Although Cadence's management finds the non-GAAP measure useful in evaluating the performance of Cadence's business, reliance on this measure is limited because items excluded from such measures often have a material effect on Cadence's earnings and earnings per share calculated in accordance with GAAP. Therefore, Cadence's management typically uses the non-GAAP earnings and earnings per share measures, in conjunction with the GAAP earnings and earnings per share measures, to address these limitations.
Cadence's management believes that presenting the non-GAAP measure of earnings and earnings per share provides investors with an additional tool for evaluating the performance of the company's business, which Cadence's management uses in its own evaluation of performance, and an additional baseline for assessing the future earnings potential of the company. While the GAAP results are more complete, Cadence's management prefers to allow investors to have this supplemental measure since it may provide additional insights into the company's 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 Web site.
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 June 19, 2009, 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 Second Quarter 2009 Earnings Release is published, which is currently scheduled for July 29, 2009.
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
April 4, 2009 and January 3, 2009
(In thousands)
(Unaudited)
April 4, 2009 January 3, 2009
--------------- ---------------
(As Adjusted)*
Current Assets:
Cash and cash equivalents $ 554,404 $ 568,255
Short-term investments 3,634 3,840
Receivables, net of allowances of
$10,743 and $7,524, respectively 245,689 298,665
Inventories 29,145 28,465
Prepaid expenses and other 55,263 54,765
--------------- ---------------
Total current assets 888,135 953,990
Property, plant and equipment, net of
accumulated depreciation of $613,180 and
$625,010, respectively 336,533 354,852
Acquired intangibles, net 42,282 49,082
Installment contract receivables, net of
allowances of $5,339 and $0, respectively 103,820 160,742
Other assets 144,368 161,187
--------------- ---------------
Total Assets $ 1,515,138 $ 1,679,853
=============== ===============
Current Liabilities:
Accounts payable and accrued liabilities 182,388 261,099
Current portion of deferred revenue 269,224 303,111
--------------- ---------------
Total current liabilities 451,612 564,210
--------------- ---------------
Long-Term Liabilities:
Long-term portion of deferred revenue 126,433 130,354
Convertible notes 421,359 416,572
Other long-term liabilities 368,049 382,004
--------------- ---------------
Total long-term liabilities 915,841 928,930
--------------- ---------------
Stockholders' Equity 147,685 186,713
--------------- ---------------
Total Liabilities and Stockholders'
Equity $ 1,515,138 $ 1,679,853
=============== ===============
* Adjusted for the retrospective adoption of FSP APB 14-1, "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)," during the three
months ended April 4, 2009.
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Operations
For the Three Months Ended April 4, 2009 and March 29, 2008
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
--------------------------------
April 4, 2009 March 29, 2008
-------------- --------------
(As Adjusted)*
Revenue:
Product $ 87,523 $ 139,754
Services 29,207 32,196
Maintenance 89,572 98,800
-------------- --------------
Total revenue 206,302 270,750
-------------- --------------
Costs and Expenses:
Cost of product 7,671 12,001
Cost of services 24,045 25,193
Cost of maintenance 12,461 14,540
Marketing and sales 74,890 93,034
Research and development 94,692 125,356
General and administrative 38,339 37,708
Amortization of acquired intangibles 3,140 5,760
Restructuring and other charges (credits) (520) -
Write-off of acquired in-process
technology - 600
-------------- --------------
Total costs and expenses 254,718 314,192
-------------- --------------
Loss from operations (48,416) (43,442)
Interest expense (7,048) (6,914)
Other income (expense), net (6,149) 5,763
-------------- --------------
Loss before provision (benefit)
for income taxes (61,613) (44,593)
Provision (benefit) for income taxes 1,644 (11,451)
-------------- --------------
Net loss $ (63,257) $ (33,142)
============== ==============
Basic and diluted net loss per share $ (0.25) $ (0.13)
============== ==============
Weighted average common shares
outstanding - basic and diluted 254,302 262,825
============== ==============
* Adjusted for the retrospective adoption of FSP APB 14-1, "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)," during the three
months ended April 4, 2009.
