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 December 14, 2012, 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 Fourth Quarter 2012 Earnings Release is published, which is currently scheduled for January 30, 2013.
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
September 29, 2012 and December 31, 2011
(In thousands)
(Unaudited)
September 29, December 31,
2012 2011
------------------ -----------------
Current Assets:
Cash and cash equivalents $ 649,099 $ 601,602
Short-term investments 95,819 3,037
Receivables, net of allowances of
$110 and $0, respectively 123,206 136,772
Inventories 34,629 43,243
2015 notes hedges 287,079 215,113
Prepaid expenses and other 60,780 64,216
------------------ -----------------
Total current assets 1,250,612 1,063,983
Property, plant and equipment, net of
accumulated depreciation of $638,552
and $658,990, respectively 246,856 262,517
Goodwill 233,275 192,125
Acquired intangibles, net of
accumulated amortization of $97,746
and $91,542, respectively 192,768 173,234
Long-term receivables 5,668 11,371
Other assets 59,335 58,039
------------------ -----------------
Total Assets $ 1,988,514 $ 1,761,269
================== =================
Current Liabilities:
Convertible notes $ 305,029 $ 294,061
2015 notes embedded conversion
derivative 287,079 215,113
Accounts payable and accrued
liabilities 160,250 165,791
Current portion of deferred revenue 322,260 340,401
------------------ -----------------
Total current liabilities 1,074,618 1,015,366
------------------ -----------------
Long-Term Liabilities:
Long-term portion of deferred revenue 58,436 73,959
Convertible notes 136,594 131,920
Other long-term liabilities 130,478 128,894
------------------ -----------------
Total long-term liabilities 325,508 334,773
------------------ -----------------
Stockholders' Equity 588,388 411,130
------------------ -----------------
Total Liabilities and Stockholders'
Equity $ 1,988,514 $ 1,761,269
================== =================
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three and Nine Months Ended September 29, 2012 and October 1, 2011
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------------- --------------------------
September 29, October 1, September 29, October 1,
2012 2011 2012 2011
------------- ----------- ------------- -----------
Revenue:
Product $ 216,561 $ 163,966 $ 614,886 $ 463,723
Services 28,415 29,102 86,923 86,384
Maintenance 93,557 99,389 279,030 291,722
------------- ----------- ------------- -----------
Total revenue 338,533 292,457 980,839 841,829
------------- ----------- ------------- -----------
Costs and Expenses:
Cost of product 23,337 18,185 60,323 52,453
Cost of services 16,809 20,410 53,254 61,101
Cost of
maintenance 11,124 11,223 33,756 32,837
Marketing and
sales 82,461 79,914 246,674 235,292
Research and
development 115,078 103,154 335,703 303,721
General and
administrative 26,350 24,041 84,364 68,720
Amortization of
acquired
intangibles 3,876 3,786 11,305 12,750
Restructuring and
other charges
(credits) 57 (433) 49 277
------------- ----------- ------------- -----------
Total costs and
expenses 279,092 260,280 825,428 767,151
------------- ----------- ------------- -----------
Income from
operations 59,441 32,177 155,411 74,678
Interest expense (8,737) (10,830) (25,840) (32,584)
Other income
(expense), net (131) 7,244 5,972 20,107
------------- ----------- ------------- -----------
Income before
provision
(benefit) for
income taxes 50,573 28,591 135,543 62,201
Provision
(benefit) for
income taxes (8,011) 485 9,469 864
------------- ----------- ------------- -----------
Net income $ 58,584 $ 28,106 $ 126,074 $ 61,337
============= =========== ============= ===========
Net income per share
- basic $ 0.22 $ 0.11 $ 0.47 $ 0.23
============= =========== ============= ===========
Net income per share
- diluted $ 0.21 $ 0.10 $ 0.45 $ 0.23
============= =========== ============= ===========
Weighted average
common shares
outstanding - basic 271,350 264,723 269,643 263,149
============= =========== ============= ===========
Weighted average
common shares
outstanding -
diluted 283,328 270,741 278,760 270,068
============= =========== ============= ===========
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 29, 2012 and October 1, 2011
(In thousands)
(Unaudited)
Nine Months Ended
--------------------------------
September 29, October 1,
2012 2011
--------------- ---------------
Cash and Cash Equivalents at Beginning of
Period $ 601,602 $ 557,409
--------------- ---------------
Cash Flows from Operating Activities:
Net income 126,074 61,337
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 67,171 68,934
Amortization of debt discount and fees 17,480 22,068
Stock-based compensation 34,285 31,589
Gain on investments, net (2,222) (19,220)
Non-cash restructuring and other charges 188 202
Deferred income taxes (14,107) (4,741)
Provisions (recoveries) for losses
(gains) on receivables, net 120 (6,596)
Other non-cash items 3,270 3,689
Changes in operating assets and
