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 June 18, 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 Second Quarter 2010 Earnings Release is published, which is currently scheduled for July 28, 2010.
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
April 3, 2010 and January 2, 2010
(In thousands)
(Unaudited)
April 3, 2010 January 2, 2010
--------------- ---------------
Current Assets:
Cash and cash equivalents $ 619,303 $ 569,115
Short-term investments 3,188 2,184
Receivables, net of allowances of
$11,427 and $14,020, respectively 181,155 200,628
Inventories 19,323 24,165
Prepaid expenses and other 56,617 54,655
--------------- ---------------
Total current assets 879,586 850,747
Property, plant and equipment, net of
accumulated depreciation of $647,275
and $637,107, respectively 302,499 311,502
Goodwill 5,605 -
Acquired intangibles, net of accumulated
amortization of $87,196 and $124,507,
respectively 26,566 28,841
Installment contract receivables, net of
allowances of $9,724 and $9,724,
respectively 41,510 58,448
Other assets 159,220 161,049
--------------- ---------------
Total Assets $ 1,414,986 $ 1,410,587
=============== ===============
Current Liabilities:
Accounts payable and accrued
liabilities $ 147,782 $ 150,207
Current portion of deferred revenue 253,947 247,691
--------------- ---------------
Total current liabilities 401,729 397,898
--------------- ---------------
Long-Term Liabilities:
Long-term portion of deferred revenue 85,498 92,298
Convertible notes 441,107 436,012
Other long-term liabilities 367,617 376,006
--------------- ---------------
Total long-term liabilities 894,222 904,316
--------------- ---------------
Stockholders' Equity 119,035 108,373
--------------- ---------------
Total Liabilities and Stockholders'
Equity $ 1,414,986 $ 1,410,587
=============== ===============
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Operations
For the Three Months Ended April 3, 2010 and April 4, 2009
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
--------------------------------
April 3, 2010 April 4, 2009
--------------- ---------------
Revenue:
Product $ 102,766 $ 87,523
Services 25,920 29,207
Maintenance 93,252 89,572
--------------- ---------------
Total revenue 221,938 206,302
--------------- ---------------
Costs and Expenses:
Cost of product 5,292 7,671
Cost of services 21,925 24,045
Cost of maintenance 11,398 12,461
Marketing and sales 74,762 74,890
Research and development 89,430 94,692
General and administrative 22,834 38,339
Amortization of acquired intangibles 2,691 3,140
Restructuring and other charges
(credits) (1,074) (520)
--------------- ---------------
Total costs and expenses 227,258 254,718
--------------- ---------------
Loss from operations (5,320) (48,416)
Interest expense (7,431) (7,048)
Other income (expense), net 5,974 (6,149)
--------------- ---------------
Loss before provision for income
taxes (6,777) (61,613)
Provision for income taxes 5,008 1,644
--------------- ---------------
Net loss $ (11,785) $ (63,257)
=============== ===============
Basic and diluted net loss per share $ (0.04) $ (0.25)
=============== ===============
Weighted average common shares
outstanding - basic and diluted 262,597 254,302
=============== ===============
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended April 3, 2010 and April 4, 2009
(In thousands)
(Unaudited)
Three Months Ended
--------------------------------
April 3, 2010 April 4, 2009
--------------- ---------------
Cash and Cash Equivalents at Beginning
of Period $ 569,115 $ 568,255
--------------- ---------------
Cash Flows from Operating Activities:
Net loss (11,785) (63,257)
Adjustments to reconcile net loss to
net cash provided by (used for)
operating activities:
Depreciation and amortization 21,465 26,257
Amortization of debt discount and
fees 5,523 5,029
Stock-based compensation 10,372 12,728
Loss from equity method investments 27 146
(Gain) loss on investments, net (5,591) 6,368
Write-down of investment securities - 3,993
Impairment of property, plant and
equipment 164 3,429
Deferred income taxes (1,706) (3,073)
Proceeds from the sale of
receivables, net - 3,458
Provisions (recoveries) for losses
(gains) on trade and installment
contract receivables (2,593) 9,818
Other non-cash items 940 (8,269)
Changes in operating assets and
liabilities, net of effect of
acquired businesses:
Receivables (23,989) 31,932
