Cadence Reports Second Quarter 2021 Financial Results

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.


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