Cadence Reports Fourth Quarter and Fiscal Year 2021 Financial Results

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 March 18, 2022, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute Cadence’s current expectations. During the Quiet Period, the business outlook in these documents should be considered historical, speaking as of prior to the Quiet Period only and not subject to any update by Cadence. 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 Cadence’s first quarter 2022 earnings release is published, which is currently scheduled for April 25, 2022.

 
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
January 1, 2022 and January 2, 2021
(In thousands)
(Unaudited)
 
January 1, 2022 January 2, 2021
 
Current assets:
Cash and cash equivalents

$

1,088,940

$

928,432

Receivables, net

 

337,596

 

338,487

Inventories

 

115,721

 

75,956

Prepaid expenses and other

 

173,512

 

135,712

Total current assets

 

1,715,769

 

1,478,587

 
Property, plant and equipment, net

 

305,911

 

311,125

Goodwill

 

928,358

 

782,087

Acquired intangibles, net

 

233,265

 

210,590

Deferred taxes

 

763,770

 

732,290

Other assets

 

439,226

 

436,106

Total assets

$

4,386,299

$

3,950,785

 
Current liabilities:
Accounts payable and accrued liabilities

$

417,283

$

349,951

Current portion of deferred revenue

 

553,942

 

446,857

Total current liabilities

 

971,225

 

796,808

 
Long-term liabilities:
Long-term portion of deferred revenue

 

101,148

 

107,064

Long-term debt

 

347,588

 

346,793

Other long-term liabilities

 

225,663

 

207,102

Total long-term liabilities

 

674,399

 

660,959

 
Stockholders' equity

 

2,740,675

 

2,493,018

Total liabilities and stockholders' equity

$

4,386,299

$

3,950,785

 
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months and Years Ended January 1, 2022 and January 2, 2021
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended Years Ended
January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021
 
Revenue:
Product and maintenance

$

719,849

 

$

723,233

 

$

2,812,947

 

$

2,536,617

 

Services

 

53,187

 

 

36,676

 

 

175,297

 

 

146,274

 

 
Total revenue

 

773,036

 

 

759,909

 

 

2,988,244

 

 

2,682,891

 

 
Costs and expenses:
Cost of product and maintenance

 

47,714

 

 

55,111

 

 

222,647

 

 

231,026

 

Cost of services

 

21,979

 

 

18,425

 

 

84,359

 

 

74,472

 

Marketing and sales

 

148,068

 

 

146,502

 

 

560,262

 

 

516,460

 

Research and development

 

288,953

 

 

290,309

 

 

1,134,277

 

 

1,033,732

 

General and administrative

 

65,743

 

 

49,264

 

 

189,018

 

 

154,425

 

Amortization of acquired intangibles

 

4,979

 

 

4,775

 

 

19,640

 

 

18,009

 

Restructuring

 

(80

)

 

10,544

 

 

(1,048

)

 

9,215

 

 
Total costs and expenses

 

577,356

 

 

574,930

 

 

2,209,155

 

 

2,037,339

 

 
Income from operations

 

195,680

 

 

184,979

 

 

779,089

 

 

645,552

 

 
Interest expense

 

(4,251

)

 

(4,873

)

 

(16,980

)

 

(20,749

)

Other income, net

 

2,625

 

 

6,083

 

 

6,326

 

 

7,945

 

 
Income before provision for income taxes

 

194,054

 

 

186,189

 

 

768,435

 

 

632,748

 

 
Provision for income taxes

 

17,475

 

 

12,451

 

 

72,480

 

 

42,104

 

 
Net income

$

176,579

 

$

173,738

 

$

695,955

 

$

590,644

 

 
 
Net income per share - basic

$

0.65

 

$

0.63

 

$

2.54

 

$

2.16

 

 
Net income per share - diluted

$

0.63

 

$

0.62

 

$

2.50

 

$

2.11

 

 
Weighted average common shares outstanding - basic

 

273,066

 

 

273,985

 

 

273,504

 

 

273,728

 

 
Weighted average common shares outstanding - diluted

 

278,253

 

 

280,173

 

 

278,858

 

 

279,641

 

 
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Years Ended January 1, 2022 and January 2, 2021
(In thousands)
(Unaudited)
 
Years Ended
January 1, January 2,

 

2022

 

 

2021

 

 
Cash and cash equivalents at beginning of year

$

928,432

 

$

705,210

 

Cash flows from operating activities:
Net income

 

695,955

 

 

590,644

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

 

142,308

 

 

145,653

 

Amortization of debt discount and fees

 

1,219

 

 

1,053

 

Stock-based compensation

 

210,090

 

 

197,268

 

(Gain) loss on investments, net

 

(580

)

 

4,954

 

Deferred income taxes

 

(43,178

)

 

(26,117

)

Provisions for losses on receivables

 

525

 

 

1,628

 

ROU asset amortization and change in operating lease liabilities

 

(11,606

)

 

4,483

 

Other non-cash items

 

