Although Cadence's management finds the non-GAAP measures useful in evaluating the performance of Cadence's business, reliance on these measures 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 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 19, 2010, 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 2010 Earnings Release is published, which is currently scheduled for April 28, 2010.
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
January 2, 2010 and January 3, 2009
(In thousands)
(Unaudited)
January 2, 2010 January 3, 2009
--------------- ---------------
(As Adjusted)*
Current Assets:
Cash and cash equivalents $ 569,115 $ 568,255
Short-term investments 2,184 3,840
Receivables, net of allowances of
$14,020 and $7,524, respectively 200,628 298,665
Inventories 24,165 28,465
Prepaid expenses and other 54,655 54,765
--------------- ---------------
Total current assets 850,747 953,990
Property, plant and equipment, net of
accumulated depreciation of $637,107 and
$625,010, respectively 311,502 354,852
Acquired intangibles, net of accumulated
amortization of $124,507 and $134,688,
respectively 28,841 49,082
Installment contract receivables, net of
allowances of $9,724 and $0, respectively 58,448 160,742
Other assets 161,049 161,187
--------------- ---------------
Total Assets $ 1,410,587 $ 1,679,853
=============== ===============
Current Liabilities:
Accounts payable and accrued liabilities 150,207 261,099
Current portion of deferred revenue 247,691 303,111
--------------- ---------------
Total current liabilities 397,898 564,210
--------------- ---------------
Long-Term Liabilities:
Long-term portion of deferred revenue 92,298 130,354
Convertible notes 436,012 416,572
Other long-term liabilities 376,006 382,004
--------------- ---------------
Total long-term liabilities 904,316 928,930
--------------- ---------------
Stockholders' Equity 108,373 186,713
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 1,410,587 $ 1,679,853
=============== ===============
* 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, on the first day of fiscal 2009.
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Operations
For the Three Months and Years Ended January 2, 2010 and January 3, 2009
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Years Ended
-------------------------- --------------------------
January 2, January 3, January 2, January 3,
2010 2009 2010 2009
------------ ------------ ------------ ------------
(As (As
Adjusted)* Adjusted)*
Revenue:
Product $ 114,478 $ 94,238 $ 400,773 $ 516,603
Services 22,871 34,735 106,555 133,498
Maintenance 82,930 98,362 345,304 388,513
------------ ------------ ------------ ------------
Total revenue 220,279 227,335 852,632 1,038,614
------------ ------------ ------------ ------------
Costs and Expenses:
Cost of product 8,286 11,062 32,114 50,303
Cost of services 20,934 25,254 90,536 103,337
Cost of
maintenance 11,170 12,951 46,593 55,840
Marketing and
sales 72,230 84,393 286,833 358,409
Research and
development 81,309 99,984 354,703 457,913
General and
administrative 21,337 46,424 122,648 152,032
Amortization of
acquired
intangibles 2,726 5,526 11,420 22,732
Impairment of
goodwill - 1,317,200 - 1,317,200
Impairment of
intangible and
tangible assets - 47,069 - 47,069
Restructuring and
other charges
(credits) 13,543 (1,318) 31,376 46,447
Write-off of
acquired
in-process
technology - - - 600
------------ ------------ ------------ ------------
Total costs and
expenses 231,535 1,648,545 976,223 2,611,882
------------ ------------ ------------ ------------
Loss from
operations (11,256) (1,421,210) (123,591) (1,573,268)
Interest expense (7,280) (6,706) (28,872) (27,402)
Other income
(expense), net 4,723 (13,142) (1,042) (16,843)
------------ ------------ ------------ ------------
Loss before
provision
(benefit)
for income
taxes (13,813) (1,441,058) (153,505) (1,617,513)
Provision
(benefit) for
income taxes (15,603) 193,047 (3,634) 239,202
------------ ------------ ------------ ------------
Net income
(loss) $ 1,790 $ (1,634,105) $ (149,871) $ (1,856,715)
============ ============ ============ ============
Basic net income
(loss) per share $ 0.01 $ (6.55) $ (0.58) $ (7.30)
============ ============ ============ ============
Diluted net income
(loss) per share $ 0.01 $ (6.55) $ (0.58) $ (7.30)
============ ============ ============ ============
Weighted average
common shares
outstanding -
basic 260,752 249,481 257,782 254,323
============ ============ ============ ============
Weighted average
common shares
outstanding -
diluted 265,093 249,481 257,782 254,323
============ ============ ============ ============
* 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, on the first day of fiscal 2009.
