UNITED STATES
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): October 26, 2011
CADENCE DESIGN SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 000-15867 | 77-0148231 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
2655 Seely Avenue, Building 5 San Jose, California |
95134 | |||
(Address of Principal Executive Offices) | (Zip Code) |
(408) 943-1234
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On October 26, 2011, Cadence Design Systems, Inc. issued a press release announcing its financial results for the third quarter of 2011, ended October 1, 2011.
A copy of the press release is attached hereto as Exhibit 99.01 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) | Exhibits |
Exhibit |
Description | |
99.01 | Press Release issued by Cadence Design Systems, Inc. on October 26, 2011. |
SIGNATURES
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: October 26, 2011
CADENCE DESIGN SYSTEMS, INC. | ||
By: | /s/ Geoffrey G. Ribar | |
Geoffrey G. Ribar | ||
Senior Vice President and Chief Financial Officer |
EXHIBIT INDEX
Exhibit |
Description | |
99.01 | Press Release issued by Cadence Design Systems, Inc. on October 26, 2011. |
Exhibit 99.01
Cadence Reports Q3 2011 Financial Results
SAN JOSE, Calif. October 26, 2011 Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the third quarter of fiscal year 2011.
Cadence reported third quarter 2011 revenue of $292 million, compared to revenue of $238 million reported for the same period in 2010. On a GAAP basis, Cadence recognized net income of $28 million, or $0.10 per share on a diluted basis in the third quarter of 2011, compared to net income of $127 million, or $0.48 per share on a diluted basis in the same period in 2010. GAAP net income for the third quarter of 2010 included $148 million in income tax benefit related to the settlement of an Internal Revenue Service examination of Cadences federal income tax returns for the tax years 2000 through 2002.
Using Cadences non-GAAP measure, net income in the third quarter of 2011 was $37 million, or $0.14 per share on a diluted basis, as compared to net income of $11 million, or $0.04 per share on a diluted basis in the same period in 2010.
Strong design activity in multiple market segments continues to drive demand for our products and solutions, said Lip-Bu Tan, president and chief executive officer. In response to customer requirements, we have established our readiness for 20-nanometer design and demonstrated product leadership for the design of SoCs using advanced multi-core processors.
Cadence again posted strong results as operating profitability continues to improve, added Geoff Ribar, senior vice president and chief financial officer. Given the risks in the world economy we looked at our prospective Q4 business very closely but still see good demand for products and services as reflected in our increased outlook.
In addition to using GAAP results to evaluate Cadences 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, integration and acquisition-related costs including changes in the fair value of contingent consideration related to prior acquisitions, acquisition-related income tax benefits, income tax benefits related to the
1
settlement of IRS examinations, shareholder litigation costs and charges, gains or losses and expenses or credits related to non-qualified deferred compensation plan assets, executive and other employee severance costs, restructuring charges and credits, amortization of discount on convertible notes, losses on extinguishment of debt, equity in losses or income from investments, write-down of investments, and gains or losses on the sale of investments. 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 companys tax liability. See GAAP to non-GAAP Reconciliation below for further information on the non-GAAP measure.
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.
Business Outlook
For the fourth quarter of 2011, the company expects total revenue in the range of $295 million to $305 million. Fourth quarter GAAP net income per diluted share is expected to be in the range of $0.08 to $0.10. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.14 to $0.16.
For 2011, the company expects total revenue in the range of $1,135 million to $1,145 million. On a GAAP basis, net income per diluted share for 2011 is expected to be in the range of $0.31 to $0.33. Using the non-GAAP measure defined below, net income per diluted share for 2011 is expected to be in the range of $0.48 to $0.50.
A schedule showing a reconciliation of the business outlook from GAAP net income and diluted net income per share to non-GAAP net income and diluted net income per share is included with this release.