427

 

 

773

 

Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables

 

2,014

 

 

(25,934

)

Inventories

 

(39,027

)

 

(25,685

)

Prepaid expenses and other

 

(34,342

)

 

(31,167

)

Other assets

 

(7,133

)

 

(71,606

)

Accounts payable and accrued liabilities

 

67,356

 

 

18,394

 

Deferred revenue

 

100,731

 

 

110,173

 

Other long-term liabilities

 

16,199

 

 

10,408

 

Net cash provided by operating activities

 

1,100,958

 

 

904,922

 

 
Cash flows from investing activities:
Proceeds from the sale of non-marketable investments

 

128

 

 

217

 

Purchases of property, plant and equipment

 

(65,298

)

 

(94,813

)

Purchases of intangible assets

 

(1,583

)

 

-

 

Cash paid in business combinations, net of cash acquired

 

(226,201

)

 

(197,562

)

Net cash used for investing activities

 

(292,954

)

 

(292,158

)

 
Cash flows from financing activities:
Proceeds from revolving credit facility

 

-

 

 

350,000

 

Payment on revolving credit facility

 

-

 

 

(350,000

)

Payment of debt issuance costs

 

(1,285

)

 

-

 

Proceeds from issuance of common stock

 

87,772

 

 

74,803

 

Stock received for payment of employee taxes on vesting of restricted stock

 

(117,982

)

 

(110,028

)

Payments for repurchases of common stock

 

(612,297

)

 

(380,064

)

Net cash used for financing activities

 

(643,792

)

 

(415,289

)

 
Effect of exchange rate changes on cash and cash equivalents

 

(3,704

)

 

25,747

 

 
Increase in cash and cash equivalents

 

160,508

 

 

223,222

 

 
Cash and cash equivalents at end of year

$

1,088,940

 

$

928,432

 

 
Cadence Design Systems, Inc.
(Unaudited)
 
Revenue Mix by Geography (% of Total Revenue)

2020

 

 

2021

GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
 
Americas

43%

44%

42%

41%

42%

46%

44%

46%

43%

45%

China

13%

12%

17%

17%

15%

12%

14%

13%

12%

13%

Other Asia

18%

19%

19%

18%

18%

18%

19%

18%

21%

19%

Europe, Middle East and Africa

19%

18%

16%

17%

18%

18%

17%

17%

18%

17%

Japan

7%

7%

6%

7%

7%

6%

6%

6%

6%

6%

Total

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

 
 
Revenue Mix by Product Category (% of Total Revenue)

2020

 

 

2021

PRODUCT CATEGORY Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
 
Custom IC Design and Simulation

25%

24%

24%

26%

25%

23%

23%

23%

24%

23%

Digital IC Design and Signoff

29%

28%

27%

31%

29%

27%

28%

29%

29%

29%

Functional Verification, including Emulation and Prototyping Hardware

23%

24%

23%

19%

22%

26%

25%

23%

21%

24%

IP

14%

14%

15%

13%

14%

14%

13%

14%

14%

13%

System Design and Analysis

9%

10%

11%

11%

10%

10%

11%

11%

12%

11%

Total

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

 
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of February 22, 2022
(Unaudited)
 
Three Months Ending Year Ending
April 2, 2022 December 31, 2022
Forecast Forecast
 
GAAP operating margin as a percent of total revenue

30% - 31%

 

27.5% - 29%

 

 

 

Reconciling items to non-GAAP operating margin as a percent of total revenue:

 

 

 

Stock-based compensation expense

7%

 

8%

Amortization of acquired intangibles

2%

 

2%

Acquisition and integration-related costs

1%

 

0%

 

 

 

Non-GAAP operating margin as a percent of total revenue�nbsp;

40% - 41%

 

37.5% - 39%

�nbsp;

The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

 
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
As of February 22, 2022
(Unaudited)
 
Three Months Ending Year Ending
April 2, 2022 December 31, 2022
Forecast Forecast
 
Diluted net income per share on a GAAP basis $0.70 to $0.74 $2.46 to $2.56
 
Stock-based compensation expense

0.22

 

0.97

Amortization of acquired intangibles

0.06

 

0.19

Acquisition and integration-related costs

0.01

 

0.03

Income tax effect of non-GAAP adjustments

0.01

 

0.05

 
Diluted net income per share on a non-GAAP basis�nbsp; $1.00 to $1.04 $3.70 to $3.80
 
 
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of February 22, 2022
(Unaudited)
 
Three Months Ending Year Ending
April 2, 2022 December 31, 2022
($ in millions) Forecast Forecast
 
Net income on a GAAP basis

$193 to $204

 

$685 to $713

 

 

 

Stock-based compensation expense

61

 

268

Amortization of acquired intangibles

17

 

52

Acquisition and integration-related costs

4

 

8

Income tax effect of non-GAAP adjustments

3

 

15

 
Net income on a non-GAAP basis�nbsp; $278 to $289 $1,028 to $1,056
�nbsp; The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

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