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Cadence Reports Third Quarter 2012 Financial Results

SAN JOSE, CA -- (Marketwire) -- Oct 24, 2012 -- Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the third quarter of fiscal year 2012.

Cadence reported third quarter 2012 revenue of $339 million, compared to revenue of $292 million reported for the same period in 2011. On a GAAP basis, Cadence recognized net income of $59 million, or $0.21 per share on a diluted basis, including $15 million in acquisition-related income tax benefit, in the third quarter of 2012, compared to net income of $28 million, or $0.10 per share on a diluted basis in the same period in 2011.

Using Cadence's non-GAAP measure, net income in the third quarter of 2012 was $59 million, or $0.21 per share on a diluted basis, as compared to net income of $37 million, or $0.14 per share on a diluted basis, in the same period in 2011.

"Demand for our technology was strong across the board in Q3, with ongoing strength in emulation and increasing demand for verification solutions," said Lip-Bu Tan, president and chief executive officer. "We continue to extend our technology leadership at advanced nodes and expand our design and verification IP business."

"Results for all key operating metrics exceeded expectations for Q3 as the entire Cadence team continues to execute," added Geoff Ribar, senior 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.

Business Outlook

For the fourth quarter of 2012, the company expects total revenue in the range of $335 million to $345 million. Fourth quarter GAAP net income per diluted share is expected to be in the range of $0.13 to $0.15. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.18 to $0.20.

For 2012, the company expects total revenue in the range of $1,315 million to $1,325 million. On a GAAP basis, net income per diluted share for 2012 is expected to be in the range of $0.58 to $0.60. Using the non-GAAP measure defined below, net income per diluted share for 2012 is expected to be in the range of $0.75 to $0.77.

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.

Audio Webcast Scheduled
Lip-Bu Tan, Cadence's president and chief executive officer, and Geoff Ribar, Cadence's senior vice president and chief financial officer, will host a third quarter 2012 financial results audio webcast today, October 24, 2012, 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 24, 2012 at 5 p.m. (Pacific) and ending November 7, 2012 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 today's 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 Cadence's third quarter 2012 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 Cadence's control, including, among others: (i) Cadence's ability to compete successfully in the electronic design automation product and the commercial electronic design and methodology services industries; (ii) the success of Cadence's efforts to improve operational efficiency and growth; (iii) the mix of products and services sold and the timing of significant orders for Cadence's 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 those resulting from consolidation among Cadence's customers and the possibility that Cadence's customers' restructurings and other efforts to improve operational efficiency could result in delays in their purchases of Cadence's 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 which Cadence does business; (vii) capital expenditure requirements, legislative or regulatory requirements, interest rates and Cadence's 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 Cadence's efforts to improve operational efficiency on its business, including its strategic and customer relationships, and its ability to retain key employees; (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 Cadence's business, please refer to Cadence's filings with the Securities and Exchange Commission. These include Cadence's most recent reports on Form 10-K and Form 10-Q, including Cadence's future filings.

GAAP to non-GAAP Reconciliation

To supplement Cadence's financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence's performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP, and is calculated by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, integration and acquisition-related costs, including changes in contingent consideration related to prior acquisitions and asset purchases, acquisition-related income tax benefits, shareholder litigation costs, 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, 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 Cadence would accrue if it used non-GAAP results instead of GAAP results to calculate the company's tax liability.

Cadence's management believes it is useful in measuring Cadence's operations to exclude amortization of intangible assets and integration and acquisition-related costs, including changes in contingent consideration related to prior acquisitions and asset purchases, because these costs are inconsistent in size, are significantly impacted by the timing and valuation of those acquisitions and generally cannot be changed by Cadence's management in the short term. In addition, Cadence's management believes it is useful to exclude stock-based compensation expense because it 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 Cadence's business operations, and such exclusion enhances investors' ability to review Cadence's business from the same perspective as Cadence's management. Cadence's management also believes it is useful to exclude costs related to shareholder litigation because these costs are not related to Cadence's core business operations. Cadence's management also believes that it is useful to exclude restructuring charges and credits. Cadence's management believes that in measuring the company's operations, it is useful to exclude any such restructuring charges and credits because exclusion of such charges and credits permits consistent evaluations of Cadence's performance before and after such actions are taken. Cadence's 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 Cadence's direct costs of operations, but reflect changes in the value of assets held in the non-qualified deferred compensation plan. Cadence's management also believes it is useful to exclude executive and other employee severance costs because exclusion of such costs permits consistent evaluations of Cadence's performance. Cadence's 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 Cadence's direct cost of operations. Finally, Cadence's 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 Cadence's direct cost of operations. Rather, these are non-operating items that are included in other income or expense and are part of the company's investment activities.

