Form 8-K CADENCE DESIGN SYSTEMS For: Feb 04
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
�FORM 8-K
�
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 4, 2015
�
CADENCE DESIGN SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
�
Delaware | � | 000-15867 | � | 00-0000000 |
(State or Other Jurisdiction of Incorporation) | � | (Commission File Number) | � | (I.R.S. Employer Identification No.) |
2655 Seely Avenue, Building 5 San Jose, California | � | 95134 | ||
(Address of Principal Executive Offices) | � | (Zip Code) | ||
(408) 943-1234
(Registrants telephone number, including area code)
�
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
� | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
� | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
� | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
� | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
�
Item�2.02. Results of Operations and Financial Condition.
On February 4, 2015, Cadence Design Systems, Inc. issued a press release announcing its financial results for the fourth quarter and fiscal year ended January 3, 2015.
A copy of the press release is attached hereto as Exhibit 99.01 and is incorporated herein by reference.
Item�9.01. Financial Statements and Exhibits.
(d) | Exhibits |
Exhibit No. | �� | Description |
99.01 | �� | Press Release issued by Cadence Design Systems, Inc. on February 4, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: February 4, 2015�
CADENCE DESIGN SYSTEMS, INC. | ||
By: | � | /s/ Geoffrey G. Ribar |
� | Geoffrey G. Ribar | |
� | Senior Vice President and Chief Financial Officer | |
EXHIBIT INDEX
�
Exhibit No. | �� | Description |
99.01 | �� | Press Release issued by Cadence Design Systems, Inc. on February 4, 2015. |
Exhibit 99.01
Cadence Reports Fourth Quarter and Fiscal Year 2014 Financial Results
SAN JOSE, Calif. February 4, 2015 Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the fourth quarter and fiscal year 2014.
Cadence reported fourth quarter 2014 revenue of $423 million, compared to revenue of $377 million reported for the same period in 2013. On a GAAP basis, Cadence recognized net income of $65 million, or $0.21 per share on a diluted basis, in the fourth quarter of 2014, compared to net income of $38 million, or $0.13 per share on a diluted basis, for the same period in 2013. Revenue for 2014 totaled $1.581 billion, compared to revenue of $1.460 billion for 2013. Net income for 2014 was $159 million, or $0.52 per share on a diluted basis, compared to net income of $164 million, or $0.56 per share on a diluted basis, for 2013.
Using the non-GAAP measure defined below, net income in the fourth quarter of 2014 was $84 million, or $0.27 per share on a diluted basis, as compared to net income of $67 million, or $0.23 per share on a diluted basis, for the same period in 2013. For 2014, non-GAAP net income was $287 million, or $0.94 per share on a diluted basis, compared to non-GAAP net income of $252 million, or $0.86 per share on a diluted basis, in 2013.
Fiscal 2014 was a year of excellent progress for our system design enablement strategy for end-product design, as we delivered a growing set of innovative solutions to our expanding systems and SoC customer base, said Lip-Bu Tan, president and chief executive officer.� Our digital and signoff solutions gained momentum with market-shaping customers, and our IP business had a breakout year with revenue growth of nearly 40 percent.� As we look ahead, we are confident that our strategy and commitment to innovation will continue to drive meaningful customer wins.
Our focus on execution drove solid financial results in Q4 and throughout 2014, added Geoff Ribar, senior vice president and chief financial officer.� We are committed to driving efficiency, productivity and sustainable profitability over the long-term as we work to meet the needs of our ongoing business, invest in future growth opportunities and return cash to shareholders under our recently expanded stock repurchase program.
Business Outlook
For the first quarter of 2015, the company expects total revenue in the range of $405 million to $415 million. First quarter GAAP net income per diluted share is expected to be in the range of $0.08 to $0.10. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.20 to $0.22.
For 2015, the company expects total revenue in the range of $1.680 billion to $1.720 billion. On a GAAP basis, net income per diluted share for 2015 is expected to be in the range of $0.49 to $0.61. Using the non-GAAP measure defined below, net income per diluted share for 2015 is expected to be in the range of $0.94 to $1.06.
For 2015, the company is forecasting a non-GAAP income tax rate of 23 percent, down from 26 percent used in fiscal 2014, based on forecasted increases in foreign earnings that are expected to lower Cadence's long-term non-GAAP effective income tax rate.
A schedule showing a reconciliation of the business outlook from GAAP net income and diluted net income per share to non-GAAP net income and diluted net income per share is included in this release.