2
Audio Webcast Scheduled
Lip-Bu Tan, Cadences president and chief executive officer, and Geoff Ribar, Cadences senior vice president and chief financial officer, will host a third quarter 2011 financial results audio webcast today, October 26, 2011, at 2 p.m. (Pacific) / 5 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 October 26, 2011 at 5 p.m. (Pacific) and ending November 9, 2011 at 5 p.m. (Pacific). 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 todays integrated circuits and electronics. Customers use Cadence software, hardware, IP, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. The company is headquartered in San Jose, California, with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about the company and its products and services is available at www.cadence.com.
Cadence and the Cadence logo are registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
The statements contained above regarding Cadences third quarter 2011 results, as well as the information in the Business Outlook section and the statements by Lip-Bu Tan and Geoff Ribar 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 risks, uncertainties and other factors, many of which are outside Cadences control, including, among others: (i) Cadences ability to compete successfully in the electronic design automation product and the commercial electronic design and methodology services industries; (ii) the success of Cadences other efforts to improve operational efficiency and growth; (iii) the mix of products and services sold and the timing of significant orders for Cadences products, and its shift to a ratable license structure, which may result in changes in the mix of license types; (iv) change in customer demands, including the possibility that restructurings and other efforts to improve operational efficiency could result in delays in customers purchases of products and services; (v) economic and industry conditions in regions in which Cadence does business; (vi) fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries in
3
which Cadence does business; (vii) capital expenditure requirements, legislative or regulatory requirements, interest rates and Cadences ability to access capital and debt markets; (viii) the acquisition of other companies or technologies or the failure to successfully integrate and operate these companies or technologies Cadence acquires; (ix) the effects of restructurings and other efforts to improve operational efficiency on Cadences business, including its strategic and customer relationships, ability to retain key employees and stock prices; (x) events that affect the reserves or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes, litigation or other matters; and (xi) the effects of any litigation or other proceedings to which Cadence is or may become a party.
For a detailed discussion of these and other cautionary statements related to Cadences business, please refer to Cadences filings with the Securities and Exchange Commission. These include Cadences Annual Report on Form 10-K for the year ended January 1, 2011, and Cadences future filings.
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, and is GAAP net income excluding, as applicable, amortization of intangible assets, stock-based compensation expense, integration and acquisition-related costs, including changes in the fair value of contingent consideration related to prior acquisitions, acquisition-related income tax benefits, income tax benefits related to the settlement of IRS examinations, shareholder litigation costs and charges, gains or losses and expenses or credits related to non-qualified deferred compensation plan assets, executive and other employee severance costs, restructuring charges and credits, amortization of discount on convertible notes, losses on extinguishment of debt, equity in losses or income from investments, write-down of investments and gains or losses on the sale of 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 companys tax liability.
Cadences management believes it is useful in measuring Cadences operations to exclude amortization of intangible assets and integration and acquisition-related costs, including changes in the fair value of contingent consideration related to prior acquisitions, because these costs are primarily fixed at the time of an acquisition and generally cannot be changed by Cadences management in the short term. In addition, Cadences management believes it is useful to exclude stock-based compensation expense because such exclusion enhances investors ability to review Cadences business from the same perspective as Cadences management, which believes that stock-based compensation expense is based on many subjective inputs at a point in time and many of these inputs are not necessarily directly attributable to the underlying performance of Cadences business operations. Cadences management also believes it is useful to exclude costs and charges related to shareholder litigation because these costs and charges are not related to Cadences core business operations. Cadences management also believes that it is useful to exclude restructuring charges and credits. During the fourth quarter of 2010, Cadence commenced a restructuring program and expects to have paid substantially all termination benefits and costs by the fourth quarter of 2011. Cadences management believes that in measuring the companys operations, it is useful to exclude any such restructuring charges and credits because exclusion of such charges and credits permits consistent evaluations of Cadences performance before and after such actions are taken. Cadences management also believes it is useful to exclude gains or losses and expenses or credits related to the non-qualified deferred compensation plan assets because these gains or losses and expenses or credits are not part of Cadences direct costs of operations, but reflect changes in the value of assets held in the non-qualified deferred compensation plan. Cadences management also believes it is useful to exclude executive and other employee severance costs as these costs do not occur frequently. Cadences management also believes it is useful to exclude the amortization of the discount on convertible notes because this incremental cost recorded as interest expense does not represent a cash obligation of the company and is not part of Cadences direct cost of operations. Finally,
5
Cadences management believes it is useful to exclude the equity in losses or income from investments, write-down of investments and gains or losses on the sale of investments because these items are not part of Cadences direct cost of operations. Rather, these are non-operating items that are included in other income or expense and are part of the companys investment activities.
