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 September 11, 2020, 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 third quarter 2020 earnings release is published, which is currently scheduled for October 19, 2020.
Cadence Design Systems, Inc. | ||||||
Condensed Consolidated Balance Sheets | ||||||
June 27, 2020 and December 28, 2019 | ||||||
(In thousands) | ||||||
(Unaudited) | ||||||
June 27, 2020 | December 28, 2019 | |||||
Current assets: | ||||||
Cash and cash equivalents | $ |
1,189,186 |
$ |
705,210 |
||
Receivables, net |
|
312,758 |
|
304,546 |
||
Inventories |
|
43,924 |
|
55,802 |
||
Prepaid expenses and other |
|
93,915 |
|
103,785 |
||
Total current assets |
|
1,639,783 |
|
1,169,343 |
||
Property, plant and equipment, net |
|
282,738 |
|
275,855 |
||
Goodwill |
|
778,857 |
|
661,856 |
||
Acquired intangibles, net |
|
242,543 |
|
172,375 |
||
Deferred taxes |
|
704,882 |
|
732,367 |
||
Other assets |
|
350,694 |
|
345,429 |
||
Total assets | $ |
3,999,497 |
$ |
3,357,225 |
||
Current liabilities: | ||||||
Revolving credit facility | $ |
350,000 |
$ |
- |
||
Accounts payable and accrued liabilities |
|
306,948 |
|
316,908 |
||
Current portion of deferred revenue |
|
494,939 |
|
355,483 |
||
Total current liabilities |
|
1,151,887 |
|
672,391 |
||
Long-term liabilities: | ||||||
Long-term portion of deferred revenue |
|
87,437 |
|
73,400 |
||
Long-term debt |
|
346,394 |
|
346,019 |
||
Other long-term liabilities |
|
157,148 |
|
162,521 |
||
Total long-term liabilities |
|
590,979 |
|
581,940 |
||
Stockholders' equity |
|
2,256,631 |
|
2,102,894 |
||
Total liabilities and stockholders' equity | $ |
3,999,497 |
$ |
3,357,225 |
Cadence Design Systems, Inc. | ||||||||||||||||
Condensed Consolidated Income Statements | ||||||||||||||||
For the Three and Six Months Ended June 27, 2020 and June 29, 2019 | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 27, 2020 | June 29, 2019 | June 27, 2020 | June 29, 2019 | |||||||||||||
Revenue: | ||||||||||||||||
Product and maintenance | $ |
601,356 |
|
$ |
548,028 |
|
$ |
1,183,055 |
|
$ |
1,091,546 |
|
||||
Services |
|
37,062 |
|
|
32,391 |
|
|
73,320 |
|
|
65,615 |
|
||||
Total revenue |
|
638,418 |
|
|
580,419 |
|
|
1,256,375 |
|
|
1,157,161 |
|
||||
Costs and expenses: | ||||||||||||||||
Cost of product and maintenance |
|
55,669 |
|
|
43,388 |
|
|
111,115 |
|
|
93,910 |
|
||||
Cost of services |
|
19,546 |
|
|
18,081 |
|
|
38,563 |
|
|
38,144 |
|
||||
Marketing and sales |
|
120,476 |
|
|
116,208 |
|
|
246,220 |
|
|
233,038 |
|
||||
Research and development |
|
250,821 |
|
|
231,814 |
|
|
492,489 |
|
|
460,024 |
|
||||
General and administrative |
|
35,641 |
|
|
34,407 |
|
|
69,233 |
|
|
64,509 |
|
||||
Amortization of acquired intangibles |
|
4,590 |
|
|
3,159 |
|
|
8,796 |
|
|
6,467 |
|
||||
Restructuring and other credits |
|
(275 |
) |
|
(313 |
) |
|
(1,342 |
) |
|
(1,002 |
) |
||||
Total costs and expenses |
|
486,468 |
|
|
446,744 |
|
|
965,074 |
|
|
895,090 |
|
||||
Income from operations |
|
151,950 |
|
|
133,675 |
|
|
291,301 |
|
|
262,071 |
|
||||
Interest expense |
|
(5,914 |
) |
|
(4,976 |
) |
|
(10,551 |
) |
|
(10,367 |
) |
||||
Other income (expense), net |
|
4,630 |
|
|
(110 |
) |
|
96 |
|
|
5,131 |
|
||||
Income before provision for income taxes |
|
150,666 |
|
|
128,589 |
|
|
280,846 |
|
|
256,835 |
|
||||
Provision for income taxes |
|
19,378 |
|
|
21,354 |
|
|
25,570 |
|
|
29,045 |
|
||||
Net income | $ |
131,288 |
|
$ |
107,235 |
|
$ |
255,276 |
|
$ |
227,790 |
|
||||
Net income per share - basic | $ |
0.48 |
|
$ |
0.39 |
|
$ |
0.93 |
|
$ |