Audio Webcast Scheduled
Lip-Bu Tan, president and chief executive officer, and Geoff Ribar, senior vice president and chief financial officer, will host a fourth quarter and fiscal year 2014 financial results audio webcast today, February 4, 2015, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting February 4, 2015 at 5 p.m. (Pacific) and ending March 20, 2015 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/company/investor_relations.
About Cadence
Cadence enables global electronic design innovation and plays an essential role in the creation of todays integrated circuits and electronics. Customers use Cadence� software, hardware, IP, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. The company is headquartered in San Jose, California, with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about the company and its products and services is available at www.cadence.com.
Cadence and the Cadence logo are registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
The statements contained above regarding Cadences fourth quarter and fiscal year 2014 financial results, as well as the information in the Business Outlook section and the statements by Lip-Bu Tan and Geoff Ribar, are or include forward-looking statements based on current expectations or beliefs and preliminary assumptions about future events that are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadences control, including, among others: (i)�Cadences ability to compete successfully in the electronic design automation product and the commercial electronic design and methodology services industries; (ii)�the success of Cadences efforts to improve operational efficiency and growth; (iii)�the mix of products and services sold and the timing of significant orders for Cadences products; (iv)�change in customer demands, including those resulting from consolidation among Cadences customers and the possibility that the restructurings and other efforts to improve operational efficiency of Cadence's customers could result in delays in purchases of Cadences products and services; (v)�economic and industry conditions in regions in which Cadence does business; (vi)�fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries in which Cadence does business; (vii)�capital expenditure requirements, legislative or regulatory requirements, interest rates and Cadences ability to access capital and debt markets; (viii) the acquisition of other companies or technologies or the failure to successfully integrate and operate these companies or technologies Cadence acquires, including the potential inability to retain customers, key employees or vendors; (ix)�the effects of Cadences efforts to improve operational efficiency in its business, including strategic, customer and supplier relationships, and its ability to retain key employees; (x)�events that affect the reserves or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes, litigation or other matters; and (xi)�the effects of any litigation or other proceedings to which Cadence is or may become a party.
For a detailed discussion of these and other cautionary statements related to Cadences business, please refer to Cadences filings with the Securities and Exchange Commission. These include Cadences most recent reports on Form 10-K and Form 10-Q, including Cadences future filings.
GAAP to Non-GAAP Reconciliation
To supplement Cadences financial results presented on a generally accepted accounting principles, or GAAP, basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadences performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP, and is calculated by taking GAAP net income and excluding, as applicable, amortization and sale of intangible assets and debt discount related to our convertible notes, stock-based compensation expense, acquisition and integration-related costs including changes in fair value of contingent consideration and retention expenses for employees added from our 2013 and 2014 acquisitions, special charges (comprised of costs related to a voluntary retirement program and executive severance costs), investment gains or losses, income or expenses related to Cadences non-qualified deferred compensation plan, restructuring and other significant items not directly related to Cadences core business operations, and the income tax effect of non-GAAP pre-tax adjustments.
Cadences management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the companys core business operations and therefore provides useful supplemental information to Cadences management and investors regarding the performance of the companys business operations, facilitates comparisons to the companys historical operating results and enhances investors' ability to review Cadence's business from the same perspective as Cadence's management. Cadences management also uses non-GAAP net income internally for forecasting and budgeting. Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with their most directly comparable GAAP financial results. Investors are encouraged to look at the GAAP results as the best measure of financial performance.
