Convertible Notes (Tables)

9 Months Ended

Sep. 29, 2012

Summary of key terms 2015 and 2013 notes

A summary of key terms of the 2013 Notes is as follows:



		2013 Notes
		(In thousands, except percentages)

Principal maturity value – at issuance		$250,000

Outstanding principal maturity value – at September 29, 2012		$144,461

Contractual interest rate		1.500%

Contractual maturity date		December 15, 2013

Initial conversion rate		47.2813 shares of common stock per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $21.15 per share of Cadence common stock.

Conversion feature (in addition to principal amount payable in cash)		Shares to the extent Cadence’s stock price exceeds $21.15 per share, calculated based on the applicable conversion rate multiplied by the volume weighted average price of Cadence common stock over a specified period.

Early conversion conditions (or the Early Conversion Conditions)		• Closing stock price greater than $27.50 for at least 20 of the last 30 trading days in a calendar quarter (convertible only for subsequent quarter). • Specified corporate transactions. • Note trading price falls below calculated minimum.

Conversion immediately preceding maturity		From November 1, 2013, and until the trading day immediately preceding the maturity date, holders may convert their 2013 Notes at any time into cash and Cadence shares as described above under “Conversion feature.”

Redemption at Cadence’s option prior to maturity		None.

Fundamental change put right		Upon a fundamental change prior to maturity, the 2013 Note holders could require Cadence to repurchase their notes for cash equal to the principal amount of the notes plus accrued interest.

Make-whole premium		Upon certain fundamental changes, prior to maturity, if Cadence’s stock price were between $18.00 and $60.00 per share at that time, the holders of the notes would be entitled to an increase to the conversion rate. This is referred to as a “make-whole premium.”

Financial covenants		None.

A summary of key terms of the 2015 Notes is as follows:



		2015 Notes
		(In thousands, except percentages)

Outstanding principal maturity value – at September 29, 2012		$350,000

Contractual interest rate		2.625%

Contractual maturity date		June 1, 2015

Initial conversion rate		132.5205 shares of common stock per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $7.55 per share of Cadence common stock.

Conversion feature (in addition to principal amount payable in cash)		Cash to the extent Cadence’s stock price exceeds approximately $7.55 per share, calculated based on the applicable conversion rate multiplied by the volume weighted average price of Cadence common stock over a specified period.

Early conversion conditions (or the Early Conversion Conditions)		• Closing stock price greater than $9.81 for at least 20 of the last 30 trading days in a fiscal quarter (convertible only for subsequent quarter). • Specified corporate transactions. • Note trading price falls below a calculated minimum.

Conversion immediately preceding maturity		From March 1, 2015 until the second trading day immediately preceding the maturity date, holders may convert their 2015 Notes at any time into cash as described above under “Conversion feature.”

Redemption at Cadence’s option prior to maturity		None.

Fundamental change put right		Upon certain fundamental corporate changes prior to maturity, the 2015 Note holders could require Cadence to repurchase their notes for cash equal to the principal amount of the notes plus accrued interest.

Make-whole premium		Upon certain fundamental changes prior to maturity, if Cadence’s stock price were between $6.16 and $40.00 per share at that time, the holders of the notes would be entitled to an increase to the conversion rate. This is referred to as a “make-whole premium.”

Financial covenants		None.

Components of the 2015 Notes

The components of the 2015 Notes as of September 29, 2012 and December 31, 2011 were as follows:



	As of
	September 29, 2012			December 31, 2011
	(In thousands)
Principal amount	$	350,000		$	350,000
Unamortized debt discount	(44,971		)	(55,939		)
Liability component	$	305,029		$	294,061

Effective interest rate and components of interest expense of 2015 notes

The effective interest rate and components of interest expense of the 2015 Notes for the three and nine months ended September 29, 2012 and October 1, 2011 were as follows:



	Three Months Ended						Nine Months Ended
	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
	(In thousands, except percentages)
Effective interest rate	8.1		%	8.1		%	8.1		%	8.1		%
Contractual interest expense	$	2,289		$	2,289		$	6,867		$	6,867
Amortization of debt discount	$	3,737		$	3,453		$	10,968		$	10,166

Components of the 2013 Notes

The components of the 2013 Notes as of September 29, 2012 and December 31, 2011 were as follows:



	As of
	September 29, 2012			December 31, 2011
	(In thousands)
Equity component – included in common stock	$	63,027		$	63,027
Principal amount	$	144,461		$	144,461
Unamortized debt discount	(8,045		)	(12,719		)
Liability component	$	136,416		$	131,742

Effective interest rate and components of interest expense

The effective interest rate and components of interest expense of the 2013 Notes for the three and nine months ended September 29, 2012, and of the 2013 Notes and 2011 Notes for the three and nine months ended October 1, 2011, were as follows:



	Three Months Ended						Nine Months Ended
	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
	(In thousands, except percentages)
Effective interest rate	6.4		%	6.3		%	6.4		%	6.3		%
Contractual interest expense	$	540		$	1,053		$	1,619		$	3,161
Amortization of debt discount	$	1,588		$	3,275		$	4,674		$	9,684