During the third quarter of 2012, Cadence's non-GAAP net income also excluded the effect of an income tax benefit associated with Cadence's acquisition of Sigrity, Inc. Cadence's management believes it is useful to exclude the tax benefit associated with this acquisition because Cadence does not expect an acquisition-related income tax benefit of the magnitude recorded in the third quarter of 2012 to be recorded frequently.

Cadence's management believes that non-GAAP net income provides useful supplemental information to Cadence's management and investors regarding the performance of the company's business operations and facilitates comparisons to the company's historical operating results. Cadence's 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.

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       
                                             ------------------------------ 
                                              September 29,    October 1,   
                                                  2012            2011      
                                             --------------  -------------- 
                                                       (unaudited)          
(in thousands)                                                              
Net income on a GAAP basis                   $       58,584  $       28,106 
  Amortization of acquired intangibles                7,750           6,692 
  Stock-based compensation expense                   12,399          11,891 
  Non-qualified deferred compensation                                       
   expenses (credits)                                  (839)            229 
  Restructuring and other charges (credits)              57            (433)
  Shareholder litigation costs                      - - - -             179 
  Executive and other employee severance                                    
   costs                                            - - - -           1,331 
  Integration and acquisition-related costs           3,016             766 
  Amortization of debt discount                       5,279           6,697 
  Other income or expense related to                                        
   investments and non-qualified deferred                                   
   compensation plan assets*                          1,954          (5,544)
  Acquisition-related income tax benefit            (14,806)        - - - - 
  Income tax effect of non-GAAP adjustments         (14,054)        (12,619)
                                             --------------  -------------- 
Net income on a non-GAAP basis               $       59,340  $       37,295 
                                             ==============  ============== 
                                                                            
* 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.                                  
                                                                            
Diluted Net Income per Share Reconciliation        Three Months Ended       
                                             ------------------------------ 
                                              September 29,    October 1,   
                                                  2012            2011      
                                             --------------  -------------- 
                                                       (unaudited)          
(in thousands, except per share data)                                       
Diluted net income per share on a GAAP basis $         0.21  $         0.10 
  Amortization of acquired intangibles                 0.03            0.03 
  Stock-based compensation expense                     0.04            0.04 
  Non-qualified deferred compensation                                       
   expenses (credits)                               - - - -         - - - - 
  Restructuring and other charges (credits)         - - - -         - - - - 
  Shareholder litigation costs                      - - - -         - - - - 
  Executive and other employee severance                                    
   costs                                            - - - -            0.01 
  Integration and acquisition-related costs            0.01         - - - - 
  Amortization of debt discount                        0.02            0.02 
  Other income or expense related to                                        
   investments and non-qualified deferred                                   
   compensation plan assets*                        - - - -           (0.02)
  Acquisition-related income tax benefit              (0.05)        - - - - 
  Income tax effect of non-GAAP adjustments           (0.05)          (0.04)
                                             --------------  -------------- 
Diluted net income per share on a non-GAAP                                  
 basis                                       $         0.21  $         0.14 
                                             ==============  ============== 
Shares used in calculation of diluted net                                   
 income per share --GAAP**                          283,328         270,741 
Shares used in calculation of diluted net                                   
 income per share --non-GAAP**                      283,328         270,741 
                                                                            
 * 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.

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 Cadence's current expectations on matters covered unless Cadence publishes a notice stating otherwise.

Beginning December 14, 2012, 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 any update by the company. During the Quiet Period, Cadence's representatives will not comment on Cadence's business outlook, financial results or expectations. The Quiet Period will extend until the day when Cadence's Fourth Quarter 2012 Earnings Release is published, which is currently scheduled for January 30, 2013.