0.83 |
|
||||
Net income per share - diluted | $ |
0.47 |
|
$ |
0.38 |
|
$ |
0.91 |
|
$ |
0.81 |
|
||||
Weighted average common shares outstanding - basic |
|
273,432 |
|
|
273,159 |
|
|
273,488 |
|
|
273,155 |
|
||||
Weighted average common shares outstanding - diluted |
|
279,080 |
|
|
281,054 |
|
|
279,207 |
|
|
280,877 |
|
Cadence Design Systems, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
For the Six Months Ended June 27, 2020 and June 29, 2019 | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Six Months Ended |
||||||||
June 27, |
June 29, |
|||||||
2020 |
2019 |
|||||||
Cash and cash equivalents at beginning of period | $ |
705,210 |
|
$ |
533,298 |
|
||
Cash flows from operating activities: | ||||||||
Net income |
|
255,276 |
|
|
227,790 |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization |
|
69,902 |
|
|
61,197 |
|
||
Amortization of debt discount and fees |
|
512 |
|
|
497 |
|
||
Stock-based compensation |
|
93,389 |
|
|
86,510 |
|
||
Loss on investments, net |
|
4,036 |
|
|
259 |
|
||
Deferred income taxes |
|
(1,609 |
) |
|
(8,159 |
) |
||
Provisions for losses (recoveries) on receivables |
|
922 |
|
|
(386 |
) |
||
ROU asset amortization and change in operating lease liabilities |
|
1,502 |
|
|
2,504 |
|
||
Other non-cash items |
|
296 |
|
|
160 |
|
||
Changes in operating assets and liabilities, net of effect of acquired businesses: | ||||||||
Receivables |
|
(2,497 |
) |
|
63,876 |
|
||
Inventories |
|
11,020 |
|
|
(25,689 |
) |
||
Prepaid expenses and other |
|
9,910 |
|
|
33,055 |
|
||
Other assets |
|
(17,687 |
) |
|
2,547 |
|
||
Accounts payable and accrued liabilities |
|
(11,141 |
) |
|
(34,670 |
) |
||
Deferred revenue |
|
148,508 |
|
|
19,707 |
|
||
Other long-term liabilities |
|
504 |
|
|
2,576 |
|
||
Net cash provided by operating activities |
|
562,843 |
|
|
431,774 |
|
||
Cash flows from investing activities: | ||||||||
Purchases of non-marketable investments |
|
- |
|
|
(33,717 |
) |
||
Proceeds from the sale of non-marketable investments |
|
- |
|
|
2,952 |
|
||
Purchases of property, plant and equipment |
|
(43,535 |
) |
|
(30,562 |
) |
||
Cash paid in business combinations, net of cash acquired |
|
(195,118 |
) |
|
(338 |
) |
||
Net cash used for investing activities |
|
(238,653 |
) |
|
(61,665 |
) |
||
Cash flows from financing activities: | ||||||||
Proceeds from revolving credit facility |
|
350,000 |
|
|
150,000 |
|
||
Payment on revolving credit facility |
|
- |
|
|
(250,000 |
) |
||
Proceeds from issuance of common stock |
|
43,667 |
|
|
32,855 |
|
||
Stock received for payment of employee taxes on vesting of restricted stock |
|
(53,657 |
) |
|
(45,698 |
) |
||
Payments for repurchases of common stock |
|
(175,036 |
) |
|
(156,120 |
) |
||
Net cash provided by (used for) financing activities |
|
164,974 |
|
|
(268,963 |
) |
||
Effect of exchange rate changes on cash and cash equivalents |
|
(5,188 |
) |
|
(1,029 |
) |
||
Increase in cash and cash equivalents |
|
483,976 |
|
|
100,117 |
|
||
Cash and cash equivalents at end of period | $ |
1,189,186 |
|
$ |
633,415 |
|
Cadence Design Systems, Inc. | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Revenue Mix by Geography (% of Total Revenue) | |||||||||||||||||||||
2019 |
2020 |
||||||||||||||||||||
GEOGRAPHY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | ||||||||||||||
Americas | 44 |
% |
42 |
% |
44 |
% |
46 |
% |
44 |
% |
43 |
% |
44 |
% |
|||||||
China | 10 |
% |
12 |
% |
10 |
% |
9 |
% |
10 |
% |
13 |
% |
12 |
% |
|||||||
Other Asia | 19 |
% |
19 |
% |
21 |
% |
20 |
% |
20 |
% |
18 |
% |
19 |
% |
|||||||
