During fiscal year 2009, Cadence's non-GAAP net loss also excluded the impact of an income tax benefit associated with the temporary increase in the net operating loss carryback period for operating losses Cadence incurred in the United States. Cadence's management believes it is useful to exclude the tax benefit associated with this change in the United States tax law because the extended net operating loss carryback period is only applicable for operating losses incurred during either fiscal 2008 or fiscal 2009.
During fiscal year 2008, Cadence's non-GAAP net loss also excluded the impact of tax expense associated with recording a valuation allowance against Cadence's deferred tax assets. Cadence's management believes it is useful to exclude the tax expense associated with this valuation allowance because Cadence does not expect changes in the valuation allowance of the magnitude recorded in the fourth quarter of 2008 to be recorded frequently.
During fiscal year 2008, Cadence's non-GAAP net loss also excluded the impact of tax expense associated with Cadence's repatriation of foreign earnings. Cadence's management believes it is useful to exclude the tax expense associated with the repatriation of foreign earnings because it resulted from an event that is not expected to occur frequently.
During fiscal year 2008, Cadence's non-GAAP net loss also excluded costs related to a withdrawn acquisition proposal and losses on the sale of shares of the target company stock which Cadence acquired as part of the proposed acquisition. Cadence's management believes that in measuring Cadence's operations it is useful to exclude the costs and the losses associated with this proposed acquisition because these items are not directly related to Cadence's operating performance and resulted from events that are not expected to occur frequently.
Cadence's management believes that non-GAAP net income or net loss provides useful supplemental information to Cadence's management and investors regarding the performance of the company's business operations and facilitates comparisons to the company's historical operating results. Cadence's management also uses this information 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.
The following tables reconcile the specific items excluded from GAAP net income or net loss and GAAP net income or net loss per diluted share in the calculation of non-GAAP net income or net loss and non-GAAP net income or net loss per diluted share for the periods shown below:
Net Income (Loss) Reconciliation Three Months Ended
------------------------------
January 2, January 3,
2010 2009
-------------- --------------
(As Adjusted)*
(unaudited)
(in thousands)
Net income (loss) on a GAAP basis $ 1,790 $ (1,634,105)
Amortization of acquired intangibles 4,391 10,310
Stock-based compensation expense 11,016 23,596
Non-qualified deferred compensation
expenses (credits) 3,389 (4,357)
Impairment of goodwill - 1,317,200
Impairment of intangible and tangible
assets - 47,069
Restructuring and other charges
(credits) 13,543 (1,318)
Executive severance costs - 9,232
Integration and acquisition-related
costs 135 231
Amortization of debt discount 4,870 4,276
Equity in losses from investments,
write-down of investments, gains and
losses on non-qualified deferred
compensation plan assets - recorded in
Other income (expense), net (3,177) 10,647
Loss on liquidation of subsidiary - 9,327
Income tax expense from recording a
valuation allowance against deferred
tax assets - 332,880
Income tax related to repatriation of
foreign earnings - 30,076
Income tax effect of the increase in
United States net operating loss
carryback period (14,825) -
Income tax effect of non-GAAP
adjustments (6,070) (166,049)
-------------- --------------
Net income (loss) on a non-GAAP basis $ 15,062 $ (10,985)
============== ==============
* Adjusted for the retrospective adoption of new accounting principles
as required by the "Debt with Conversion and Other Options" subtopic
of the FASB Accounting Standards Codification.
Net Loss Reconciliation Years Ended
------------------------------
January 2, January 3,
2010 2009
-------------- --------------
(As Adjusted)*
(unaudited)
(in thousands)
Net loss on a GAAP basis $ (149,871) $ (1,856,715)
Amortization of acquired intangibles 19,941 44,185
Stock-based compensation expense 54,706 81,274
Non-qualified deferred compensation
expenses (credits) (644) (7,321)
Impairment of goodwill - 1,317,200
Impairment of intangible and tangible
assets - 47,069
Restructuring and other charges 31,376 46,447
Costs related to a withdrawn acquisition
proposal - 3,153
Write-off of acquired in-process
technology - 600
Executive severance costs - 9,232
Integration and acquisition-related
costs 665 995
Amortization of debt discount 19,104 16,460
Equity in losses from investments,
write-down of investments, gains and
losses on non-qualified deferred
compensation plan assets - recorded in
Other income (expense), net 6,738 26,515
Losses on the sale of shares of
withdrawn acquisition target company
stock - 9,379
Loss on liquidation of subsidiary - 9,327
Income tax expense from recording a
valuation allowance against deferred
tax assets - 332,880
Income tax related to repatriation of
foreign earnings - 101,123
Income tax effect of the increase in
United States net operating loss
carryback period (14,825) -
Income tax effect of non-GAAP
adjustments 16,812 (191,421)
-------------- --------------
Net loss on a non-GAAP basis $ (15,998) $ (9,618)
============== ==============
* Adjusted for the retrospective adoption of new accounting principles
as required by the "Debt with Conversion and Other Options" subtopic
of the FASB Accounting Standards Codification.