                                                                            
                        Cadence Design Systems, Inc.                        
                    Condensed Consolidated Balance Sheets                   
                  September 29, 2012 and December 31, 2011                  
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
                                           September 29,      December 31,  
                                               2012               2011      
                                        ------------------ -----------------
                                                                            
Current Assets:                                                             
  Cash and cash equivalents             $          649,099 $         601,602
  Short-term investments                            95,819             3,037
  Receivables, net of allowances of                                         
   $110 and $0, respectively                       123,206           136,772
  Inventories                                       34,629            43,243
  2015 notes hedges                                287,079           215,113
  Prepaid expenses and other                        60,780            64,216
                                        ------------------ -----------------
    Total current assets                         1,250,612         1,063,983
                                                                            
Property, plant and equipment, net of                                       
 accumulated depreciation of $638,552                                       
 and $658,990, respectively                        246,856           262,517
Goodwill                                           233,275           192,125
Acquired intangibles, net of                                                
 accumulated amortization of $97,746                                        
 and $91,542, respectively                         192,768           173,234
Long-term receivables                                5,668            11,371
Other assets                                        59,335            58,039
                                        ------------------ -----------------
Total Assets                            $        1,988,514 $       1,761,269
                                        ================== =================
                                                                            
Current Liabilities:                                                        
  Convertible notes                     $          305,029 $         294,061
  2015 notes embedded conversion                                            
   derivative                                      287,079           215,113
  Accounts payable and accrued                                              
   liabilities                                     160,250           165,791
  Current portion of deferred revenue              322,260           340,401
                                        ------------------ -----------------
    Total current liabilities                    1,074,618         1,015,366
                                        ------------------ -----------------
                                                                            
Long-Term Liabilities:                                                      
  Long-term portion of deferred revenue             58,436            73,959
  Convertible notes                                136,594           131,920
  Other long-term liabilities                      130,478           128,894
                                        ------------------ -----------------
    Total long-term liabilities                    325,508           334,773
                                        ------------------ -----------------
                                                                            
Stockholders' Equity                               588,388           411,130
                                        ------------------ -----------------
Total Liabilities and Stockholders'                                         
 Equity                                 $        1,988,514 $       1,761,269
                                        ================== =================
                                                                            
                        Cadence Design Systems, Inc.                        
                  Condensed Consolidated Income Statements                  
 For the Three and Nine Months Ended September 29, 2012 and October 1, 2011 
                  (In thousands, except per share amounts)                  
                                (Unaudited)                                 
                                                                            
                         Three Months Ended           Nine Months Ended     
                     --------------------------  -------------------------- 
                     September 29,   October 1,  September 29,   October 1, 
                          2012          2011          2012          2011    
                     -------------  -----------  -------------  ----------- 
                                                                            
Revenue:                                                                    
  Product            $     216,561  $   163,966  $     614,886  $   463,723 
  Services                  28,415       29,102         86,923       86,384 
  Maintenance               93,557       99,389        279,030      291,722 
                     -------------  -----------  -------------  ----------- 
                                                                            
    Total revenue          338,533      292,457        980,839      841,829 
                     -------------  -----------  -------------  ----------- 
                                                                            
Costs and Expenses:                                                         
  Cost of product           23,337       18,185         60,323       52,453 
  Cost of services          16,809       20,410         53,254       61,101 
  Cost of                                                                   
   maintenance              11,124       11,223         33,756       32,837 
  Marketing and                                                             
   sales                    82,461       79,914        246,674      235,292 
  Research and                                                              
   development             115,078      103,154        335,703      303,721 
  General and                                                               
   administrative           26,350       24,041         84,364       68,720 
  Amortization of                                                           
   acquired                                                                 
   intangibles               3,876        3,786         11,305       12,750 
  Restructuring and                                                         
   other charges                                                            
   (credits)                    57         (433)            49          277 
                     -------------  -----------  -------------  ----------- 
                                                                            
    Total costs and                                                         
     expenses              279,092      260,280        825,428      767,151 
                     -------------  -----------  -------------  ----------- 
                                                                            
      Income from                                                           
       operations           59,441       32,177        155,411       74,678 
                                                                            
  Interest expense          (8,737)     (10,830)       (25,840)     (32,584)
  Other income                                                              
   (expense), net             (131)       7,244          5,972       20,107 
                     -------------  -----------  -------------  ----------- 
                                                                            
      Income before                                                         
       provision                                                            
       (benefit) for                                                        
       income taxes         50,573       28,591        135,543       62,201 
                                                                            
  Provision                                                                 
   (benefit) for                                                            
   income taxes             (8,011)         485          9,469          864 
                     -------------  -----------  -------------  ----------- 
                                                                            
      Net income     $      58,584  $    28,106  $     126,074  $    61,337 
                     =============  ===========  =============  =========== 
                                                                            
