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 September 13, 2013, 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 Third Quarter 2013 Earnings Release is published, which is currently scheduled for October 23, 2013.
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
June 29, 2013 and December 29, 2012
(In thousands)
(Unaudited)
June 29, 2013 December 29, 2012
----------------- -----------------
Current assets:
Cash and cash equivalents $ 577,233 $ 726,357
Short-term investments 101,251 100,704
Receivables, net of allowances of $0
and $85, respectively 92,581 97,821
Inventories 38,705 36,163
2015 notes hedges 335,131 303,154
Prepaid expenses and other 120,598 127,036
----------------- -----------------
Total current assets 1,265,499 1,391,235
Property, plant and equipment, net of
accumulated depreciation of $623,356 and
$635,450, respectively 243,288 244,439
Goodwill 457,556 233,266
Acquired intangibles, net of accumulated
amortization of $115,406 and $104,351,
respectively 337,705 184,938
Long-term receivables 5,929 7,559
Other assets 253,112 225,566
----------------- -----------------
Total assets $ 2,563,089 $ 2,287,003
================= =================
Current liabilities:
Revolving credit facility $ 100,000 $ -
Convertible notes 458,179 447,011
2015 notes embedded conversion
derivative 335,131 303,154
Accounts payable and accrued
liabilities 185,809 171,318
Current portion of deferred revenue 282,784 295,787
----------------- -----------------
Total current liabilities 1,361,903 1,217,270
----------------- -----------------
Long-term liabilities:
Long-term portion of deferred revenue 43,892 50,529
Other long-term liabilities 117,034 104,033
----------------- -----------------
Total long-term liabilities 160,926 154,562
----------------- -----------------
Stockholders' equity 1,040,260 915,171
----------------- -----------------
Total liabilities and stockholders'
equity $ 2,563,089 $ 2,287,003
================= =================
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three and Six Months Ended June 29, 2013 and June 30, 2012
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
----------------------- -----------------------
June 29, June 30, June 29, June 30,
2013 2012 2013 2012
----------- ----------- ----------- -----------
Revenue:
Product and maintenance $ 337,983 $ 297,510 $ 666,254 $ 583,798
Services 24,498 28,966 50,493 58,508
----------- ----------- ----------- -----------
Total revenue 362,481 326,476 716,747 642,306
----------- ----------- ----------- -----------
Costs and expenses:
Cost of product and
maintenance 28,095 32,406 57,942 59,618
Cost of services 15,148 17,071 33,492 36,445
Marketing and sales 95,277 80,418 185,679 164,213
Research and development 136,395 112,031 260,479 220,625
General and
administrative 34,441 30,244 64,251 58,014
Amortization of acquired
intangibles 5,327 3,643 9,118 7,429
Restructuring and other
charges (credits) 2,656 43 2,508 (8)
----------- ----------- ----------- -----------
Total costs and
expenses 317,339 275,856 613,469 546,336
----------- ----------- ----------- -----------
Income from
operations 45,142 50,620 103,278 95,970
Interest expense (9,528) (8,566) (18,790) (17,103)
Other income, net 2,018 3,669 4,193 6,103
----------- ----------- ----------- -----------
Income before
provision for income
taxes 37,632 45,723 88,681 84,970
Provision for income
taxes 28,203 9,337 643 17,480
----------- ----------- ----------- -----------
Net income $ 9,429 $ 36,386 $ 88,038 $ 67,490
=========== =========== =========== ===========
Net income per share -
basic $ 0.03 $ 0.13 $ 0.32 $ 0.25
=========== =========== =========== ===========
Net income per share -
diluted $ 0.03 $ 0.13 $ 0.30 $ 0.24
=========== =========== =========== ===========
Weighted average common
shares outstanding - basic 277,146 269,739 276,018 268,840
=========== =========== =========== ===========
Weighted average common
shares outstanding -
diluted 294,443 275,318 293,274 276,526
=========== =========== =========== ===========
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 29, 2013 and June 30, 2012
(In thousands)
(Unaudited)
Six Months Ended
----------------------
June 29, June 30,
2013 2012
---------- ----------
Cash and cash equivalents at beginning of period $ 726,357 $ 601,602
---------- ----------
Cash flows from operating activities:
Net income 88,038 67,490
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 46,977 43,736
Amortization of debt discount and fees 12,625 11,529
Stock-based compensation 28,921 21,886
Gain on investments, net (2,477) (4,169)
Deferred income taxes (4,413) 459
Other non-cash items 433 3,564
Changes in operating assets and liabilities, net
of effect of acquired businesses:
Receivables 8,719 16,513
Inventories (2,672) 499
Prepaid expenses and other 26,516 414
Other assets (45,274) (169)
Accounts payable and accrued liabilities 10,023 (4,694)