The following tables reconcile the specific items excluded from GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
�
Net Income Reconciliation | Three Months Ended | |||||||
� | January 3, 2015 | December 28, 2013 | ||||||
� | (unaudited) | |||||||
(in thousands) | � | � | ||||||
Net income on a GAAP basis | $ | 65,030 | $ | 37,705 | ||||
Amortization of acquired intangibles | 17,559 | 12,422 | ||||||
Stock-based compensation expense | 22,974 | 18,798 | ||||||
Non-qualified deferred compensation expenses | 409 | 1,256 | ||||||
Restructuring and other charges (credits) | (1,145 | ) | 15,405 | |||||
Acquisition and integration-related costs | 4,280 | 8,903 | ||||||
Special charges* | 216 | |||||||
Amortization of debt discount | 4,782 | 5,515 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | (1,484 | ) | (1,553 | ) | ||||
Income tax effect of non-GAAP adjustments | (27,987 | ) | (31,775 | ) | ||||
Net income on a non-GAAP basis | $ | 84,418 | $ | 66,892 | ||||
�
* | Comprised of costs related to executive severance costs |
** | 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. |
Net Income Reconciliation | Years Ended | |||||||
� | January 3, 2015 | December 28, 2013 | ||||||
� | (unaudited) | |||||||
(in thousands) | � | � | ||||||
Net income on a GAAP basis | $ | 158,898 | $ | 164,243 | ||||
Amortization and sale of acquired intangibles | 60,924 | 44,134 | ||||||
Stock-based compensation expense | 83,792 | 66,285 | ||||||
Non-qualified deferred compensation expenses | 3,415 | 3,293 | ||||||
Restructuring and other charges | 10,252 | 17,999 | ||||||
Acquisition and integration-related costs | 24,620 | 31,972 | ||||||
Special charges* | 10,816 | 961 | ||||||
Amortization of debt discount | 17,602 | 22,315 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | (4,629 | ) | (5,280 | ) | ||||
Income tax benefit due to a release of an uncertain tax position | (33,719 | ) | ||||||
Income tax effect of non-GAAP adjustments | (78,723 | ) | (60,104 | ) | ||||
Net income on a non-GAAP basis | $ | 286,967 | $ | 252,099 | ||||
�
* | Comprised of costs related to a voluntary retirement program and executive severance costs |
** | 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. |
Diluted Net Income per Share Reconciliation | Three Months Ended | |||||||
� | January 3, 2015 | December 28, 2013 | ||||||
� | (unaudited) | |||||||
(in thousands, except per share data) | � | � | ||||||
Diluted net income per share on a GAAP basis | $ | 0.21 | $ | 0.13 | ||||
Amortization of acquired intangibles | 0.06 | 0.04 | ||||||
Stock-based compensation expense | 0.07 | 0.06 | ||||||
Non-qualified deferred compensation expenses | 0.01 | |||||||
Restructuring and other charges (credits) | 0.05 | |||||||
Acquisition and integration-related costs | 0.01 | 0.03 | ||||||
Special charges* | ||||||||
Amortization of debt discount | 0.01 | 0.02 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | ||||||||
Income tax effect of non-GAAP adjustments | (0.09 | ) | (0.11 | ) | ||||
Diluted net income per share on a non-GAAP basis | $ | 0.27 | $ | 0.23 | ||||
Shares used in calculation of diluted net income per share GAAP*** | 310,273 | 294,663 | ||||||
Shares used in calculation of diluted net income per share non-GAAP*** | 310,273 | 294,663 | ||||||
�
* | Comprised of costs related to executive severance costs |
** | 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. |
*** | Shares used in the calculation of GAAP net income per share are expected to be the same as shares used in the calculation of non-GAAP net income per share, except when the company reports a GAAP net loss and non-GAAP net income, or GAAP net income and a non-GAAP net loss. |
Diluted Net Income per Share Reconciliation | Years Ended | |||||||
� | January 3, 2015 | December 28, 2013 | ||||||
� | (unaudited) | |||||||
(in thousands, except per share data) | � | � | ||||||
Diluted net income per share on a GAAP basis | $ | 0.52 | $ | 0.56 | ||||
Amortization and sale of acquired intangibles | 0.20 | 0.15 | ||||||
Stock-based compensation expense | 0.27 | 0.23 | ||||||
Non-qualified deferred compensation expenses | 0.01 | 0.01 | ||||||
Restructuring and other charges | 0.03 | 0.06 | ||||||
Acquisition and integration-related costs | 0.08 | 0.11 | ||||||
Special charges* | 0.04 | |||||||
Amortization of debt discount | 0.06 | 0.08 | ||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | (0.01 | ) | (0.02 | ) | ||||
Income tax benefit due to a release of an uncertain tax position | (0.11 | ) | ||||||
Income tax effect of non-GAAP adjustments | (0.26 | ) | (0.21 | ) | ||||
Diluted net income per share on a non-GAAP basis | $ | 0.94 | $ | 0.86 | ||||
Shares used in calculation of diluted net income per share GAAP*** | 306,775 | 294,564 | ||||||
Shares used in calculation of diluted net income per share non-GAAP*** | 306,775 | 294,564 | ||||||
�
* | Comprised of costs related to a voluntary retirement program and executive severance costs |
** | 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. |
*** | Shares used in the calculation of GAAP net income per share are expected to be the same as shares used in the calculation of non-GAAP net income per share, except when the company reports a GAAP net loss and non-GAAP net income, or GAAP net income and a non-GAAP net loss. |
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 Cadences current expectations on matters covered unless Cadence publishes a notice stating otherwise.
Beginning March 20, 2015, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the companys most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute the companys 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, Cadences representatives will not comment on Cadences business outlook, financial results or expectations. The Quiet Period will extend until the day when Cadences first quarter 2015 earnings release is published, which is currently scheduled for April 27, 2015.
