Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results
for the third quarter of fiscal year 2010.
Cadence reported third quarter 2010 revenue of $238 million,
compared to revenue of $216 million reported for the same period in
2009. On a GAAP basis, Cadence recognized net income of $127
million, or $0.48 per share on a diluted basis in the third quarter
of 2010, compared to a net loss of $14 million, or $(0.05) per
share on a diluted basis, in the same period in 2009. Cadence's
third quarter 2010 net income includes a $148 million income tax
benefit related to the settlement of an Internal Revenue Service
examination of Cadence's federal income tax returns for the tax
years 2000 through 2002.
Using Cadence's non-GAAP measure, net income in the third
quarter of 2010 was $11 million, or $0.04 per share on a diluted
basis, as compared to net income of $7 million, or $0.03 per share
on a diluted basis, in the same period in 2009.
"Cadence had a successful third quarter. Momentum for Cadence
solutions is building at our key customers, driven by the
combination of leading and competitive technology and solid
performance from the Cadence team. Revenue and operating margin
continue to grow. There is still more work to do, but I am pleased
with our results to date," said Lip-Bu Tan, president and chief
executive officer.
In addition to using GAAP results to evaluate Cadence's
business, management believes it is useful to measure results using
a non-GAAP measure of net income or net loss, which excludes, as
applicable, amortization of intangible assets, stock-based
compensation expense, integration and acquisition-related costs,
acquisition-related income tax benefits, shareholder litigation
costs, gains or losses and expenses or credits related to
non-qualified deferred compensation plan assets, executive
severance costs, restructuring charges and credits, amortization of
discount on convertible notes, losses on extinguishment of debt,
equity in losses or income from investments, write-down of
investments, and gains or losses on the sale of investments.
Non-GAAP net income or net loss is adjusted by the amount of
additional taxes or tax benefit that the company would accrue if it
used non-GAAP results instead of GAAP results to calculate the
company's tax liability. See "GAAP to non-GAAP Reconciliation"
below for further information on the non-GAAP measure.
The following statements are based on current expectations.
These statements are forward-looking, and actual results may differ
materially.
Business Outlook
For the fourth quarter of 2010, the company expects total
revenue in the range of $230 million to $240 million. Fourth
quarter GAAP net loss per diluted share is expected to be in the
range of $(0.06) to $(0.04). Net income per diluted share using the
non-GAAP measure defined below is expected to be in the range of
$0.03 to $0.05.
For the full year 2010, the company expects total revenue in the
range of $917 million to $927 million. On a GAAP basis, net income
per diluted share for fiscal 2010 is expected to be in the range of
$0.55 to $0.57. Using the non-GAAP measure defined below, net
income per diluted share for fiscal 2010 is expected to be in the
range of $0.16 to $0.18.
A schedule showing a reconciliation of the business outlook from
GAAP net income or net loss and diluted net income or net loss per
share to non-GAAP net income and diluted net income per share is
included with this release.
Audio Webcast Scheduled
Lip-Bu Tan, Cadence's president and chief executive officer, and
Kevin S. Palatnik, Cadence's senior vice president and chief
financial officer, will host a third quarter of fiscal year 2010
financial results audio webcast today, October 27, 2010, at 2 p.m.
(Pacific) / 5 p.m. (Eastern). Attendees are asked to register at
the Web site at least 10 minutes prior to the scheduled webcast. An
archive of the webcast will be available starting October 27, 2010
at 5 p.m. (Pacific) and ending November 10, 2010 at 5 p.m.
(Pacific). Webcast access is available at
www.cadence.com/company/investor_relations.
About Cadence
Cadence enables global electronic-design innovation and plays an
essential role in the creation of today's integrated circuits and
electronics. Customers use Cadence® software and hardware,
methodologies, and services to design and verify advanced
semiconductors, consumer electronics, networking and
telecommunications equipment, and computer systems. Cadence is
headquartered in San Jose, Calif., with sales offices, design
centers, and research facilities around the world to serve the
global electronics industry. More information about Cadence and its
products and services is available at www.cadence.com.
Cadence and the Cadence logo are registered trademarks of
Cadence Design Systems, Inc. All other trademarks are the property
of their respective owners.