                                                                            
Net income per share                                                        
 - basic             $        0.22  $      0.11  $        0.47  $      0.23 
                     =============  ===========  =============  =========== 
                                                                            
Net income per share                                                        
 - diluted           $        0.21  $      0.10  $        0.45  $      0.23 
                     =============  ===========  =============  =========== 
                                                                            
Weighted average                                                            
 common shares                                                              
 outstanding - basic       271,350      264,723        269,643      263,149 
                     =============  ===========  =============  =========== 
                                                                            
Weighted average                                                            
 common shares                                                              
 outstanding -                                                              
 diluted                   283,328      270,741        278,760      270,068 
                     =============  ===========  =============  =========== 
                                                                            
                        Cadence Design Systems, Inc.                        
              Condensed Consolidated Statements of Cash Flows               
      For the Nine Months Ended September 29, 2012 and October 1, 2011      
                               (In thousands)                               
                                (Unaudited)                                 
                                                                            
                                                   Nine Months Ended        
                                           -------------------------------- 
                                            September 29,      October 1,   
                                                 2012             2011      
                                           ---------------  --------------- 
                                                                            
Cash and Cash Equivalents at Beginning of                                   
 Period                                    $       601,602  $       557,409 
                                           ---------------  --------------- 
Cash Flows from Operating Activities:                                       
  Net income                                       126,074           61,337 
  Adjustments to reconcile net income to                                    
   net cash provided by operating                                           
   activities:                                                              
  Depreciation and amortization                     67,171           68,934 
  Amortization of debt discount and fees            17,480           22,068 
  Stock-based compensation                          34,285           31,589 
  Gain on investments, net                          (2,222)         (19,220)
  Non-cash restructuring and other charges             188              202 
  Deferred income taxes                            (14,107)          (4,741)
  Provisions (recoveries) for losses                                        
   (gains) on receivables, net                         120           (6,596)
  Other non-cash items                               3,270            3,689 
  Changes in operating assets and                                           
   liabilities, net of effect of acquired                                   
   businesses:                                                              
    Receivables                                     24,276           63,729 
    Inventories                                      6,936           (9,767)
    Prepaid expenses and other                       1,547           19,718 
    Other assets                                    (3,101)           3,718 
    Accounts payable and accrued                                            
     liabilities                                    (1,714)         (71,832)
    Deferred revenue                               (38,230)          20,245 
    Other long-term liabilities                     (1,855)          (4,868)
                                           ---------------  --------------- 
      Net cash provided by operating                                        
       activities                                  220,118          178,205 
                                           ---------------  --------------- 
                                                                            
Cash Flows from Investing Activities:                                       
  Proceeds from the sale and maturity of                                    
   available-for-sale securities                     7,436            9,588 
  Purchases of available-for-sale                                           
   securities                                     (101,248)               - 
  Proceeds from the sale of long-term                                       
   investments                                          44            4,824 
  Purchases of property, plant and                                          
   equipment                                       (25,932)         (17,703)
  Investment in venture capital                                             
   partnerships and equity investments                (250)            (608)
  Cash paid in business combinations and                                    
   asset acquisitions, net of cash                                          
   acquired                                        (66,432)         (44,052)
                                           ---------------  --------------- 
      Net cash used for investing                                           
       activities                                 (186,382)         (47,951)
                                           ---------------  --------------- 
                                                                            
Cash Flows from Financing Activities:                                       
  Principal payments on receivable sale                                     
   financing                                        (2,907)          (2,829)
  Tax effect related to employee stock                                      
   transactions allocated to equity                  5,790            2,897 
  Payment of acquisition-related                                            
   contingent consideration                            (39)               - 
  Proceeds from issuance of common stock            28,755           16,994 
  Stock received for payment of employee                                    
   taxes on vesting of restricted stock            (13,457)          (9,926)
                                           ---------------  --------------- 
      Net cash provided by financing                                        
       activities                                   18,142            7,136 
                                           ---------------  --------------- 
                                                                            
Effect of exchange rate changes on cash                                     
 and cash equivalents                               (4,381)           1,302 
                                           ---------------  --------------- 
                                                                            
Increase in cash and cash equivalents               47,497          138,692 
                                           ---------------  --------------- 
                                                                            
Cash and Cash Equivalents at End of Period $       649,099  $       696,101 
                                           ===============  =============== 
                                                                            
                        Cadence Design Systems, Inc.                        
                           As of October 24, 2012                           
  Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per  
                                    Share                                   
                                 (Unaudited)                                
                                                                            