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Years Ended January 2, 2010 and January 3, 2009
(In thousands)
(Unaudited)
Years Ended
------------------------------
January 2, January 3,
2010 2009
-------------- --------------
(As Adjusted)*
Cash and Cash Equivalents at Beginning of
Period $ 568,255 $ 1,062,920
-------------- --------------
Cash Flows from Operating Activities:
Net loss (149,871) (1,856,715)
Adjustments to reconcile net 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 93,139 126,489
Amortization of debt discount and
fees 20,912 18,019
Stock-based compensation 54,706 81,274
Equity in loss from investments, net 481 945
(Gain) loss on investments, net (1,292) 15,263
Gain on sale and leaseback of land
and buildings (122) (185)
Write-down of investment securities 5,207 16,653
Write-off of acquired in-process
technology - 600
Loss on liquidation of subsidiary - 9,327
Tax benefit of call options - 4,389
Impairment of property, plant and
equipment 6,730 2,170
Deferred income taxes (3,438) 198,784
Proceeds from the sale of
receivables, net 5,827 52,232
Provisions for losses on trade and
installment contract receivables and
sales returns 20,947 4,578
Other non-cash items (995) 2,086
Changes in operating assets and
liabilities, net of effect of
acquired businesses:
Receivables 61,966 (31,205)
Installment contract receivables 114,346 79,635
Inventories 3,896 2,584
Prepaid expenses and other (1,393) (4,618)
Other assets 12,044 (2,778)
Accounts payable and accrued
liabilities (94,851) (42,882)
Deferred revenue (95,135) 25,648
Other long-term liabilities (27,467) 3,724
-------------- --------------
Net cash provided by operating
activities 25,637 70,286
-------------- --------------
Cash Flows from Investing Activities:
Proceeds from the sale of
available-for-sale securities 4,135 56,529
Purchases of available-for-sale
securities - (62,447)
Proceeds from the sale of long-term
investments - 4,028
Proceeds from the sale of property, plant
and equipment 3,864 -
Purchases of property, plant and
equipment (41,308) (97,290)
Purchases of software licenses (774) (2,388)
Investment in venture capital
partnerships and equity investments (2,300) (4,386)
Cash paid in business combinations and
asset acquisitions, net of cash
acquired, and acquisition of intangibles (14,126) (20,931)
-------------- --------------
Net cash used for investing
activities (50,509) (126,885)
-------------- --------------
Cash Flows from Financing Activities:
Proceeds from receivable sale financing - 17,970
Principal payments on receivable sale
financing (2,467) (793)
Payment of convertible notes due 2023 - (230,207)
Tax benefit from employee stock
transactions 1,383 483
Proceeds from issuance of common stock 28,010 48,192
Stock received for payment of employee
taxes on vesting of restricted stock (5,959) (5,114)
Purchases of treasury stock - (273,950)
-------------- --------------
Net cash provided by (used for)
financing activities 20,967 (443,419)
-------------- --------------
Effect of exchange rate changes on cash and
cash equivalents 4,765 5,353
-------------- --------------
Increase (decrease) in cash and cash
equivalents 860 (494,665)
-------------- --------------
Cash and Cash Equivalents at End of Period $ 569,115 $ 568,255
============== ==============
* 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, on the first day of fiscal 2009.
Cadence Design Systems, Inc.