The statements contained above regarding Cadence's third quarter
2010 results, as well as the information in the Business Outlook
section and the statements by Lip-Bu Tan, include forward-looking
statements based on current expectations or beliefs, as well as a
number of preliminary assumptions about future events that are
subject to factors and uncertainties that could cause actual
results to differ materially from those described in the
forward-looking statements. Readers are cautioned not to put undue
reliance on these forward-looking statements, which are not a
guarantee of future performance and are subject to a number of
risks, uncertainties and other factors, many of which are outside
Cadence's control, including, among others: (i) Cadence's ability
to compete successfully in the electronic design automation product
and the commercial electronic design and methodology services
industries; (ii) Cadence's ability to successfully complete and
realize the expected benefits of the previously disclosed
restructurings without significant unexpected costs or delays, and
the success of Cadence's other efforts to improve operational
efficiency and growth; (iii) the mix of products and services sold
and the timing of significant orders for Cadence's products, and
its shift to a ratable license structure, which may result in
changes in the mix of license types; (iv) change in customer
demands, including the possibility that the previously disclosed
restructurings and other efforts to improve operational efficiency
could result in delays in customers' purchases of products and
services; (v) economic and industry conditions in regions in which
Cadence does business; (vi) fluctuations in rates of exchange
between the U.S. dollar and the currencies of other countries in
which Cadence does business; (vii) capital expenditure
requirements, legislative or regulatory requirements, interest
rates and Cadence's ability to access capital and debt markets;
(viii) the acquisition of other companies or technologies or the
failure to successfully integrate and operate these companies or
technologies Cadence acquires; (ix) the effects of the previously
disclosed restructurings and other efforts to improve operational
efficiency on Cadence's business, including its strategic and
customer relationships, ability to retain key employees and stock
prices; (x) events that affect the reserves or settlement
assumptions Cadence may take from time to time with respect to
accounts receivable, taxes, litigation or other matters; and (xi)
the effects of any litigation or other proceedings to which Cadence
is or may become a party.
For a detailed discussion of these and other cautionary
statements related to our business, please refer to Cadence's
filings with the Securities and Exchange Commission. These include
Cadence's Annual Report on Form 10-K for the year ended January 2,
2010, Cadence's Quarterly Report on Form 10-Q for the period ended
July 3, 2010 and Cadence's future filings.
GAAP to non-GAAP Reconciliation
Cadence management evaluates and makes operating decisions using
various operating measures. These measures are generally based on
the revenues of its product, maintenance and services business
operations and certain costs of those operations, such as cost of
revenues, research and development, sales and marketing and general
and administrative expenses. One such measure is non-GAAP net
income or net loss, which is a non-GAAP financial measure under
Section 101 of Regulation G under the Securities Exchange Act of
1934, as amended, and is GAAP net income or net loss excluding, as
applicable, amortization of intangible assets, stock-based
compensation expense, integration and acquisition-related costs,
acquisition-related income tax benefits, shareholder litigation
costs, gains or losses and expenses or credits related to
non-qualified deferred compensation plan assets, executive
severance costs, restructuring charges and credits, amortization of
discount on convertible notes, losses on extinguishment of debt,
equity in losses or income from investments, write-down of
investments and gains or losses on the sale of investments.
Intangible assets consist primarily of purchased or licensed
technology, backlog, patents, trademarks, distribution rights,
customer contracts and related relationships and non-compete
agreements. Non-GAAP net income or net loss is adjusted by the
amount of additional taxes or tax benefit that the company would
accrue if it used non-GAAP results instead of GAAP results to
calculate the company's tax liability.
Cadence's management believes it is useful in measuring
Cadence's operations to exclude amortization of intangible assets
and integration and acquisition-related costs because these costs
are primarily fixed at the time of an acquisition and generally
cannot be changed by Cadence's management in the short term. In
addition, Cadence's management believes it is useful to exclude
stock-based compensation expense because such exclusion enhances
investors' ability to review Cadence's business from the same
perspective as Cadence's management, which believes that
stock-based compensation expense is based on many subjective inputs
at a point in time and many of these inputs are not necessarily
directly attributable to the underlying performance of Cadence's
business operations. Cadence's management also believes it is
useful to exclude costs related to shareholder litigation because
these costs are not related to Cadence's core business operations.