                                      Three Months Ending     Year Ending   
                                       December 29, 2012   December 29, 2012
                                     -------------------- ------------------
                                           Forecast            Forecast     
                                     -------------------- ------------------
                                                                            
Diluted net income per share on a                                           
 GAAP basis                             $0.13 to $0.15      $0.58 to $0.60  
                                                                            
  Amortization of acquired                                                  
   intangibles                               0.03                0.10       
  Stock-based compensation expense           0.04                0.17       
  Non-qualified deferred                                                    
   compensation expenses                       -                 0.01       
  Integration and acquisition-                                              
   related costs                             0.01                0.03       
  Amortization of debt discount              0.02                0.07       
  Other income or expense related to                                        
   investments and non-qualified                                            
  deferred compensation plan assets*           -                (0.01)      
  Acquisition-related income tax                                            
   benefit                                     -                (0.05)      
  Income tax effect of non-GAAP                                             
   adjustments                              (0.05)              (0.15)      
                                                                            
                                     -------------------- ------------------
Diluted net income per share on a                                           
 non-GAAP basis                         $0.18 to $0.20      $0.75 to $0.77  
                                     ==================== ==================
                                                                            
* 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 24, 2012                           
        Impact of Non-GAAP Adjustments on Forward Looking Net Income        
                                 (Unaudited)                                
                                                                            
                                      Three Months Ending     Year Ending   
                                       December 29, 2012   December 29, 2012
                                     -------------------- ------------------
($ in Millions)                            Forecast            Forecast     
                                     -------------------- ------------------
                                                                            
Net income on a GAAP basis                $36 to $42         $162 to $168   
                                                                            
  Amortization of acquired                                                  
   intangibles                                 8                  29        
  Stock-based compensation expense            13                  47        
  Non-qualified deferred                                                    
   compensation expenses                       -                   3        
  Integration and acquisition-                                              
   related costs                               2                   9        
  Amortization of debt discount                5                  21        
  Other income or expense related to                                        
   investments and non-qualified                                            
   deferred compensation plan                                               
   assets*                                     -                  (2)       
  Acquisition-related income tax                                            
   benefit                                     -                 (15)       
  Income tax effect of non-GAAP                                             
   adjustments                               (13)                (44)       
                                                                            
                                     -------------------- ------------------
Net income on a non-GAAP basis            $51 to $57         $210 to $216   
                                     ==================== ==================
                                                                            
                                                                            
* 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)                               
                                                                            
                                         2011                    2012       
                             ----------------------------  ---------------- 
GEOGRAPHY                     Q1    Q2    Q3    Q4   Year   Q1    Q2    Q3  
                             ----  ----  ----  ----  ----  ----  ----  ---- 
                                                                            
Americas                       44%   47%   44%   44%   45%   44%   46%   43%
EMEA                           21%   20%   21%   20%   20%   19%   20%   20%
Japan                          19%   17%   18%   17%   18%   18%   16%   17%
Asia                           16%   16%   17%   19%   17%   19%   18%   20%
Total                         100%  100%  100%  100%  100%  100%  100%  100%
                                                                            
Revenue Mix by Product Group (% of Total Revenue)                           
                                                                            
                                         2011                    2012       
                             ----------------------------  ---------------- 
PRODUCT GROUP                 Q1    Q2    Q3    Q4   Year   Q1    Q2    Q3  
                             ----  ----  ----  ----  ----  ----  ----  ---- 
                                                                            
Functional Verification and                                                 
 Design IP                     28%   33%   30%   32%   30%   30%   33%   30%
Digital IC Design              24%   21%   22%   21%   22%   23%   22%   23%
Custom IC Design               20%   22%   23%   23%   22%   23%   22%   24%
Design for Manufacturing        8%    6%    6%    6%    7%    7%    6%    6%
System Interconnect            10%    8%    9%    8%    9%    8%    8%    9%
Services & Other               10%   10%   10%   10%   10%    9%    9%    8%
Total                         100%  100%  100%  100%  100%  100%  100%  100%
                                                                            
Note: Product Group total revenue includes Product + Maintenance            

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For more information, please contact: 

Investors and Shareholders 
Alan Lindstrom
Cadence Design Systems, Inc. 
408-944-7100 

Email Contact

Media and Industry Analysts
Nancy Szymanski
Cadence Design Systems, Inc. 
408-473-8382

Email Contact