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 March 20, 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 First Quarter 2009 Earnings Release is published, which is currently scheduled for April 29, 2009.
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
January 3, 2009 and December 29, 2007
(In thousands)
(Unaudited)
January 3, December 29,
2009 2007
------------ ------------
Current Assets:
Cash and cash equivalents $ 568,255 $ 1,062,920
Short-term investments 3,840 15,193
Receivables, net of allowances of $7,524 and
$2,895, respectively 298,665 326,211
Inventories 28,465 31,003
Prepaid expenses and other 55,323 94,236
------------ ------------
Total current assets 954,548 1,529,563
Property, plant and equipment, net of accumulated
depreciation of $625,010 and $624,680,
respectively 351,961 339,463
Goodwill - 1,310,211
Acquired intangibles, net 49,082 127,072
Installment contract receivables 160,742 238,010
Other assets 162,381 326,831
------------ ------------
Total Assets $ 1,678,714 $ 3,871,150
============ ============
Current Liabilities:
Convertible notes $ - $ 230,385
Accounts payable and accrued liabilities 261,099 289,934
Current portion of deferred revenue 303,111 265,168
------------ ------------
Total current liabilities 564,210 785,487
------------ ------------
Long-Term Liabilities:
Long-term portion of deferred revenue 130,354 136,655
Convertible notes 500,178 500,000
Other long-term liabilities 382,004 368,942
------------ ------------
Total long-term liabilities 1,012,536 1,005,597
------------ ------------
Stockholders' Equity 101,968 2,080,066
------------ ------------
Total Liabilities and Stockholders' Equity $ 1,678,714 $ 3,871,150
============ ============
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Operations
For the Quarters and Years Ended January 3, 2009 and December 29, 2007
(In thousands, except per share amounts)
(Unaudited)
Quarters Ended Years Ended
------------------------ ------------------------
January 3, December 29, January 3, December 29,
2009 2007 2009 2007
----------- ----------- ----------- -----------
Revenue:
Product $ 94,238 $ 328,474 $ 516,603 $ 1,103,970
Services 34,735 29,875 133,498 125,838
Maintenance 98,362 99,594 388,513 385,205
----------- ----------- ----------- -----------
Total revenue 227,335 457,943 1,038,614 1,615,013
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of product 11,062 17,767 50,303 60,069
Cost of services 25,254 22,939 103,337 93,360
Cost of maintenance 12,951 15,444 55,840 61,079
Marketing and sales 84,393 109,224 358,409 407,148
Research and
development 99,984 128,614 457,913 494,032
General and
administrative 46,424 45,831 152,032 168,997
Amortization of
acquired intangibles 5,526 5,760 22,732 19,421
Impairment of
goodwill 1,317,200 - 1,317,200 -
Impairment of
intangible and
tangible assets 47,069 - 47,069 -
Restructuring and
other charges
(credits) (1,318) (102) 46,447 (9,686)
Write-off of acquired
in-process
technology - - 600 2,678
----------- ----------- ----------- -----------
Total costs and
expenses 1,648,545 345,477 2,611,882 1,297,098
----------- ----------- ----------- -----------
Income (loss)
from
operations (1,421,210) 112,466 (1,573,268) 317,915
Interest expense (2,559) (3,001) (11,614) (12,374)
Other income
(expense), net (13,142) 10,592 (16,843) 58,530
----------- ----------- ----------- -----------
Income (loss)
before
provision for
income taxes (1,436,911) 120,057 (1,601,725) 364,071
Provision for income
taxes 202,044 554 252,313 67,819
----------- ----------- ----------- -----------
Net income (loss) $(1,638,955) $ 119,503 $(1,854,038) $ 296,252
=========== =========== =========== ===========
Basic net income (loss)
per share $ (6.57) $ 0.44 $ (7.29) $ 1.09
=========== =========== =========== ===========
Diluted net income
(loss) per share $ (6.57) $ 0.41 $ (7.29) $ 1.01
=========== =========== =========== ===========
Weighted average common
shares outstanding -
basic 249,481 268,659 254,323 271,455
=========== =========== =========== ===========
Weighted average common
shares outstanding -
diluted 249,481 290,970 254,323 295,591
=========== =========== =========== ===========
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Years Ended January 3, 2009 and December 29, 2007
(In thousands)
(Unaudited)
Years Ended
------------------------
January 3, December 29,
2009 2007
----------- -----------
Cash and Cash Equivalents at Beginning of Period $ 1,062,920 $ 934,342
----------- -----------
Cash Flows from Operating Activities:
Net income (loss) (1,854,038) 296,252
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Impairment of goodwill 1,317,200 -
Impairment of intangible and tangible
assets 47,069 -
Depreciation and amortization 128,720 130,649
Stock-based compensation 81,274 101,415
Equity in loss from investments, net 945 3,027
(Gain) loss on investments, net 15,263 (18,090)
Gain on sale and leaseback of land and
buildings (185) (13,141)
Write-down of investment securities 16,653 2,550
Write-off of acquired in-process technology 600 2,678
Non-cash restructuring and other charges
(credits) 279 (7,106)
Loss on liquidation of subsidiary 9,327 -
Tax benefit from call options 10,549 11,346
Deferred income taxes 205,735 12,811
Proceeds from the sale of receivables, net 52,232 215,444
Provisions (recoveries) for losses (gains)
on trade accounts receivable and sales
returns 4,578 (586)
Other non-cash items 3,977 11,219