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended April 4, 2009 and March 29, 2008
(In thousands)
(Unaudited)
Three Months Ended
--------------------------------
April 4, March 29,
2009 2008
-------------- --------------
(As Adjusted)*
Cash and Cash Equivalents at Beginning
of Period $ 568,255 $ 1,062,920
-------------- --------------
Cash Flows from Operating Activities:
Net loss (63,257) (33,142)
Adjustments to reconcile net loss to
net cash used for operating
activities:
Depreciation and amortization 26,257 32,398
Amortization of debt discount
and fees 5,029 4,503
Stock-based compensation 12,728 21,590
Equity in loss from investments, net 146 333
(Gain) loss on investments, net 6,368 (224)
Gain on sale and leaseback of land
and buildings (122) (535)
Write-down of investment securities 3,993 5,401
Write-off of acquired in-process
technology - 600
Impairment of property, plant and
equipment 3,429 1,097
Deferred income taxes (3,073) -
Proceeds from the sale of
receivables, net 3,458 15,660
Provisions (recoveries) for losses
(gains) on trade accounts
receivable and sales returns 9,818 (142)
Other non-cash items (8,147) (22)
Changes in operating assets and
liabilities, net of effect of
acquired businesses:
Receivables 31,932 (20,431)
Installment contract receivables 57,767 42,600
Inventories (665) 1,281
Prepaid expenses and other 172 (3,546)
Other assets 7,083 (4,344)
Accounts payable and accrued
liabilities (63,736) (80,931)
Deferred revenue (31,581) 19,622
Other long-term liabilities (4,937) (20,849)
-------------- --------------
Net cash used for operating
activities (7,338) (19,081)
-------------- --------------
Cash Flows from Investing Activities:
Proceeds from the sale of long-term
investments - 3,250
Purchases of property, plant and
equipment (14,818) (24,595)
Purchases of software licenses - (375)
Investment in venture capital
partnerships and equity investments (1,150) -
Cash paid in business combinations and
asset acquisitions, net of cash
acquired, and acquisition of
intangibles (3,543) (5,560)
-------------- --------------
Net cash used for investing
activities (19,511) (27,280)
-------------- --------------
Cash Flows from Financing Activities:
Principal payments on receivable sale
financing (796) -
Tax benefit from employee stock
transactions - 95
Proceeds from issuance of common stock 19,521 25,485
Stock received for payment of employee
taxes on vesting of restricted stock (659) (2,207)
Purchases of treasury stock - (216,236)
-------------- --------------
Net cash provided by (used
for) financing activities 18,066 (192,863)
-------------- --------------
Effect of exchange rate changes on cash
and cash equivalents (5,068) 1,849
-------------- --------------
Decrease in cash and cash equivalents (13,851) (237,375)
-------------- --------------
Cash and Cash Equivalents at End
of Period $ 554,404 $ 825,545
============== ==============
* Adjusted for the retrospective adoption of FSP APB 14-1, "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)," during the three
months ended April 4, 2009.
Cadence Design Systems, Inc.
As of April 29, 2009
Impact of Non-GAAP Adjustments on Forward Looking
Diluted Net Loss Per Share
(Unaudited)
Three Months Ended Year Ended
July 4, 2009 January 2, 2010
----------------- -----------------
Forecast Forecast
----------------- -----------------
Diluted net loss per share on a $(0.24) to $(0.22) $(0.89) to $(0.77)
GAAP basis
Amortization of acquired
intangibles 0.02 0.08
Stock-based compensation expense 0.06 0.22
Non-qualified deferred
compensation expenses (credits) - (0.02)
Equity in losses from
investments, write-down of
investments, gains and losses
on non-qualified deferred
compensation plan assets - 0.05
Amortization of debt discount 0.02 0.07
Income tax effect of non-GAAP
adjustments 0.05 0.16
----------------- -----------------
Diluted net loss per share on a $(0.09) to $(0.07) $(0.33) to $(0.21)
non-GAAP basis ================= =================
Cadence Design Systems, Inc.
As of April 29, 2009
Impact of Non-GAAP Adjustments on Forward Looking Net Loss
(Unaudited)
Three Months Ended Year Ended
July 4, 2009 January 2, 2010
----------------- -----------------
($ in Millions) Forecast Forecast
----------------- -----------------
Net loss on a GAAP basis $(61) to $(57) $(229) to $(199)
Amortization of acquired
intangibles 5 20
Stock-based compensation expense 16 58
Non-qualified deferred
compensation expenses (credits) - (6)
Integration and
acquisition-related costs - 1
Equity in losses from
investments, write-down of
investments, gains and losses
on non-qualified deferred
compensation plan assets - 12
Amortization of debt discount 5 19
Income tax effect of non-GAAP
adjustments 12 41
----------------- -----------------
Net loss on a non-GAAP basis $(23) to $(19) $(84) to $(54)
================= =================
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
2007
============================
GEOGRAPHY Q1 Q2 Q3 Q4 Year
==== ==== ==== ==== ====
Americas 48% 52% 41% 50% 49%
Europe 15% 17% 25% 17% 18%
Japan 27% 14% 22% 22% 21%
Asia 10% 17% 12% 11% 12%
Total 100% 100% 100% 100% 100%
2008 2009
============================ ====
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1
==== ==== ==== ==== ==== ====
Americas 43% 48% 43% 45% 45% 42%
Europe 24% 21% 23% 22% 22% 24%
Japan 21% 19% 20% 18% 20% 19%
Asia 12% 12% 14% 15% 13% 15%
Total 100% 100% 100% 100% 100% 100%
Revenue Mix by Product Group (% of Total Revenue)
2007
============================
PRODUCT GROUP Q1 Q2 Q3 Q4 Year
==== ==== ==== ==== ====
Functional
Verification 24% 24% 20% 26% 24%
Digital IC Design 26% 29% 27% 27% 27%
Custom IC Design 24% 24% 32% 25% 27%
Design for
Manufacturing 7% 7% 6% 6% 6%
System Interconnect 10% 8% 7% 9% 8%
Services & Other 9% 8% 8% 7% 8%
Total 100% 100% 100% 100% 100%
2008 2009
============================ ====
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1
==== ==== ==== ==== ==== ====
Functional
Verification 22% 25% 22% 17% 22% 20%
Digital IC Design 24% 24% 20% 26% 24% 19%
Custom IC Design 26% 23% 26% 23% 24% 26%
Design for
Manufacturing 5% 7% 7% 7% 6% 9%
System Interconnect 11% 10% 11% 12% 11% 12%
Services & Other 12% 11% 14% 15% 13% 14%
Total 100% 100% 100% 100% 100% 100%
Note: Product Group total revenue includes Product + Maintenance
Cadence Design Systems, Inc.
