Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.
The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
Operating Margin Reconciliation |
|
Three Months Ended |
||
|
|
July 3, 2021 |
|
June 27, 2020 |
|
|
(unaudited) |
||
GAAP operating margin as a percent of total revenue |
|
25% |
|
24% |
Reconciling items to non-GAAP operating margin as a percent of total revenue: |
|
|
|
|
Stock-based compensation expense |
|
7% |
|
7% |
Amortization of acquired intangibles |
|
2% |
|
2% |
Acquisition and integration-related costs |
|
1% |
|
1% |
Restructuring and other credits |
|
0% |
|
0% |
Non-qualified deferred compensation expenses |
|
0% |
|
1% |
Special charges* |
|
4% |
|
0% |
Non-GAAP operating margin as a percent of total revenue |
|
39% |
|
35% |
* |
Q2 2021 includes costs related to a voluntary retirement program. |
Net Income Reconciliation |
|
Three Months Ended |
||||||
|
|
July 3, 2021 |
|
June 27, 2020 |
||||
(in thousands) |
|
(unaudited) |
||||||
Net income on a GAAP basis |
|
$ |
155,900 |
|
|
$ |
131,288 |
|
Stock-based compensation expense |
|
50,518 |
|
|
46,907 |
|
||
Amortization of acquired intangibles |
|
17,262 |
|
|
16,074 |
|
||
Acquisition and integration-related costs |
|
5,631 |
|
|
5,315 |
|
||
| Restructuring and other credits |
|
(469 |
) |
|
(275 |
) |
||
| Non-qualified deferred compensation expenses |
|
2,411 |
|
|
3,618 |
|
||
| Special charges* |
|
26,832 |
|
|
270 |
|
||
| Other income or expense related to investments and non-qualified deferred compensation plan assets** |
|
(1,774 |
) |
|
(2,797 |
) |
||
| Income tax effect of non-GAAP adjustments |
|
(18,023 |
) |
|
(15,786 |
) |
||
| Net income on a non-GAAP basis |
|
$ |
238,288 |
|
|
$ |
184,614 |
|
| * |
Q2 2021 includes costs related to a voluntary retirement program. |
| ** |
Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
| Diluted Net Income Per Share Reconciliation |
|
Three Months Ended |
||||||
|
|
|
July 3, 2021 |
|
June 27, 2020 |
||||
| (in thousands, except per share data) |
|
(unaudited) |
||||||
| Diluted net income per share on a GAAP basis |
|
$ |
0.56 |
|
|
$ |
0.47 |
|
| Stock-based compensation expense |
|
0.18 |
|
|
0.17 |
|
||
| Amortization of acquired intangibles |
|
0.06 |
|
|
0.06 |
|
||
| Acquisition and integration-related costs |
|
0.02 |
|
|
0.02 |
|
||
| Restructuring and other credits |
|
— |
|
|
— |
|
||
| Non-qualified deferred compensation expenses |
|
0.01 |
|
|
0.01 |
|
||
| Special charges* |
|
0.10 |
|
|
— |
|
||
| Other income or expense related to investments and non-qualified deferred compensation plan assets** |
|
(0.01 |
) |
|
(0.01 |
) |
||
| Income tax effect of non-GAAP adjustments |
|
(0.06 |
) |
|
(0.06 |
) |
||
| Diluted net income per share on a non-GAAP basis |
|
$ |
0.86 |
|
|
$ |
0.66 |
|
| Shares used in calculation of diluted net income per share |
|
278,558 |
|
|
279,080 |
|
||
| * |
Q2 2021 includes costs related to a voluntary retirement program. |
| ** |
Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