During the second quarter of 2011, Cadences non-GAAP net income also excluded the effect of an income tax benefit associated with Cadences effective settlement of an Internal Revenue Services, or IRS, examination of Cadences federal income tax returns for the tax years 2003 through 2005. During the third quarter of 2010, Cadences non-GAAP net income also excluded the effect of an income tax benefit associated with Cadences effective settlement of an IRS examination of Cadences federal income tax returns for the tax years 2000 through 2002. Cadences management believes it is useful to exclude the income tax benefits associated with these settlements because exclusion of such tax benefits permits consistent evaluations of Cadences performance. Cadence does not expect settlements resulting in income tax provisions or benefits of the magnitude recorded during the third quarter of 2010 to occur frequently.
During the second and fourth quarters of 2010, Cadences non-GAAP net income also excluded losses associated with its repurchase of a portion of its 1.375% Convertible Senior Notes Due December 15, 2011 and a portion of its 1.500% Convertible Senior Notes Due December 15, 2013. Cadences management believes it is useful to exclude the losses on the extinguishment of debt as the losses are not directly related to Cadences core business operations and similar transactions are not expected to occur frequently.
During the second quarter of 2011, Cadences non-GAAP net income also excluded the effect of an income tax benefit associated with an acquisition Cadence completed during the second quarter of 2011. During the second quarter of 2010, Cadences non-GAAP net income also excluded the effect of an income tax benefit associated with Cadences acquisition of Denali Software, Inc. Cadences management believes it is useful to exclude the tax benefits associated with these acquisitions because exclusion of such tax benefits permits consistent evaluations of Cadences performance. Cadence does not expect an acquisition-related income tax benefit of the magnitude recorded in the second quarter of 2010 to be recorded frequently.
Cadences management believes that non-GAAP net income provides useful supplemental information to Cadences management and investors regarding the performance of the companys business operations and facilitates comparisons to the companys historical operating results. Cadences management also uses this information internally for forecasting and budgeting. Non-GAAP financial measures should not be considered as a substitute for or superior to 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.
6
The following tables reconcile the specific items excluded from GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
Net Income Reconciliation | Three Months Ended | |||||||
October 1, 2011 | October 2, 2010 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Net income on a GAAP basis |
$ | 28,106 | $ | 126,753 | ||||
Amortization of acquired intangibles |
6,692 | 6,655 | ||||||
Stock-based compensation expense |
11,891 | 12,010 | ||||||
Non-qualified deferred compensation expenses (credits) |
229 | (1,873 | ) | |||||
Restructuring and other charges (credits) |
(433 | ) | (1,682 | ) | ||||
Shareholder litigation costs |
179 | 1,452 | ||||||
Executive and other employee severance costs |
1,331 | 1,627 | ||||||
Integration and acquisition-related costs |
766 | 5,322 | ||||||
Amortization of debt discount |
6,697 | 6,291 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* |
(5,544 | ) | 1,834 | |||||
Income tax benefit of IRS settlement |
| (148,302 | ) | |||||
Income tax effect of non-GAAP adjustments |
(12,619 | ) | 1,139 | |||||
|
|
|
|
|||||
Net income on a non-GAAP basis |
$ | 37,295 | $ | 11,226 | ||||
|
|
|
|
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in Other income (expense), net. |