For more information, please contact:
Investors and Shareholders
Alan Lindstrom
Cadence Design Systems, Inc.
408-944-7100
Media and Industry Analysts
Mark Plungy
Cadence Design Systems, Inc.
408-944-7039
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
January 3, 2015 and December 28, 2013
(In thousands)
(Unaudited)
�
January 3,�2015 | December�28,�2013 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 932,161 | $ | 536,260 | ||||
Short-term investments | 90,445 | 96,788 | ||||||
Receivables, net | 122,492 | 107,624 | ||||||
Inventories | 56,394 | 50,220 | ||||||
2015 notes hedges | 523,930 | 306,817 | ||||||
Prepaid expenses and other | 126,313 | 123,382 | ||||||
Total current assets | 1,851,735 | 1,221,091 | ||||||
Property, plant and equipment, net of accumulated depreciation of $552,551 and $568,494, respectively | 230,112 | 238,715 | ||||||
Goodwill | 553,767 | 456,905 | ||||||
Acquired intangibles, net of accumulated amortization of $154,814 and $139,820, respectively | 360,932 | 311,693 | ||||||
Long-term receivables | 3,644 | 3,672 | ||||||
Other assets | 209,366 | 196,525 | ||||||
Total assets | $ | 3,209,556 | $ | 2,428,601 | ||||
Current liabilities: | ||||||||
Convertible notes | $ | 342,499 | $ | 324,826 | ||||
2015 notes embedded conversion derivative | 523,930 | 306,817 | ||||||
Accounts payable and accrued liabilities | 225,375 | 216,594 | ||||||
Current portion of deferred revenue | 301,287 | 299,973 | ||||||
Total current liabilities | 1,393,091 | 1,148,210 | ||||||
Long-term liabilities: | ||||||||
Long-term portion of deferred revenue | 54,726 | 52,850 | ||||||
Long-term debt | 348,676 | |||||||
Other long-term liabilities | 79,489 | 71,436 | ||||||
Total long-term liabilities | 482,891 | 124,286 | ||||||
Stockholders equity | 1,333,574 | 1,156,105 | ||||||
Total liabilities and stockholders equity | $ | 3,209,556 | $ | 2,428,601 | ||||
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months and Years Ended January 3, 2015 and December 28, 2013
(In thousands, except per share amounts)
(Unaudited)
�
� | Three Months Ended | Years Ended | ||||||||||||||
� | January 3, 2015 | December 28, 2013 | January 3, 2015 | December 28, 2013 | ||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 393,223 | $ | 350,079 | $ | 1,479,151 | $ | 1,357,934 | ||||||||
Services | 29,875 | 26,643 | 101,781 | 102,182 | ||||||||||||
Total revenue | 423,098 | 376,722 | 1,580,932 | 1,460,116 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 39,475 | 41,757 | 156,333 | 132,245 | ||||||||||||
Cost of services | 18,640 | 17,274 | 67,373 | 67,956 | ||||||||||||
Marketing and sales | 102,367 | 94,384 | 399,688 | 378,157 | ||||||||||||
Research and development | 155,124 | 135,465 | 603,006 | 534,022 | ||||||||||||
General and administrative | 26,939 | 29,481 | 113,619 | 121,314 | ||||||||||||
Amortization of acquired intangibles | 6,912 | 5,157 | 24,017 | 19,416 | ||||||||||||
Restructuring and other charges (credits) | (1,145 | ) | 15,405 | 10,252 | 17,999 | |||||||||||
Total costs and expenses | 348,312 | 338,923 | 1,374,288 | 1,271,109 | ||||||||||||
Income from operations | 74,786 | 37,799 | 206,644 | 189,007 | ||||||||||||
Interest expense | (11,961 | ) | (9,208 | ) | (34,121 | ) | (37,581 | ) | ||||||||
Other income, net | 3,879 | 842 | 8,479 | 7,570 | ||||||||||||
Income before provision (benefit) for income taxes | 66,704 | 29,433 | 181,002 | 158,996 | ||||||||||||
Provision (benefit) for income taxes | 1,674 | (8,272 | ) | 22,104 | (5,247 | ) | ||||||||||
Net income | $ | 65,030 | $ | 37,705 | $ | 158,898 | $ | 164,243 | ||||||||
Net income per share - basic | $ | 0.23 | $ | 0.13 | $ | 0.56 | $ | 0.59 | ||||||||
Net income per share - diluted | $ | 0.21 | $ | 0.13 | $ | 0.52 | $ | 0.56 | ||||||||
Weighted average common shares outstanding - basic | 283,928 | 280,083 | 283,349 | 277,796 | ||||||||||||