As of February 3, 2010
Impact of Non-GAAP Adjustments on Forward Looking Diluted
Net Loss Per Share
(Unaudited)
Three Months Ending Year Ending
April 3, 2010 January 1, 2011
------------------- -------------------
Forecast Forecast
------------------- -------------------
Diluted net loss per share on a
GAAP basis $(0.10) to $(0.08) $(0.29) to $(0.19)
Amortization of acquired
intangibles 0.02 0.04
Stock-based compensation
expense 0.04 0.18
Restructuring and other charges - -
Equity in losses from
investments, write-down of
investments, gains and losses
on non-qualified deferred
compensation plan assets - -
Amortization of debt discount 0.02 0.08
Income tax effect of non-GAAP
adjustments 0.02 0.04
------------------- -------------------
Diluted net income per share on
a non-GAAP basis $0.00 to $0.02 $0.05 to $0.15
=================== ===================
Cadence Design Systems, Inc.
As of February 3, 2010
Impact of Non-GAAP Adjustments on Forward Looking Net Loss
(Unaudited)
Three Months Ending Year Ending
April 3, 2010 January 1, 2011
------------------- -------------------
($ in Millions) Forecast Forecast
------------------- -------------------
Net loss on a GAAP basis $(26) to $(20) $(78) to $(52)
Amortization of acquired
intangibles 5 12
Stock-based compensation
expense 11 48
Restructuring and other charges - 1
Equity in losses from
investments, write-down of
investments, gains and losses
on non-qualified deferred
compensation plan assets - 1
Amortization of debt discount 5 21
Income tax effect of non-GAAP
adjustments 5 10
------------------- -------------------
Net income on a non-GAAP basis $0 to $6 $15 to $41
=================== ===================
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
2007 2008
============================ ============================
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
Americas 48% 52% 41% 50% 49% 43% 48% 43% 45% 45%
Europe 15% 17% 25% 17% 18% 24% 21% 23% 22% 22%
Japan 27% 14% 22% 22% 21% 21% 19% 20% 18% 20%
Asia 10% 17% 12% 11% 12% 12% 12% 14% 15% 13%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
2009
============================
GEOGRAPHY Q1 Q2 Q3 Q4 Year
==== ==== ==== ==== ====
Americas 42% 48% 43% 51% 46%
Europe 24% 21% 20% 24% 22%
Japan 19% 17% 23% 12% 18%
Asia 15% 14% 14% 13% 14%
Total 100% 100% 100% 100% 100%
Revenue Mix by Product Group (% of Total Revenue)
2007 2008
============================ ============================
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
Functional
Verification 24% 24% 20% 26% 24% 22% 25% 22% 17% 22%
Digital IC
Design 26% 29% 27% 27% 27% 24% 24% 20% 26% 24%
Custom IC
Design 24% 24% 32% 25% 27% 26% 23% 26% 23% 24%
Design for
Manufacturing 7% 7% 6% 6% 6% 5% 7% 7% 7% 6%
System
Interconnect 10% 8% 7% 9% 8% 11% 10% 11% 12% 11%
Services &
Other 9% 8% 8% 7% 8% 12% 11% 14% 15% 13%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
2009
============================
PRODUCT GROUP Q1 Q2 Q3 Q4 Year
==== ==== ==== ==== ====
Functional
Verification 20% 23% 21% 22% 22%
Digital IC
Design 19% 24% 19% 22% 21%
Custom IC
Design 26% 25% 28% 28% 27%
Design for
Manufacturing 9% 5% 9% 7% 7%
System
Interconnect 12% 10% 11% 11% 11%
Services &
Other 14% 13% 12% 10% 12%
Total 100% 100% 100% 100% 100%
Note: Product Group total revenue includes Product + Maintenance
Cadence Design Systems, Inc.