7
Diluted Net Income per Share Reconciliation | Three Months Ended | |||||||
October 1, 2011 | October 2, 2010 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Diluted net income per share on a GAAP basis |
$ | 0.10 | $ | 0.48 | ||||
Amortization of acquired intangibles |
0.03 | 0.03 | ||||||
Stock-based compensation expense |
0.04 | 0.04 | ||||||
Non-qualified deferred compensation expenses (credits) |
| (0.01 | ) | |||||
Restructuring and other charges (credits) |
| (0.01 | ) | |||||
Shareholder litigation costs |
| 0.01 | ||||||
Executive and other employee severance costs |
0.01 | 0.01 | ||||||
Integration and acquisition-related costs |
| 0.02 | ||||||
Amortization of debt discount |
0.02 | 0.02 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* |
(0.02 | ) | 0.01 | |||||
Income tax benefit of IRS settlement |
| (0.56 | ) | |||||
Income tax effect of non-GAAP adjustments |
(0.04 | ) | | |||||
|
|
|
|
|||||
Diluted net income per share on a non-GAAP basis |
$ | 0.14 | $ | 0.04 | ||||
|
|
|
|
|||||
Shares used in calculation of diluted net income per share GAAP** |
270,741 | 263,302 | ||||||
Shares used in calculation of diluted net income per share non-GAAP** |
270,741 | 263,302 |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in Other income (expense), net. |
** | 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. |
Investors are encouraged to look at the GAAP results as the best measure of financial performance. For example, amortization of intangibles is important to consider because it may represent an initial expenditure that under GAAP is 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. All of these metrics are important to financial performance generally.
Although Cadences management finds the non-GAAP measures useful in evaluating the performance of Cadences business, reliance on these measures is limited because items excluded from such measures often have a material effect on Cadences earnings and earnings per share
8
calculated in accordance with GAAP. Therefore, Cadences management typically uses the non-GAAP earnings and earnings per share measures, in conjunction with the GAAP earnings and earnings per share measures, to address these limitations.
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 business outlook, publicly available on its website.
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 Cadences current expectations on matters covered unless Cadence publishes a notice stating otherwise.
Beginning December 16, 2011, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the companys most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute the companys 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 any update by the company. During the Quiet Period, Cadences representatives will not comment on Cadences business outlook, financial results or expectations. The Quiet Period will extend until the day when Cadences Fourth Quarter 2011 Earnings Release is published, which is currently scheduled for February 1, 2012.
For more information, please contact:
Investors and Shareholders
Alan Lindstrom
Cadence Design Systems, Inc.
408-944-7100
investor_relations@cadence.com
Media and Industry Analysts
Nancy Szymanski
Cadence Design Systems, Inc.
408-473-8382
publicrelations@cadence.com
# # #
9
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
October 1, 2011 and January 1, 2011
(In thousands)
(Unaudited)
October 1, 2011 | January 1, 2011 | |||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 696,101 | $ | 557,409 | ||||
Short-term investments |
2,959 | 12,715 | ||||||
Receivables, net of allowances of $65 and $7,604, respectively |
152,433 | 191,893 | ||||||
Inventories |
47,056 | 39,034 | ||||||
Prepaid expenses and other |
59,910 | 78,355 | ||||||
|
|
|
|
|||||