Weighted average common shares outstanding - diluted | 310,273 | 294,663 | 306,775 | 294,564 | ||||||||||||
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Years Ended January 3, 2015 and December 28, 2013
(In thousands)
(Unaudited)�
Years Ended | |||||||
� | January 3, 2015 | December 28, 2013 | |||||
Cash and cash equivalents at beginning of year | $ | 536,260 | $ | 726,357 | |||
Cash flows from operating activities: | |||||||
Net income | 158,898 | 164,243 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 115,634 | 98,308 | |||||
Amortization of debt discount and fees | 20,529 | 25,384 | |||||
Stock-based compensation | 83,792 | 66,285 | |||||
Gain on investments, net | (4,707 | ) | (5,311 | ) | |||
Deferred income taxes | 12,478 | (2,366 | ) | ||||
Other non-cash items | 6,854 | 3,932 | |||||
Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||
Receivables | (17,925 | ) | (3,609 | ) | |||
Inventories | (11,708 | ) | (14,594 | ) | |||
Prepaid expenses and other | (2,501 | ) | 30,368 | ||||
Other assets | (42,181 | ) | (2,530 | ) | |||
Accounts payable and accrued liabilities | 3,856 | 41,727 | |||||
Deferred revenue | (11,860 | ) | 2,506 | ||||
Other long-term liabilities | 5,563 | (36,738 | ) | ||||
Net cash provided by operating activities | 316,722 | 367,605 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (124,165 | ) | (111,702 | ) | |||
Proceeds from the sale of available-for-sale securities | 85,384 | 77,621 | |||||
Proceeds from the maturity of available-for-sale securities | 46,612 | 38,706 | |||||
Proceeds from the sale of long-term investments | 1,085 | 6,234 | |||||
Purchases of property, plant and equipment | (39,810 | ) | (44,929 | ) | |||
Cash paid in business combinations and asset acquisitions, net of cash acquired | (167,121 | ) | (392,825 | ) | |||
Net cash used for investing activities | (198,015 | ) | (426,895 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of debt | 348,649 | ||||||
Proceeds from revolving credit facility | 100,000 | 100,000 | |||||
Payment on revolving credit facility | (100,000 | ) | (100,000 | ) | |||
Payment of convertible notes | (1 | ) | (144,639 | ) | |||
Payment of convertible notes embedded conversion derivative liability | (1 | ) | |||||
Proceeds from convertible notes hedges | 1 | ||||||
Principal payments on receivable financing | (2,526 | ) | |||||
Payment of debt issuance costs | (6,500 | ) | |||||
Payment of acquisition-related contingent consideration | (1,835 | ) | (677 | ) | |||
Tax effect related to employee stock transactions allocated to equity | 7,583 | 9,034 | |||||
Proceeds from issuance of common stock | 65,913 | 42,657 | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (24,727 | ) | (20,140 | ) | |||
Payments for repurchases of common stock | (100,117 | ) | |||||
Net cash provided by (used for) financing activities | 288,965 | (116,291 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (11,771 | ) | (14,516 | ) | |||
Increase (decrease) in cash and cash equivalents | 395,901 | (190,097 | ) | ||||
Cash and cash equivalents at end of year | $ | 932,161 | $ | 536,260 | |||
Cadence Design Systems, Inc.
As of February 4, 2015
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
(Unaudited)
�
Three�Months�Ending April 4, 2015 | Year Ending January�2,�2016 | |||
� | Forecast | Forecast | ||
Diluted net income per share on a GAAP basis | $0.08�to�$0.10 | $0.49�to�$0.61 | ||
Amortization of acquired intangibles | 0.05 | 0.21 | ||
Stock-based compensation expense | 0.07 | 0.31 | ||
Acquisition and integration-related costs | 0.01 | 0.03 | ||
Amortization of debt discount | 0.02 | 0.02 | ||
Income tax effect of non-GAAP adjustments | (0.03) | (0.12) | ||
Diluted net income per share on a non-GAAP basis | $0.20�to�$0.22 | $0.94�to�$1.06 | ||
Cadence Design Systems, Inc.
