17 %     25 %     17 %     18 %
Japan
     30 %     25 %     20 %     26 %     25 %     21 %     24 %     13 %     10 %     17 %     27 %     14 %     22 %     22 %     21 %
Asia
     8 %     9 %     6 %     12 %     9 %     9 %     10 %     11 %     11 %     10 %     10 %     17 %     12 %     11 %     12 %
Total
     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %
Revenue Mix by Product Group (% of Total Revenue)
                                                                                                                         
    2005   2006   2007
PRODUCT GROUP   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year
Functional Verification
     20 %     19 %     21 %     25 %     21 %     26 %     22 %     24 %     23 %     24 %     24 %     24 %     20 %     26 %     24 %
Digital IC Design
     27 %     23 %     26 %     29 %     28 %     20 %     26 %     19 %     26 %     24 %     26 %     29 %     27 %     27 %     27 %
Custom IC Design
     23 %     31 %     27 %     22 %     25 %     27 %     27 %     30 %     26 %     27 %     24 %     24 %     32 %     25 %     27 %
Design for Manufacturing
     9 %     9 %     9 %     8 %     9 %     8 %     8 %     8 %     6 %     7 %     7 %     7 %     6 %     6 %     6 %
System Interconnect
     10 %     9 %     8 %     7 %     8 %     9 %     8 %     10 %     11 %     9 %     10 %     8 %     7 %     9 %     8 %
Services & Other
     11 %     9 %     9 %     9 %     9 %     10 %     9 %     9 %     8 %     9 %     9 %     8 %     8 %     7 %     8 %
Total
     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %
Note: Product Group total revenue includes Product + Maintenance