Total current assets |
958,459 | 879,406 | ||||||
Property, plant and equipment, net of accumulated depreciation of $650,786 and $648,676, respectively |
259,940 | 285,115 | ||||||
Goodwill |
192,153 | 158,893 | ||||||
Acquired intangibles, net of accumulated amortization of $84,725 and $105,158, respectively |
180,045 | 179,198 | ||||||
Installment contract receivables |
9,178 | 23,380 | ||||||
2015 notes hedges |
179,658 | 130,211 | ||||||
Other assets |
81,244 | 75,913 | ||||||
|
|
|
|
|||||
Total Assets |
$ | 1,860,677 | $ | 1,732,116 | ||||
|
|
|
|
|||||
Current Liabilities: |
||||||||
Convertible notes |
$ | 148,530 | $ | 143,258 | ||||
Accounts payable and accrued liabilities |
140,422 | 216,864 | ||||||
Current portion of deferred revenue |
360,580 | 337,426 | ||||||
|
|
|
|
|||||
Total current liabilities |
649,532 | 697,548 | ||||||
|
|
|
|
|||||
Long-Term Liabilities: |
||||||||
Long-term portion of deferred revenue |
88,039 | 85,400 | ||||||
Convertible notes |
420,982 | 406,404 | ||||||
2015 notes embedded conversion derivative |
179,658 | 130,211 | ||||||
Other long-term liabilities |
145,870 | 135,899 | ||||||
|
|
|
|
|||||
Total long-term liabilities |
834,549 | 757,914 | ||||||
|
|
|
|
|||||
Stockholders Equity |
376,596 | 276,654 | ||||||
|
|
|
|
|||||
Total Liabilities and Stockholders Equity |
$ | 1,860,677 | $ | 1,732,116 | ||||
|
|
|
|
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three and Nine Months Ended October 1, 2011 and October 2, 2010
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
October 1, 2011 |
October 2, 2010 |
October 1, 2011 |
October 2, 2010 |
|||||||||||||
Revenue: |
||||||||||||||||
Product |
$ | 163,966 | $ | 118,221 | $ | 463,723 | $ | 338,053 | ||||||||
Services |
29,102 | 23,945 | 86,384 | 75,123 | ||||||||||||
Maintenance |
99,389 | 95,768 | 291,722 | 273,760 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue |
292,457 | 237,934 | 841,829 | 686,936 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Costs and Expenses: | ||||||||||||||||
Cost of product |
18,185 | 10,757 | 52,453 | 23,172 | ||||||||||||
Cost of services |
20,410 | 19,102 | 61,101 | 62,583 | ||||||||||||
Cost of maintenance |
11,223 | 9,960 | 32,837 | 31,839 | ||||||||||||
Marketing and sales |
79,914 | 76,065 | 235,292 | 222,340 | ||||||||||||
Research and development |
103,154 | 97,275 | 303,721 | 278,585 | ||||||||||||
General and administrative |
24,041 | 25,081 | 68,720 | 64,973 | ||||||||||||
Amortization of acquired intangibles |
3,786 | 4,459 | 12,750 | 9,701 | ||||||||||||
Restructuring and other charges (credits) |
(433 | ) | (1,682 | ) | 277 | (3,073 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total costs and expenses |
260,280 | 241,017 | 767,151 | 690,120 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) from operations |
32,177 | (3,083 | ) | 74,678 | (3,184 | ) | ||||||||||
Interest expense |
(10,830 | ) | (10,476 | ) | (32,584 | ) | (25,879 | ) | ||||||||
Other income (expense), net |
7,244 | (2,907 | ) | 20,107 | (33 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) before provision (benefit) for income taxes |
28,591 | (16,466 | ) | 62,201 | (29,096 | ) | ||||||||||
Provision (benefit) for income taxes |
485 | (143,219 | ) | 864 | (192,671 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 28,106 | $ | 126,753 | $ | 61,337 | $ | 163,575 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic net income per share |
$ | 0.11 | $ | 0.49 | $ | 0.23 | $ | 0.63 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted net income per share |
$ | 0.10 | $ | 0.48 | $ | 0.23 | $ | 0.62 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average common shares outstanding - basic |
264,723 | 258,606 | 263,149 | 261,122 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average common shares outstanding - diluted |