As of February 4, 2015
Impact of Non-GAAP Adjustments on Forward Looking Net Income
(Unaudited)
�
Three�Months�Ending April 4, 2015 | Year Ending January�2,�2016 | |||
($ in millions) | Forecast | Forecast | ||
Net income on a GAAP basis | $26�to�$33 | $153�to�$190 | ||
Amortization of acquired intangibles | 16 | 64 | ||
Stock-based compensation expense | 22 | 95 | ||
Acquisition and integration-related costs | 3 | 8 | ||
Amortization of debt discount | 5 | 7 | ||
Income tax effect of non-GAAP adjustments | (10) | (36) | ||
Net income on a non-GAAP basis | $62�to�$69 | $291�to�$328 | ||
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
�
� | 2013 | 2014 | ||||||||||||||||||||||||||||
GEOGRAPHY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||||||
Americas | 44 | % | 45 | % | 48 | % | 47 | % | 46 | % | 45 | % | 44 | % | 46 | % | 47 | % | 45 | % | ||||||||||
Asia | 19 | % | 21 | % | 20 | % | 19 | % | 20 | % | 23 | % | 23 | % | 22 | % | 22 | % | 23 | % | ||||||||||
Europe, Middle East and Africa | 22 | % | 21 | % | 20 | % | 20 | % | 21 | % | 20 | % | 22 | % | 21 | % | 21 | % | 21 | % | ||||||||||
Japan | 15 | % | 13 | % | 12 | % | 14 | % | 13 | % | 12 | % | 11 | % | 11 | % | 10 | % | 11 | % | ||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||
Revenue Mix by Product Group (% of Total Revenue)
�
� | 2013 | 2014 | ||||||||||||||||||||||||||||
PRODUCT GROUP | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||||||
Functional Verification, including Emulation Hardware | 22 | % | 22 | % | 24 | % | 25 | % | 23 | % | 23 | % | 21 | % | 23 | % | 21 | % | 22 | % | ||||||||||
Digital IC Design and Signoff | 33 | % | 31 | % | 29 | % | 29 | % | 30 | % | 30 | % | 30 | % | 29 | % | 28 | % | 29 | % | ||||||||||
Custom IC Design | 28 | % | 28 | % | 28 | % | 26 | % | 27 | % | 27 | % | 28 | % | 27 | % | 28 | % | 27 | % | ||||||||||
System Interconnect and Analysis | 10 | % | 11 | % | 10 | % | 10 | % | 11 | % | 10 | % | 11 | % | 10 | % | 11 | % | 11 | % | ||||||||||
IP | 7 | % | 8 | % | 9 | % | 10 | % | 9 | % | 10 | % | 10 | % | 11 | % | 12 | % | 11 | % | ||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Three Months Ended January 3, 2015 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
January 3, 2015 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 393,223 | $ | $ | 393,223 | |||||||||||
Services | 29,875 | 29,875 | ||||||||||||||
Total revenue | 423,098 | 423,098 | ||||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 39,475 | (11,297 | ) | �(A) | 28,178 | |||||||||||
Cost of services | 18,640 | (950 | ) | �(A) | 17,690 | |||||||||||
Marketing and sales | 102,367 | (5,924 | ) | �(A) | 96,443 | |||||||||||
Research and development | 155,124 | (15,795 | ) | �(A) | 139,329 | |||||||||||
General and administrative | 26,939 | (4,344 | ) | �(A) | 22,595 | |||||||||||
Amortization of acquired intangibles | 6,912 | (6,912 | ) | �(A) | ||||||||||||
Restructuring and other charges (credits) | (1,145 | ) | 1,145 | |||||||||||||
Total costs and expenses | 348,312 | (44,077 | ) | 304,235 | ||||||||||||
Income from operations | 74,786 | 44,077 | 118,863 | |||||||||||||
Interest expense | (11,961 | ) | 4,782 | �(B) | (7,179 | ) | ||||||||||
Other income (expense), net | 3,879 | (1,484 | ) | �(C) | 2,395 | |||||||||||
Income before provision for income taxes | 66,704 | 47,375 | 114,079 | |||||||||||||
Provision for income taxes | 1,674 | 27,987 | (D) | 29,661 | ||||||||||||
Net income | $ | 65,030 | $ | 19,388 | $ | 84,418 | ||||||||||
Notes:
(A) For the three months ended January 3, 2015 adjustments to GAAP are as follows for the line items specified:
Amortization of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation expenses | Acquisition and integration-related costs | Total adjustments | |||||||||||||||||||
Cost of product and maintenance | $ | 10,647 | $ | 644 | $ | 6 | $ | $ | 11,297 | ||||||||||||||
Cost of services | 942 | 8 | 950 | ||||||||||||||||||||
Marketing and sales | 5,494 | 19 | 411 | 5,924 | |||||||||||||||||||
Research and development | 12,225 | 216 | 3,354 | 15,795 | |||||||||||||||||||