Impact of Retrospective Adoption of the
"Debt with Conversion and Other Options"
Subtopic of the FASB Accounting Standards Codification
On Previously Reported Condensed Consolidated Balance Sheets as of
January 3, 2009
(In thousands)
(Unaudited)
As of January 3, 2009
-----------------------------------------
As Previously As
Reported Adjustments Adjusted
----------- ----------- -----------
Current assets $ 954,548 $ (558) (A) $ 953,990
Property, plant and equipment,
net 351,961 2,891 (B) 354,852
Acquired intangibles, net 49,082 - 49,082
Installment contract receivables 160,742 - 160,742
Other assets 162,381 (1,194) (C) 161,187
----------- ----------- -----------
Total Assets $ 1,678,714 $ 1,139 $ 1,679,853
=========== =========== ===========
Current liabilities $ 564,210 $ - $ 564,210
Long-Term Liabilities:
Long-term portion of
deferred revenue 130,354 - 130,354
Convertible notes 500,178 (83,606) (D) 416,572
Other long-term liabilities 382,004 - 382,004
----------- ----------- -----------
Total long-term
liabilities 1,012,536 (83,606) 928,930
----------- ----------- -----------
Stockholders' Equity:
Common stock and capital in
excess of par value 1,562,079 97,223 (E) 1,659,302
Treasury stock, at cost (695,152) - (695,152)
Accumulated deficit (802,201) (12,478) (F) (814,679)
Accumulated other
comprehensive income 37,242 - 37,242
----------- ----------- -----------
Total stockholders'
equity 101,968 84,745 186,713
----------- ----------- -----------
----------- ----------- -----------
Total Liabilities and
Stockholders' Equity $ 1,678,714 $ 1,139 $ 1,679,853
=========== =========== ===========
(A) This amount represents the cumulative adjustments to the current
portion of debt issuance costs associated with Cadence's Convertible
Senior Notes.
(B) This amount represents the cumulative capitalized interest related to
the amortization of debt discount.
(C) This amount represents the cumulative adjustments to the long-term
portion of debt issuance costs associated with Cadence's Convertible
Senior Notes and the cumulative impact on the net deferred tax assets
related to the amortization of debt discount.
(D) This amount represents the remaining unamortized debt discount on
Cadence's Convertible Senior Notes as of January 3, 2009.
(E) This amount represents the equity component of Cadence's Convertible
Senior Notes, net of tax adjustments to the tax benefit of call
options, due to the amortization of debt discount.
(F) This amount represents the cumulative Net loss impact of the
amortization of debt discount and the associated tax adjustments since
inception of Cadence's Convertible Senior Notes.
Cadence Design Systems, Inc.
Impact of Retrospective Adoption of the
"Debt with Conversion and Other Options"
Subtopic of the FASB Accounting Standards Codification
On Previously Reported Condensed Consolidated Statements of Operations
For the Three Months and Year Ended January 3, 2009
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended January 3, 2009
-----------------------------------------
As Previously As
Reported Adjustments Adjusted
----------- ----------- -----------
Revenue $ 227,335 $ - $ 227,335
Costs and expenses 1,648,545 - 1,648,545
----------- ----------- -----------
Loss from operations (1,421,210) - (1,421,210)
----------- ----------- -----------
Interest expense (2,559) (4,147) (G) (6,706)
Other expense, net (13,142) - (13,142)
----------- ----------- -----------
Loss before provision for
income taxes (1,436,911) (4,147) (1,441,058)
Provision for income taxes 202,044 (8,997) (H) 193,047
----------- ----------- -----------
Net loss $(1,638,955) $ 4,850 $(1,634,105)
=========== =========== ===========
=========== ===========
Basic and diluted net loss per
share $ (6.57) $ (6.55)
=========== ===========
Year Ended January 3, 2009
-----------------------------------------
As Previously As
Reported Adjustments Adjusted
----------- ----------- -----------
Revenue $ 1,038,614 $ - $ 1,038,614
Costs and expenses 2,611,882 - 2,611,882
----------- ----------- -----------
Loss from operations (1,573,268) - (1,573,268)
----------- ----------- -----------
Interest expense (11,614) (15,788) (G) (27,402)
Other expense, net (16,843) - (16,843)
----------- ----------- -----------
Loss before provision for
income taxes (1,601,725) (15,788) (1,617,513)
Provision for income taxes 252,313 (13,111) (H) 239,202
----------- ----------- -----------
Net loss $(1,854,038) $ (2,677) $(1,856,715)
=========== =========== ===========
=========== ===========
Basic and diluted net loss per
share $ (7.29) $ (7.30)
=========== ===========
(G) This amount represents the amortization of debt discount, net of the
decrease in interest expense associated with the debt issuance costs.
(H) This amount represents the tax adjustments associated with the
increased expense during the period.