Diluted Net Income (Loss) per Share
Reconciliation Three Months Ended
------------------------------
January 2, January 3,
2010 2009
-------------- --------------
(As Adjusted)*
(unaudited)
(in thousands, except per share data)
Diluted net income (loss) per share on a
GAAP basis $ 0.01 $ (6.55)
Amortization of acquired intangibles 0.02 0.04
Stock-based compensation expense 0.04 0.09
Non-qualified deferred compensation
expenses (credits) 0.01 (0.02)
Impairment of goodwill - 5.28
Impairment of intangible and tangible
assets - 0.19
Restructuring and other charges
(credits) 0.05 -
Executive severance costs - 0.04
Amortization of debt discount 0.02 0.02
Equity in losses from investments,
write-down of investments, gains and
losses on non-qualified deferred
compensation plan assets - recorded in
Other income (expense), net (0.01) 0.04
Loss on liquidation of subsidiary - 0.04
Income tax expense from recording a
valuation allowance against deferred
tax assets - 1.33
Income tax related to repatriation of
foreign earnings - 0.12
Income tax effect of the increase in
United States net operating loss
carryback period (0.06) -
Income tax effect of non-GAAP
adjustments (0.02) (0.66)
-------------- --------------
Diluted net income (loss) per share on a
non-GAAP basis $ 0.06 $ (0.04)
============== ==============
Shares used in calculation of diluted net
income (loss) per share -- GAAP (A) 265,093 249,481
Shares used in calculation of diluted net
income (loss) per share -- non-GAAP (A) 265,093 249,481
(A) Shares used in the calculation of GAAP net income (loss) per share are
expected to be the same as shares used in the calculation of non-GAAP
net income (loss) 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.
* Adjusted for the retrospective adoption of new accounting principles
as required by the "Debt with Conversion and Other Options" subtopic
of the FASB Accounting Standards Codification.
Diluted Net Loss per Share Reconciliation Years Ended
------------------------------
January 2, January 3,
2010 2009
-------------- --------------
(As Adjusted)*
(unaudited)
(in thousands, except per share data)
Diluted net loss per share on a GAAP basis $ (0.58) $ (7.30)
Amortization of acquired intangibles 0.08 0.17
Stock-based compensation expense 0.21 0.32
Non-qualified deferred compensation
expenses (credits) - (0.03)
Impairment of goodwill - 5.18
Impairment of intangible and tangible
assets - 0.19
Restructuring and other charges 0.12 0.18
Costs related to a withdrawn acquisition
proposal - 0.01
Executive severance costs - 0.04
Amortization of debt discount 0.07 0.06
Equity in losses from investments,
write-down of investments, gains and
losses on non-qualified deferred
compensation plan assets - recorded in
Other income (expense), net 0.03 0.10
Losses on the sale of shares of
withdrawn acquisition target company
stock - 0.04
Loss on liquidation of subsidiary - 0.04
Income tax expense from recording a
valuation allowance against deferred
tax assets - 1.31
Income tax related to repatriation of
foreign earnings - 0.40
Income tax effect of the increase in
United States net operating loss
carryback period (0.06) -
Income tax effect of non-GAAP
adjustments 0.07 (0.75)
-------------- --------------
Diluted net income (loss) per share on a
non-GAAP basis $ (0.06) $ (0.04)
============== ==============
Shares used in calculation of diluted net
loss per share --GAAP (A) 257,782 254,323
Shares used in calculation of diluted net
loss per share --non-GAAP (A) 257,782 254,323
(A) Shares used in the calculation of GAAP net income (loss) per share are
expected to be the same as shares used in the calculation of non-GAAP
net income (loss) 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.
* Adjusted for the retrospective adoption of new accounting principles
as required by the "Debt with Conversion and Other Options" subtopic
of the FASB Accounting Standards Codification.