liabilities, net of effect of acquired
businesses:
Receivables 24,276 63,729
Inventories 6,936 (9,767)
Prepaid expenses and other 1,547 19,718
Other assets (3,101) 3,718
Accounts payable and accrued
liabilities (1,714) (71,832)
Deferred revenue (38,230) 20,245
Other long-term liabilities (1,855) (4,868)
--------------- ---------------
Net cash provided by operating
activities 220,118 178,205
--------------- ---------------
Cash Flows from Investing Activities:
Proceeds from the sale and maturity of
available-for-sale securities 7,436 9,588
Purchases of available-for-sale
securities (101,248) -
Proceeds from the sale of long-term
investments 44 4,824
Purchases of property, plant and
equipment (25,932) (17,703)
Investment in venture capital
partnerships and equity investments (250) (608)
Cash paid in business combinations and
asset acquisitions, net of cash
acquired (66,432) (44,052)
--------------- ---------------
Net cash used for investing
activities (186,382) (47,951)
--------------- ---------------
Cash Flows from Financing Activities:
Principal payments on receivable sale
financing (2,907) (2,829)
Tax effect related to employee stock
transactions allocated to equity 5,790 2,897
Payment of acquisition-related
contingent consideration (39) -
Proceeds from issuance of common stock 28,755 16,994
Stock received for payment of employee
taxes on vesting of restricted stock (13,457) (9,926)
--------------- ---------------
Net cash provided by financing
activities 18,142 7,136
--------------- ---------------
Effect of exchange rate changes on cash
and cash equivalents (4,381) 1,302
--------------- ---------------
Increase in cash and cash equivalents 47,497 138,692
--------------- ---------------
Cash and Cash Equivalents at End of Period $ 649,099 $ 696,101
=============== ===============
Cadence Design Systems, Inc.
As of October 24, 2012
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per
Share
(Unaudited)
Three Months Ending Year Ending
December 29, 2012 December 29, 2012
-------------------- ------------------
Forecast Forecast
-------------------- ------------------
Diluted net income per share on a
GAAP basis $0.13 to $0.15 $0.58 to $0.60
Amortization of acquired
intangibles 0.03 0.10
Stock-based compensation expense 0.04 0.17
Non-qualified deferred
compensation expenses - 0.01
Integration and acquisition-
related costs 0.01 0.03
Amortization of debt discount 0.02 0.07
Other income or expense related to
investments and non-qualified
deferred compensation plan assets* - (0.01)
Acquisition-related income tax
benefit - (0.05)
Income tax effect of non-GAAP
adjustments (0.05) (0.15)
-------------------- ------------------
Diluted net income per share on a
non-GAAP basis $0.18 to $0.20 $0.75 to $0.77
==================== ==================
* Includes, as applicable, equity in losses or income from investments,
write-down of investments, gains or losses on sale of investments and
gains or losses on non-qualified deferred compensation plan assets
recorded in Other income (expense), net.
Cadence Design Systems, Inc.
As of October 24, 2012
Impact of Non-GAAP Adjustments on Forward Looking Net Income
(Unaudited)
Three Months Ending Year Ending
December 29, 2012 December 29, 2012
-------------------- ------------------
($ in Millions) Forecast Forecast
-------------------- ------------------
Net income on a GAAP basis $36 to $42 $162 to $168
Amortization of acquired
intangibles 8 29
Stock-based compensation expense 13 47
Non-qualified deferred
compensation expenses - 3
Integration and acquisition-
related costs 2 9
Amortization of debt discount 5 21
Other income or expense related to
investments and non-qualified
deferred compensation plan
assets* - (2)
Acquisition-related income tax
benefit - (15)
Income tax effect of non-GAAP
adjustments (13) (44)
-------------------- ------------------
Net income on a non-GAAP basis $51 to $57 $210 to $216
==================== ==================
* 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 (expense), net.
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
2011 2012
---------------------------- ----------------
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2 Q3
---- ---- ---- ---- ---- ---- ---- ----
Americas 44% 47% 44% 44% 45% 44% 46% 43%
EMEA 21% 20% 21% 20% 20% 19% 20% 20%
Japan 19% 17% 18% 17% 18% 18% 16% 17%
Asia 16% 16% 17% 19% 17% 19% 18% 20%
Total 100% 100% 100% 100% 100% 100% 100% 100%
Revenue Mix by Product Group (% of Total Revenue)
2011 2012
---------------------------- ----------------
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1 Q2 Q3
---- ---- ---- ---- ---- ---- ---- ----
Functional Verification and
Design IP 28% 33% 30% 32% 30% 30% 33% 30%
Digital IC Design 24% 21% 22% 21% 22% 23% 22% 23%
Custom IC Design 20% 22% 23% 23% 22% 23% 22% 24%
Design for Manufacturing 8% 6% 6% 6% 7% 7% 6% 6%
System Interconnect 10% 8% 9% 8% 9% 8% 8% 9%
Services & Other 10% 10% 10% 10% 10% 9% 9% 8%
Total 100% 100% 100% 100% 100% 100% 100% 100%
Note: Product Group total revenue includes Product + Maintenance