Installment contract receivables 57,769 57,767
Inventories (6,047) (665)
Prepaid expenses and other (1,518) 172
Other assets 5,538 7,083
Accounts payable and accrued
liabilities 925 (63,736)
Deferred revenue 3,813 (31,581)
Other long-term liabilities (6,604) (4,937)
--------------- ---------------
Net cash provided by (used
for) operating activities 46,703 (7,338)
--------------- ---------------
Cash Flows from Investing Activities:
Proceeds from the sale of long-term
investments 8,964 -
Purchases of property, plant and
equipment (9,899) (14,818)
Purchases of software licenses (487) -
Investment in venture capital
partnerships and equity investments - (1,150)
Cash paid in business combinations and
asset acquisitions, net of cash
acquired - (3,543)
--------------- ---------------
Net cash used for investing
activities (1,422) (19,511)
--------------- ---------------
Cash Flows from Financing Activities:
Principal payments on receivable sale
financing (1,719) (796)
Tax benefit from employee stock
transactions 30 -
Proceeds from issuance of common stock 8,044 19,521
Stock received for payment of employee
taxes on vesting of restricted stock (2,079) (659)
--------------- ---------------
Net cash provided by financing
activities 4,276 18,066
--------------- ---------------
Effect of exchange rate changes on cash
and cash equivalents 631 (5,068)
--------------- ---------------
Increase (decrease) in cash and cash
equivalents 50,188 (13,851)
--------------- ---------------
Cash and Cash Equivalents at End of
Period $ 619,303 $ 554,404
=============== ===============
Cadence Design Systems, Inc.
As of April 28, 2010
Impact of Non-GAAP Adjustments on Forward Looking Diluted
Net Loss Per Share
(Unaudited)
Three Months Ending Year Ending
July 3, 2010 January 1, 2011
------------------- -------------------
Forecast Forecast
------------------- -------------------
Diluted net loss per share on a
GAAP basis $(0.05) to $(0.03) $(0.23) to $(0.13)
Amortization of acquired
intangibles 0.01 0.04
Stock-based compensation
expense 0.04 0.16
Non-qualified deferred
compensation expenses
(credits) - -
Restructuring and other charges
(credits) - -
Other income or expense related
to investments and
non-qualified deferred
compensation plan assets* - (0.02)
Amortization of debt discount 0.02 0.08
Income tax effect of non-GAAP
adjustments - 0.02
------------------- -------------------
Diluted net income per share on
a non-GAAP basis $0.02 to $0.04 $0.05 to $0.15
=================== ===================
Cadence Design Systems, Inc.
As of April 28, 2010
Impact of Non-GAAP Adjustments on Forward Looking Net Loss
(Unaudited)
Three Months Ending Year Ending
July 3, 2010 January 1, 2011
------------------- -------------------
($ in Millions) Forecast Forecast
------------------- -------------------
Net loss on a GAAP basis $(14) to $(8) $(62) to $(36)
Amortization of acquired
intangibles 3 12
Stock-based compensation
expense 11 44
Non-qualified deferred
compensation expenses
(credits) - 1
Restructuring and other charges
(credits) - (1)
Other income or expense related
to investments and
non-qualified deferred
compensation plan assets* - (5)
Amortization of debt discount 5 21
Income tax effect of non-GAAP
adjustments - 5
------------------- -------------------
Net income on a non-GAAP basis $5 to $11 $15 to $41
=================== ===================
* 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)
2008 2009 2010
============================ ============================ ====
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
Americas 43% 48% 43% 45% 45% 42% 48% 43% 51% 46% 40%
Europe 24% 21% 23% 22% 22% 24% 21% 20% 24% 22% 22%
Japan 21% 19% 20% 18% 20% 19% 17% 23% 12% 18% 23%
Asia 12% 12% 14% 15% 13% 15% 14% 14% 13% 14% 15%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Revenue Mix by Product Group (% of Total Revenue)
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%
2009 2010
============================ ====
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1
==== ==== ==== ==== ==== ====
Functional Verification 20% 23% 21% 22% 22% 22%
Digital IC Design 19% 24% 19% 22% 21% 21%
Custom IC Design 26% 25% 28% 28% 27% 27%
Design for Manufacturing 9% 5% 9% 7% 7% 9%
System Interconnect 12% 10% 11% 11% 11% 9%
Services & Other 14% 13% 12% 10% 12% 12%
Total 100% 100% 100% 100% 100% 100%
Note: Product Group total revenue includes Product + Maintenance