Deferred revenue (24,359) (27,446)
Other long-term liabilities 7,174 (1,424)
---------- ----------
Net cash provided by operating activities 150,231 128,188
---------- ----------
Cash flows from investing activities:
Purchases of available-for-sale securities (63,705) (49,083)
Proceeds from the sale of available-for-sale
securities 46,857 136
Proceeds from the maturity of available-for-sale
securities 15,716 -
Proceeds from the sale of long-term investments 6,102 44
Purchases of property, plant and equipment (23,739) (18,269)
Investment in venture capital partnerships and
equity investments - (250)
Cash paid in business combinations and asset
acquisitions, net of cash acquired (392,139) (1,041)
---------- ----------
Net cash used for investing activities (410,908) (68,463)
---------- ----------
Cash flows from financing activities:
Proceeds from revolving credit facility 100,000 -
Principal payments on receivable financing (2,526) (2,907)
Payment of acquisition-related contingent
consideration (582) (39)
Tax effect related to employee stock transactions
allocated to equity 7,300 4,075
Proceeds from issuance of common stock 30,227 13,063
Stock received for payment of employee taxes on
vesting of restricted stock (11,758) (9,897)
---------- ----------
Net cash provided by financing activities 122,661 4,295
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents (11,108) (3,964)
---------- ----------
Increase (decrease) in cash and cash equivalents (149,124) 60,056
---------- ----------
Cash and cash equivalents at end of period $ 577,233 $ 661,658
========== ==========
Cadence Design Systems, Inc.
As of July 24, 2013
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per
Share
(Unaudited)
Three Months Ending Year Ending
September 28, 2013 December 28, 2013
------------------- -------------------
Forecast Forecast
------------------- -------------------
Diluted net income per share on a
GAAP basis $0.08 to $0.10 $0.45 to $0.54
Amortization of acquired
intangibles 0.04 0.14
Stock-based compensation expense 0.06 0.23
Non-qualified deferred compensation
expenses - 0.01
Restructuring and other charges - 0.01
Integration and acquisition-related
costs 0.03 0.10
Amortization of debt discount 0.02 0.08
Other income or expense related to
investments and non-qualified
deferred compensation plan assets* - (0.01)
Income tax benefit due to a release
of an uncertain tax position - (0.11)
Income tax effect of non-GAAP
adjustments (0.04) (0.10)
------------------- -------------------
Diluted net income per share on a
non-GAAP basis $0.19 to $0.21 $0.80 to $0.89
=================== ===================
* Includes, as applicable, equity in losses or income from investments,
write-down of investments, gains or losses on sale of investments and
gains or losses on non-qualified deferred compensation plan assets
recorded in other income or expense.
Cadence Design Systems, Inc.
As of July 24, 2013
Impact of Non-GAAP Adjustments on Forward Looking Net Income
(Unaudited)
Three Months Ending Year Ending
September 28, 2013 December 28, 2013
------------------- -------------------
($ in millions) Forecast Forecast
------------------- -------------------
Net income on a GAAP basis $24 to $30 $134 to $161
Amortization of acquired
intangibles 12 43
Stock-based compensation expense 19 69
Non-qualified deferred
compensation expenses - 2
Restructuring and other charges - 3
Integration and acquisition-
related costs 8 29
Amortization of debt discount 6 22
Other income or expense related to
investments and non-qualified
deferred compensation plan
assets* - (2)
Income tax benefit due to a
release of an uncertain tax
position - (34)
Income tax effect of non-GAAP
adjustments (11) (30)
------------------- -------------------
Net income on a non-GAAP basis $58 to $64 $236 to $263
=================== ===================
* 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 or expense.
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
2012 2013
------------------------- ----------
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2
------------------------- ----------
Americas 44% 46% 43% 45% 45% 44% 45%
EMEA 19% 20% 20% 21% 20% 22% 21%
Japan 18% 16% 17% 14% 16% 15% 13%
Asia 19% 18% 20% 20% 19% 19% 21%
Total 100% 100% 100% 100% 100% 100% 100%
Revenue Mix by Product Group (% of Total Revenue)
2012 2013
------------------------- ----------
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1 Q2
------------------------- ----------
Functional Verification, Hardware and
IP 30% 33% 30% 30% 30% 26% 28%
Digital IC Design 23% 22% 23% 23% 23% 25% 23%
Custom IC Design 23% 22% 24% 24% 23% 25% 25%
Design for Manufacturing 7% 6% 6% 6% 6% 7% 6%
System Interconnect Design 8% 8% 9% 9% 9% 10% 11%
Services and other 9% 9% 8% 8% 9% 7% 7%
Total 100% 100% 100% 100% 100% 100% 100%
Note: Product Group total revenue includes product + maintenance
Cadence Design Systems, Inc.