Europe, Middle East and Africa | 18 |
% |
20 |
% |
18 |
% |
18 |
% |
18 |
% |
19 |
% |
18 |
% |
|||||||
Japan | 9 |
% |
7 |
% |
7 |
% |
7 |
% |
8 |
% |
7 |
% |
7 |
% |
|||||||
Total | 100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
|||||||
Revenue Mix by Product Category (% of Total Revenue) | |||||||||||||||||||||
2019 |
2020 |
||||||||||||||||||||
PRODUCT CATEGORY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | ||||||||||||||
Custom IC Design and Simulation | 25 |
% |
26 |
% |
26 |
% |
25 |
% |
25 |
% |
25 |
% |
24 |
% |
|||||||
Digital IC Design and Signoff | 30 |
% |
31 |
% |
30 |
% |
29 |
% |
30 |
% |
29 |
% |
28 |
% |
|||||||
Functional Verification, including Emulation and Prototyping Hardware | 24 |
% |
22 |
% |
20 |
% |
24 |
% |
23 |
% |
23 |
% |
24 |
% |
|||||||
IP | 12 |
% |
11 |
% |
15 |
% |
13 |
% |
13 |
% |
14 |
% |
14 |
% |
|||||||
System Interconnect and Analysis | 9 |
% |
10 |
% |
9 |
% |
9 |
% |
9 |
% |
9 |
% |
10 |
% |
|||||||
Total | 100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
Cadence Design Systems, Inc. | ||||
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin | ||||
As of July 20, 2020 | ||||
(Unaudited) | ||||
Three Months Ending | Year Ending | |||
September 26, 2020 | January 2, 2021 | |||
Forecast | Forecast | |||
GAAP operating margin as a percent of total revenue | ~22% |
|
~22% |
|
|
|
|
||
Reconciling items to non-GAAP operating margin as a percent of total revenue: |
|
|
|
|
Amortization of acquired intangibles | 2% |
|
2% |
|
Stock-based compensation expense | 7% |
|
8% |
|
Acquisition and integration-related costs | 1% |
|
1% |
|
|
|
|
||
Non-GAAP operating margin as a percent of total revenue�nbsp; | ~32% |
|
~33% |
�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 July 20, 2020 | ||||
(Unaudited) | ||||
Three Months Ending | Year Ending | |||
September 26, 2020 | January 2, 2021 | |||
Forecast | Forecast | |||
Diluted net income per share on a GAAP basis | $0.49 to $0.51 |
|
$1.84 to $1.90 |
|
|
|
|
||
Amortization of acquired intangibles | 0.06 |
|
0.23 |
|
Stock-based compensation expense | 0.16 |
|
0.70 |
|
Non-qualified deferred compensation expenses (credits) | - |
|
- |
|
Restructuring and other charges (credits) | - |
|
- |
|
Acquisition and integration-related costs | 0.02 |
|
0.07 |
|
Other income or expense related to investments and non-qualified deferred compensation plan assets* | - |
|
0.02 |
|
Income tax effect of non-GAAP adjustments | (0.14) |
|
(0.36) |
|
|
|
|
||
Diluted net income per share on a non-GAAP basis�nbsp; | $0.59 to $0.61 |
|
$2.50 to $2.56 |
|
Cadence Design Systems, Inc. | ||||
Impact of Non-GAAP Adjustments on Forward Looking Net Income | ||||
As of July 20, 2020 | ||||
(Unaudited) | ||||
Three Months Ending | Year Ending | |||
September 26, 2020 | January 2, 2021 | |||
($ in millions) | Forecast | Forecast | ||
Net income on a GAAP basis | $138 to $144 |
|
$516 to $533 |
|
|
|
|
||
Amortization of acquired intangibles | 16 |
|
64 |
|
Stock-based compensation expense | 45 |
|
197 |
|
Non-qualified deferred compensation expenses (credits) | - |
|
(1) |
|
Restructuring and other charges (credits) | - |
|
(1) |
|
Acquisition and integration-related costs | 5 |
|
19 |
|
Other income or expense related to investments and non-qualified deferred compensation plan assets* | 1 |
|
6 |
|
Income tax effect of non-GAAP adjustments | (40) |
|
(100) |
|
|
|
|
||
Net income on a non-GAAP basis�nbsp; | $165 to $171 |
|
$700 to $717 |
�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. |
* |
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. |