General and administrative | 3,669 | 160 | 515 | 4,344 | |||||||||||||||||||
Amortization of acquired intangibles | 6,912 | 6,912 | |||||||||||||||||||||
Total | $ | 17,559 | $ | 22,974 | $ | 409 | $ | 4,280 | $ | 45,222 | |||||||||||||
(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 December 28, 2013 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
December 28, 2013 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 350,079 | $ | $ | 350,079 | |||||||||||
Services | 26,643 | 26,643 | ||||||||||||||
Total revenue | 376,722 | 376,722 | ||||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 41,757 | (7,743 | ) | �(E) | 34,014 | |||||||||||
Cost of services | 17,274 | (698 | ) | �(E) | 16,576 | |||||||||||
Marketing and sales | 94,384 | (5,201 | ) | �(E) | 89,183 | |||||||||||
Research and development | 135,465 | (15,666 | ) | �(E) | 119,799 | |||||||||||
General and administrative | 29,481 | (7,130 | ) | �(E) | 22,351 | |||||||||||
Amortization of acquired intangibles | 5,157 | (5,157 | ) | �(E) | ||||||||||||
Restructuring and other charges | 15,405 | (15,405 | ) | |||||||||||||
Total costs and expenses | 338,923 | (57,000 | ) | 281,923 | ||||||||||||
Income from operations | 37,799 | 57,000 | 94,799 | |||||||||||||
Interest expense | (9,208 | ) | 5,515 | (F) | (3,693 | ) | ||||||||||
Other income (expense), net | 842 | (1,553 | ) | (G) | (711 | ) | ||||||||||
Income before provision (benefit) for income taxes | 29,433 | 60,962 | 90,395 | |||||||||||||
Provision (benefit) for income taxes | (8,272 | ) | 31,775 | (H) | 23,503 | |||||||||||
Net income | $ | 37,705 | $ | 29,187 | $ | 66,892 | ||||||||||
Notes:
(E) For the three months ended December 28, 2013 adjustments to GAAP are as follows for the line items specified:
Amortization of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation expenses | Acquisition and integration-related costs | Special charges (I) | Total adjustments | ||||||||||||||||||||||
Cost of product and maintenance | $ | 7,265 | $ | 471 | $ | 7 | $ | $ | $ | 7,743 | |||||||||||||||||
Cost of services | 689 | 9 | 698 | ||||||||||||||||||||||||
Marketing and sales | 4,703 | 68 | 430 | 5,201 | |||||||||||||||||||||||
Research and development | 9,605 | 683 | 5,378 | 15,666 | |||||||||||||||||||||||
General and administrative | 3,330 | 489 | 3,095 | 216 | 7,130 | ||||||||||||||||||||||
Amortization of acquired intangibles | 5,157 | 5,157 | |||||||||||||||||||||||||
Total | $ | 12,422 | $ | 18,798 | $ | 1,256 | $ | 8,903 | $ | 216 | $ | 41,595 | |||||||||||||||
(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
(I) Comprised of cost related to executive severance costs
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Year Ended January 3, 2015 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Year Ended | ||||||||||||||||
January 3, 2015 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 1,479,151 | $ | $ | 1,479,151 | |||||||||||
Services | 101,781 | 101,781 | ||||||||||||||
Total revenue | 1,580,932 | 1,580,932 | ||||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 156,333 | (39,586 | ) | �(J) | 116,747 | |||||||||||
Cost of services | 67,373 | (3,997 | ) | �(J) | 63,376 | |||||||||||
Marketing and sales | 399,688 | (25,410 | ) | �(J) | 374,278 | |||||||||||
Research and development | 603,006 | (68,141 | ) | �(J) | 534,865 | |||||||||||
General and administrative | 113,619 | (22,416 | ) | �(J) | 91,203 | |||||||||||
Amortization of acquired intangibles | 24,017 | (24,017 | ) | �(J) | ||||||||||||
Restructuring and other charges | 10,252 | (10,252 | ) | |||||||||||||
Total costs and expenses | 1,374,288 | (193,819 | ) | 1,180,469 | ||||||||||||
Income from operations | 206,644 | 193,819 | 400,463 | |||||||||||||
Interest expense | (34,121 | ) | 17,602 | �(K) | (16,519 | ) | ||||||||||
Other income, net | 8,479 | (4,629 | ) | �(L) | 3,850 | |||||||||||
Income before provision for income taxes | 181,002 | 206,792 | 387,794 | |||||||||||||
Provision for income taxes | 22,104 | 78,723 | (M) | 100,827 | ||||||||||||
Net income | $ | 158,898 | $ | 128,069 | $ | 286,967 | ||||||||||