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures
For the Three Months Ended June 29, 2013
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
June 29, 2013
-----------------------------------------
GAAP Adjustments Non-GAAP
Revenue:
Product and maintenance $ 337,983 $ - $ 337,983
Services 24,498 - 24,498
----------- ----------- -----------
Total revenue 362,481 - 362,481
----------- ----------- -----------
Costs and expenses:
Cost of product and maintenance 28,095 (6,095) (A) 22,000
Cost of services 15,148 (483) (A) 14,665
Marketing and sales 95,277 (3,868) (A) 91,409
Research and development 136,395 (13,096) (A) 123,299
General and administrative 34,441 (9,121) (A) 25,320
Amortization of acquired
intangibles 5,327 (5,327) (A) -
Restructuring and other charges 2,656 (2,656) -
----------- ----------- -----------
Total costs and expenses 317,339 (40,646) 276,693
----------- ----------- -----------
Income from operations 45,142 40,646 85,788
Interest expense (9,528) 5,571 (B) (3,957)
Other income, net 2,018 (1,193) (C) 825
----------- ----------- -----------
Income before provision for
income taxes 37,632 45,024 82,656
Provision for income taxes 28,203 (6,712) (D) 21,491
----------- ----------- -----------
Net income $ 9,429 $ 51,736 $ 61,165
=========== =========== ===========
Notes:
(A) For the three months ended June 29, 2013 adjustments to GAAP are as
follows for the line items specified:
Non- Integration
qualified and
Amortization Stock-based deferred acquisition Total
of acquired compensation compensation -related adjust-
intangibles expense expenses costs ments
----------- ------------ ------------ ----------- ----------
Cost of product
and
maintenance $ 5,760 $ 323 $ 12 $ - $ 6,095
Cost of
services - 466 17 - 483
Marketing and
sales - 3,327 146 395 3,868
Research and
development - 7,485 879 4,732 13,096
General and
administrative - 3,510 645 4,966 9,121
Amortization of
acquired
intangibles 5,327 - - - 5,327
----------- ------------ ------------ ----------- ----------
Total $ 11,087 $ 15,111 $ 1,699 $ 10,093 $ 37,990
=========== ============ ============ =========== ==========
(B) Amortization of debt discount related to convertible notes
(C) Other income or expense related to investments and non-qualified
deferred compensation plan assets
(D) Income tax effect of non-GAAP adjustments
Cadence Design Systems, Inc.
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures
For the Three Months Ended June 30, 2012
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
June 30, 2012
-----------------------------------------
GAAP Adjustments Non-GAAP
Revenue:
Product and maintenance $ 297,510 $ - $ 297,510
Services 28,966 - 28,966
----------- ----------- -----------
Total revenue 326,476 - 326,476
----------- ----------- -----------
Costs and expenses:
Cost of product and maintenance 32,406 (3,188) (E) 29,218
Cost of services 17,071 (426) (E) 16,645
Marketing and sales 80,418 (2,420) (E) 77,998
Research and development 112,031 (7,865) (E) 104,166
General and administrative 30,244 (5,258) (E) 24,986
Amortization of acquired
intangibles 3,643 (3,643) (E) -
Restructuring and other charges 43 (43) -
----------- ----------- -----------
Total costs and expenses 275,856 (22,843) 253,013
----------- ----------- -----------
Income from operations 50,620 22,843 73,463
Interest expense (8,566) 5,124 (F) (3,442)
Other income, net 3,669 (2,220) (G) 1,449
----------- ----------- -----------
Income before provision for
income taxes 45,723 25,747 71,470
Provision for income taxes 9,337 9,245 (H) 18,582
----------- ----------- -----------
Net income $ 36,386 $ 16,502 $ 52,888
=========== =========== ===========
Notes:
(E) For the three months ended June 30, 2012 adjustments to GAAP are as
follows for the line items specified:
Non- Integration
qualified and
Amortization Stock-based deferred acquisition Total
of acquired compensation compensation -related adjust-
intangibles expense expenses costs ments
----------- ------------ ------------ ----------- ----------
Cost of product
and
maintenance $ 2,891 $ 268 $ 29 $ - $ 3,188
Cost of
services - 384 42 - 426
Marketing and
sales - 2,128 212 80 2,420
Research and
development - 4,441 1,083 2,341 7,865
General and
administrative - 3,140 912 1,206 5,258
Amortization of
acquired
intangibles 3,643 - - - 3,643
----------- ------------ ------------ ----------- ----------
Total $ 6,534 $ 10,361 $ 2,278 $ 3,627 $ 22,800
=========== ============ ============ =========== ==========
(F) Amortization of debt discount related to convertible notes
(G) Other income or expense related to investments and non-qualified
deferred compensation plan assets
(H) Income tax effect of non-GAAP adjustments