Impact of Retrospective Adoption of FSP APB 14-1 on
Previously Reported Condensed Consolidated Balance Sheets
as of January 3, 2009
(In thousands)
(Unaudited)
As of January 3, 2009
---------------------------------------------
As Previously As
Reported Adjustments Adjusted
------------ ------------ ------------
Current assets $ 954,548 $ (558)(A) $ 953,990
Property, plant and
equipment, net 351,961 2,891 (B) 354,852
Acquired intangibles, net 49,082 - 49,082
Installment contract
receivables 160,742 - 160,742
Other assets 162,381 (1,194)(C) 161,187
------------ ------------ ------------
Total Assets $ 1,678,714 $ 1,139 $ 1,679,853
============ ============ ============
Current liabilities $ 564,210 $ - $ 564,210
Long-Term Liabilities:
Long-term portion of
deferred revenue 130,354 - 130,354
Convertible notes 500,178 (83,606)(D) 416,572
Other long-term
liabilities 382,004 - 382,004
------------ ------------ ------------
Total long-term
liabilities 1,012,536 (83,606) 928,930
------------ ------------ ------------
Stockholders' Equity:
Common stock and capital
in excess of par value 1,562,079 97,223 (E) 1,659,302
Treasury stock, at cost (695,152) - (695,152)
Accumulated deficit (802,201) (12,478)(F) (814,679)
Accumulated other
comprehensive income 37,242 - 37,242
------------ ------------ ------------
Total stockholders'
equity 101,968 84,745 186,713
------------ ------------ ------------
Total Liabilities and ------------ ------------ ------------
Stockholders' Equity $ 1,678,714 $ 1,139 $ 1,679,853
============ ============ ============
(A) This amount represents the cumulative adjustments to the current
portion of debt issuance costs associated with Cadence's Convertible
Senior Notes.
(B) This amount represents the cumulative capitalized interest related to
the amortization of debt discount.
(C) This amount represents the cumulative adjustments to the long-term
portion of debt issuance costs associated with Cadence's Convertible
Senior Notes and the cumulative impact on the net deferred tax assets
related to the amortization of debt discount.
(D) This amount represents the remaining unamortized debt discount on
Cadence's Convertible Senior Notes.
(E) This amount represents the equity component of Cadence's Convertible
Senior Notes, net of tax adjustments to the tax benefit of call
options, due to the amortization of debt discount.
(F) This amount represents the cumulative Net loss impact of the
amortization of debt discount and the associated tax adjustments since
inception of Cadence's Convertible Senior Notes.
Cadence Design Systems, Inc.
Impact of Retrospective Adoption of FSP APB 14-1 on Previously Reported
Condensed Consolidated Statements of Operations
For the Three Months Ended March 29, 2008
(In thousands)
(Unaudited)
Three Months Ended March 29, 2008
---------------------------------------------
As Previously As
Reported Adjustments Adjusted
------------ ------------ ------------
Revenue $ 270,750 $ - $ 270,750
Costs and expenses 314,192 - 314,192
------------ ------------ ------------
Loss from operations (43,442) - (43,442)
------------ ------------ ------------
Interest expense (2,995) (3,919)(G) (6,914)
Other income, net 5,763 - 5,763
------------ ------------ ------------
Loss before benefit for
income taxes (40,674) (3,919) (44,593)
Benefit for income taxes (11,451) - (11,451)
------------ ------------ ------------
Net loss $ (29,223) $ (3,919) $ (33,142)
============ ============ ============
Basic and diluted net loss ============ ============
per share $ (0.11) $ (0.13)
============ ============
(G) This amount represents the amortization of debt discount, net of the
decrease in interest expense associated with the debt issuance costs.