270,741 | 263,302 | 270,068 | 265,383 | ||||||||||||
|
|
|
|
|
|
|
|
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended October 1, 2011 and October 2, 2010
(In thousands)
(Unaudited)
Nine Months Ended | ||||||||
October 1, 2011 |
October 2, 2010 |
|||||||
Cash and Cash Equivalents at Beginning of Period |
$ | 557,409 | $ | 569,115 | ||||
|
|
|
|
|||||
Cash Flows from Operating Activities: |
||||||||
Net income |
61,337 | 163,575 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
68,934 | 64,795 | ||||||
Amortization of debt discount and fees |
22,068 | 18,331 | ||||||
Loss on extinguishment of debt |
| 5,321 | ||||||
Stock-based compensation |
31,589 | 32,817 | ||||||
Loss from equity method investments |
104 | 105 | ||||||
Gain on investments, net |
(19,324 | ) | (5,133 | ) | ||||
Gain on sale of property, plant and equipment |
| (799 | ) | |||||
Write-down of investment securities |
| 1,500 | ||||||
Non-cash restructuring and other charges |
202 | 272 | ||||||
Impairment of property, plant and equipment |
| 491 | ||||||
Deferred income taxes |
(4,741 | ) | (70,617 | ) | ||||
Provisions (recoveries) for losses (gains) on trade and installment contract receivables |
(6,596 | ) | (13,339 | ) | ||||
Other non-cash items |
3,689 | 1,987 | ||||||
Changes in operating assets and liabilities, net of effect of acquired businesses: |
||||||||
Receivables |
(8,906 | ) | (44,422 | ) | ||||
Installment contract receivables |
72,635 | 97,818 | ||||||
Inventories |
(9,767 | ) | (16,005 | ) | ||||
Prepaid expenses and other |
19,718 | (23,828 | ) | |||||
Other assets |
3,718 | 5,396 | ||||||
Accounts payable and accrued liabilities |
(71,832 | ) | 3,308 | |||||
Deferred revenue |
20,245 | 45,229 | ||||||
Other long-term liabilities |
(4,868 | ) | (124,673 | ) | ||||
|
|
|
|
|||||
Net cash provided by operating activities |
178,205 | 142,129 | ||||||
|
|
|
|
|||||
Cash Flows from Investing Activities: |
||||||||
Proceeds from the sale of available-for-sale securities |
9,588 | | ||||||
Proceeds from the sale of long-term investments |
4,824 | 10,276 | ||||||
Proceeds from the sale of property, plant and equipment |
| 900 | ||||||
Purchases of property, plant and equipment |
(17,703 | ) | (28,940 | ) | ||||
Purchases of software licenses |
| (2,706 | ) | |||||
Investment in venture capital partnerships and equity investments |
(608 | ) | (3,000 | ) | ||||
Cash paid in business combinations and asset acquisitions, net of cash acquired |
(44,052 | ) | (256,117 | ) | ||||
|
|
|
|
|||||
Net cash used for investing activities |
(47,951 | ) | (279,587 | ) | ||||
|
|
|
|
|||||
Cash Flows from Financing Activities: |
||||||||
Principal payments on receivable sale financing |
(2,829 | ) | (3,540 | ) | ||||
Proceeds from issuance of 2015 Notes |
| 350,000 | ||||||
Payment of 2011 Notes and 2013 Notes |
| (187,150 | ) | |||||
Payment of 2015 Notes issuance costs |
| (10,419 | ) | |||||
Purchase of 2015 Notes Hedges |
| (76,635 | ) | |||||
Proceeds from termination of 2011 and 2013 Notes Hedges |
| 280 | ||||||
Proceeds from sale of 2015 Warrants |
| 37,450 | ||||||
Tax effect related to employee stock transactions allocated to equity |
2,897 | (9,624 | ) | |||||
Proceeds from issuance of common stock |
16,994 | 13,269 | ||||||
Stock received for payment of employee taxes on vesting of restricted stock |
(9,926 | ) | (5,875 | ) | ||||
Purchases of treasury stock |
| (39,997 | ) | |||||
|
|
|
|
|||||
Net cash provided by financing activities |
7,136 | 67,759 | ||||||
|
|
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents |
1,302 | 9,619 | ||||||
|
|
|
|
|||||
Increase (decrease) in cash and cash equivalents |
138,692 | (60,080 | ) | |||||
|
|
|
|
|||||
Cash and Cash Equivalents at End of Period |
$ | 696,101 | $ | 509,035 | ||||
|
|
|
|
Cadence Design Systems, Inc.