Notes:
(J) For the year ended January 3, 2015 adjustments to GAAP are as follows for the line items specified:
Amortization of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation expenses | Acquisition and integration-related costs | Special charges (N) | Total adjustments | ||||||||||||||||||||||
Cost of product and maintenance | $ | 36,907 | $ | 2,244 | $ | 34 | $ | $ | 401 | $ | 39,586 | ||||||||||||||||
Cost of services | 3,280 | 50 | 667 | 3,997 | |||||||||||||||||||||||
Marketing and sales | 20,580 | 149 | 2,768 | 1,913 | 25,410 | ||||||||||||||||||||||
Research and development | 43,173 | 1,886 | 17,228 | 5,854 | 68,141 | ||||||||||||||||||||||
General and administrative | 14,515 | 1,296 | 4,624 | 1,981 | 22,416 | ||||||||||||||||||||||
Amortization of acquired intangibles | 24,017 | 24,017 | |||||||||||||||||||||||||
Total | $ | 60,924 | $ | 83,792 | $ | 3,415 | $ | 24,620 | $ | 10,816 | $ | 183,567 | |||||||||||||||
(K) Amortization of debt discount related to convertible notes
(L) Other income or expense related to investments and non-qualified deferred compensation plan assets
(M) Income tax effect of non-GAAP adjustments
(N) Comprised of costs related to a voluntary retirement program
Cadence Design Systems, Inc. | ||||||||||||||||
Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures | ||||||||||||||||
For the Year Ended December 28, 2013 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Year Ended | ||||||||||||||||
December 28, 2013 | ||||||||||||||||
GAAP | Adjustments | Non-GAAP | ||||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ | 1,357,934 | $ | $ | 1,357,934 | |||||||||||
Services | 102,182 | 102,182 | ||||||||||||||
Total revenue | 1,460,116 | 1,460,116 | ||||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance | 132,245 | (26,352 | ) | �(O) | 105,893 | |||||||||||
Cost of services | 67,956 | (2,373 | ) | �(O) | 65,583 | |||||||||||
Marketing and sales | 378,157 | (17,828 | ) | �(O) | 360,329 | |||||||||||
Research and development | 534,022 | (53,403 | ) | �(O) | 480,619 | |||||||||||
General and administrative | 121,314 | (27,273 | ) | �(O) | 94,041 | |||||||||||
Amortization of acquired intangibles | 19,416 | (19,416 | ) | �(O) | ||||||||||||
Restructuring and other charges | 17,999 | (17,999 | ) | |||||||||||||
Total costs and expenses | 1,271,109 | (164,644 | ) | 1,106,465 | ||||||||||||
Income from operations | 189,007 | 164,644 | 353,651 | |||||||||||||
Interest expense | (37,581 | ) | 22,315 | (P) | (15,266 | ) | ||||||||||
Other income, net | 7,570 | (5,280 | ) | (Q) | 2,290 | |||||||||||
Income before provision (benefit) for income taxes | 158,996 | 181,679 | 340,675 | |||||||||||||
Provision (benefit) for income taxes | (5,247 | ) | 93,823 | (R) | 88,576 | |||||||||||
Net income | $ | 164,243 | $ | 87,856 | $ | 252,099 | ||||||||||
Notes:
(O) For the year ended December 28, 2013 adjustments to GAAP are as follows for the line items specified:
Amortization and sale of acquired intangibles | Stock-based compensation expense | Non-qualified deferred compensation expenses | Acquisition and integration-related costs | Special charges (S) | Total adjustments | ||||||||||||||||||||||
Cost of product and maintenance | $ | 24,718 | $ | 1,596 | $ | 38 | $ | $ | $ | 26,352 | |||||||||||||||||
Cost of services | 2,321 | 52 | 2,373 | ||||||||||||||||||||||||
Marketing and sales | 15,642 | 239 | 1,467 | 480 | 17,828 | ||||||||||||||||||||||
Research and development | 32,999 | 1,700 | 18,704 | 53,403 | |||||||||||||||||||||||
General and administrative | 13,727 | 1,264 | 11,801 | 481 | 27,273 | ||||||||||||||||||||||
Amortization of acquired intangibles | 19,416 | 19,416 | |||||||||||||||||||||||||
Total | $ | 44,134 | $ | 66,285 | $ | 3,293 | $ | 31,972 | $ | 961 | $ | 146,645 | |||||||||||||||
(P) Amortization of debt discount related to convertible notes
(Q) Other income or expense related to investments and non-qualified deferred compensation plan assets
(R) Income tax effect of non-GAAP adjustments
(S) Comprised of cost related to executive severance costs