Changes in operating assets and
liabilities, net of effect of acquired
businesses:
Receivables (31,205) 15,762
Installment contract receivables 79,635 (393,658)
Inventories 2,584 6,197
Prepaid expenses and other (4,618) (603)
Other assets (2,778) (628)
Accounts payable and accrued liabilities (42,882) 20,352
Deferred revenue 25,648 44,775
Other long-term liabilities 3,724 (38,227)
----------- -----------
Net cash provided by operating
activities 70,286 402,438
----------- -----------
Cash Flows from Investing Activities:
Proceeds from the sale of available-for-sale
securities 56,529 6,468
Purchases of available-for-sale securities (62,447) -
Proceeds from the sale of long-term
investments 4,028 6,323
Proceeds from the sale of property, plant and
equipment - 46,500
Purchases of property, plant and equipment (97,290) (81,795)
Purchases of software licenses (2,388) (2,000)
Investment in venture capital partnerships and
equity investments (4,386) (3,214)
Cash paid in business combinations and asset
acquisitions, net of cash acquired, and
acquisition of intangibles (20,931) (80,725)
----------- -----------
Net cash used for investing
activities (126,885) (108,443)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from receivable sale financing 17,970 -
Principal payments on receivable sale
financing (793) -
Principal payments on term loan - (28,000)
Payment of convertible notes due 2023 (230,207) -
Tax benefit from employee stock transactions 483 21,090
Proceeds from issuance of common stock 48,192 255,462
Stock received for payment of employee taxes
on vesting of restricted stock (5,114) (19,128)
Purchases of treasury stock (273,950) (399,490)
----------- -----------
Net cash used for financing
activities (443,419) (170,066)
----------- -----------
Effect of exchange rate changes on cash and cash
equivalents 5,353 4,649
----------- -----------
Increase (decrease) in cash and cash equivalents (494,665) 128,578
----------- -----------
Cash and Cash Equivalents at End of Period $ 568,255 $ 1,062,920
=========== ===========
Cadence Design Systems, Inc.
As of February 4, 2009
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Loss Per
Share
(Unaudited)
Quarter Ended Year Ended
April 4, 2009 January 2, 2010
------------------- -------------------
Forecast Forecast
------------------- -------------------
Diluted net loss per share on a
GAAP basis $ (0.33) to $ (0.31) $ (0.99) to $ (0.87)
Amortization of acquired
intangibles 0.03 0.08
Stock-based compensation
expense 0.06 0.21
Restructuring and other charges 0.01 0.01
Integration and
acquisition-related costs - -
Equity in losses from
investments, write-down of
investments, gains and losses
on non-qualified deferred
compensation plan assets - 0.01
Incremental non-cash interest
expense related to convertible
notes 0.02 0.08
Income tax effect of non-GAAP
adjustments 0.08 0.24
------------------- -------------------
Diluted net loss per share on a
non-GAAP basis $ (0.13) to $ (0.11) $ (0.36) to $ (0.24)
=================== ===================
Cadence Design Systems, Inc.
As of February 4, 2009
Impact of Non-GAAP Adjustments on Forward Looking Net Loss
(Unaudited)
Quarter Ended Year Ended
April 4, 2009 January 2, 2010
------------------- -------------------
($ in Millions) Forecast Forecast
------------------- -------------------
Net loss on a GAAP basis $ (82) to $ (78) $ (247) to $ (217)
Amortization of acquired
intangibles 7 20
Stock-based compensation
expense 14 53
Restructuring and other charges 3 3
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 - 2
Incremental non-cash interest
expense related to convertible
notes 5 20
Income tax effect of non-GAAP
adjustments 21 58
------------------- -------------------
Net loss on a non-GAAP basis $ (32) to $ (28) $ (90) to $ (60)
=================== ===================
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
2006 2007
======================== ========================
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
Americas 51% 48% 54% 60% 54% 48% 52% 41% 50% 49%
Europe 19% 18% 22% 19% 19% 15% 17% 25% 17% 18%
Japan 21% 24% 13% 10% 17% 27% 14% 22% 22% 21%
Asia 9% 10% 11% 11% 10% 10% 17% 12% 11% 12%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
2008
========================
GEOGRAPHY Q1 Q2 Q3 Q4 Year
==== ==== ==== ==== ====
Americas 43% 48% 43% 45% 45%
Europe 24% 21% 23% 22% 22%
Japan 21% 19% 20% 18% 20%
Asia 12% 12% 14% 15% 13%
Total 100% 100% 100% 100% 100%
Revenue Mix by Product Group (% of Total Revenue)
2006 2007
======================== ========================
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
Functional
Verification 26% 22% 24% 23% 24% 24% 24% 20% 26% 24%
Digital IC Design 20% 26% 19% 26% 24% 26% 29% 27% 27% 27%
Custom IC Design 27% 27% 30% 26% 27% 24% 24% 32% 25% 27%
Design for
Manufacturing 8% 8% 8% 6% 7% 7% 7% 6% 6% 6%
System Interconnect 9% 8% 10% 11% 9% 10% 8% 7% 9% 8%
Services & Other 10% 9% 9% 8% 9% 9% 8% 8% 7% 8%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
2008
========================
PRODUCT GROUP Q1 Q2 Q3 Q4 Year
==== ==== ==== ==== ====
Functional
Verification 22% 25% 22% 17% 22%
Digital IC Design 24% 24% 20% 26% 24%
Custom IC Design 26% 23% 26% 23% 24%
Design for
Manufacturing 5% 7% 7% 7% 6%
System Interconnect 11% 10% 11% 12% 11%
Services & Other 12% 11% 14% 15% 13%
Total 100% 100% 100% 100% 100%
Note: Product Group total revenue includes Product + Maintenance