As of October 26, 2011
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
(Unaudited)
Three Months Ending | Year Ending | |||
December 31, 2011 | December 31, 2011 | |||
Forecast | Forecast | |||
Diluted net income per share on a GAAP basis |
$0.08 to $0.10 | $0.31 to $0.33 | ||
Amortization of acquired intangibles |
0.03 | 0.10 | ||
Stock-based compensation expense |
0.04 | 0.16 | ||
Non-qualified deferred compensation expenses |
| 0.01 | ||
Shareholder litigation costs |
| | ||
Executive and other employee severance costs |
| 0.01 | ||
Integration and acquisition-related costs |
| 0.01 | ||
Amortization of debt discount |
0.02 | 0.10 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* |
| (0.07) | ||
Acquisition-related income tax benefit |
| (0.02) | ||
Income tax benefit of IRS settlement |
| (0.02) | ||
Income tax effect of non-GAAP adjustments |
(0.03) | (0.11) | ||
|
| |||
Diluted net income per share on a non-GAAP basis |
$0.14 to $0.16 | $0.48 to $0.50 | ||
|
|
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in Other income (expense), net. |
Cadence Design Systems, Inc.
As of October 26, 2011
Impact of Non-GAAP Adjustments on Forward Looking Net Income
(Unaudited)
Three Months Ending | Year Ending | |||
December 31, 2011 | December 31, 2011 | |||
($ in Millions) | Forecast | Forecast | ||
Net income on a GAAP basis |
$21 to $27 | $83 to $89 | ||
Amortization of acquired intangibles |
7 | 27 | ||
Stock-based compensation expense |
12 | 43 | ||
Non-qualified deferred compensation expenses |
| 3 | ||
Shareholder litigation costs |
| 1 | ||
Executive and other employee severance costs |
| 3 | ||
Integration and acquisition-related costs |
| 3 | ||
Amortization of debt discount |
6 | 26 | ||
Other income or expense related to investments and non-qualified deferred compensation plan assets* |
| (19) | ||
Acquisition-related income tax benefit |
| (5) | ||
Income tax benefit of IRS settlement |
| (6) | ||
Income tax effect of non-GAAP adjustments |
(8) | (29) | ||
|
| |||
Net income on a non-GAAP basis |
$38 to $44 | $130 to $136 | ||
|
|
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in Other income (expense), net. |
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
2010 | 2011 | |||||||||||||||||||||||||||||||
GEOGRAPHY |
Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 | ||||||||||||||||||||||||
Americas |
40 | % | 46 | % | 43 | % | 45 | % | 43 | % | 44 | % | 47 | % | 44 | % | ||||||||||||||||
Europe |
22 | % | 23 | % | 20 | % | 23 | % | 22 | % | 21 | % | 20 | % | 21 | % | ||||||||||||||||
Japan |
23 | % | 14 | % | 20 | % | 14 | % | 18 | % | 19 | % | 17 | % | 18 | % | ||||||||||||||||
Asia |
15 | % | 17 | % | 17 | % | 18 | % | 17 | % | 16 | % | 16 | % | 17 | % | ||||||||||||||||
Total |
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Revenue Mix by Product Group (% of Total Revenue)
2010 | 2011 | |||||||||||||||||||||||||||||||
PRODUCT GROUP |
Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 | ||||||||||||||||||||||||
Functional Verification and Design IP |
22 | % | 26 | % | 25 | % | 22 | % | 24 | % | 28 | % | 33 | % | 30 | % | ||||||||||||||||
Digital IC Design |
21 | % | 21 | % | 23 | % | 26 | % | 23 | % | 24 | % | 21 | % | 22 | % | ||||||||||||||||
Custom IC Design |
27 | % | 26 | % | 24 | % | 27 | % | 26 | % | 20 | % | 22 | % | 23 | % | ||||||||||||||||
Design for Manufacturing |
9 | % | 6 | % | 8 | % | 7 | % | 7 | % | 8 | % | 6 | % | 6 | % | ||||||||||||||||
System Interconnect |
9 | % | 10 | % | 10 | % | 8 | % | 9 | % | 10 | % | 8 | % | 9 | % | ||||||||||||||||
Services & Other |
12 | % | 11 | % | 10 | % | 10 | % | 11 | % | 10 | % | 10 | % | 10 | % | ||||||||||||||||
Total |
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Note: Product Group total revenue includes Product + Maintenance