Cadence's management also believes that it is useful to exclude
restructuring charges and credits. During fiscal 2009, Cadence
commenced a restructuring program that it expects to complete
during the first fiscal quarter of 2011. Cadence's management
believes that in measuring the company's operations, it is useful
to exclude any such restructuring charges and credits because
exclusion of such charges and credits permits consistent
evaluations of Cadence's performance before and after such actions
are taken. Cadence's management believes it is useful to exclude
gains or losses and expenses or credits related to the
non-qualified deferred compensation plan assets because these gains
or losses and expenses or credits are not part of Cadence's direct
costs of operations, but reflect changes in the value of assets
held in the non-qualified deferred compensation plan. Cadence's
management also believes it is useful to exclude executive
severance costs as these costs do not occur frequently. Cadence's
management also believes it is useful to exclude the amortization
of the discount on convertible notes because this incremental cost
recorded as interest expense does not represent a cash obligation
of the company and is not part of Cadence's direct cost of
operations. Finally, Cadence's management believes it is useful to
exclude the equity in losses or income from investments, write-down
of investments and gains or losses on the sale of investments
because these items are not part of Cadence's direct cost of
operations. Rather, these are non-operating items that are included
in other income or expense and are part of the company's investment
activities.
During the third quarter of fiscal 2010, Cadence's non-GAAP net
income also excluded the impact of an income tax benefit associated
with Cadence's effective settlement of an Internal Revenue Service,
or IRS, examination of Cadence's federal income tax returns for the
tax years 2000 through 2002. Cadence's management believes it is
useful to exclude the income tax benefit associated with this
settlement because Cadence does not expect settlements resulting in
income tax provisions or benefits of the magnitude recorded during
the third quarter of 2010 to occur frequently.
During the second quarter of fiscal 2010, Cadence's non-GAAP net
income also excluded losses associated with its repurchase of a
portion of its 1.375% Convertible Senior Notes Due December 15,
2011 and a portion of its 1.500% Convertible Senior Notes Due
December 15, 2013. Cadence's management believes it is useful to
exclude the losses on the extinguishment of debt as the losses are
not directly related to Cadence's core business operations and
similar transactions are not expected to occur frequently.
During the second quarter of fiscal 2010, Cadence's non-GAAP net
income also excluded the impact of an income tax benefit associated
with Cadence's acquisition of Denali Software, Inc. Cadence's
management believes it is useful to exclude the tax benefit
associated with this acquisition because Cadence does not expect an
acquisition-related income tax benefit of the magnitude recorded in
the second quarter of 2010 to be recorded frequently.
During the fourth quarter of fiscal 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.
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 and
non-GAAP net income per diluted share for the periods shown
below:
Net Income (Loss) Reconciliation Three Months Ended
------------------------
October 2, October 3,
2010 2009
----------- -----------
(unaudited)
(in thousands)
Net income (loss) on a GAAP basis $ 126,753 $ (14,047)
Amortization of acquired intangibles 6,655 4,391
Stock-based compensation expense 12,010 14,455
Non-qualified deferred compensation expenses
(credits) (1,873) 3,752
Restructuring and other charges (credits) (1,682) (175)
Shareholder litigation costs 1,452 -
Executive severance costs 1,627 -
Integration and acquisition-related costs 5,322 155
Amortization of debt discount 6,291 4,837
Other income or expense related to investments
and non-qualified deferred compensation plan
assets* 1,834 (2,913)
Income tax benefit of IRS settlement (148,302) -
Income tax effect of non-GAAP adjustments 1,139 (3,055)
----------- -----------
Net income on a non-GAAP basis $ 11,226 $ 7,400
=========== ===========
* 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.
Diluted Net Income (Loss) per Share
Reconciliation Three Months Ended
------------------------
October 2, October 3,
2010 2009
----------- -----------
(unaudited)
(in thousands, except per share data)
Diluted net income (loss) per share on a GAAP
basis $ 0.48 $ (0.05)
Amortization of acquired intangibles 0.03 0.02
Stock-based compensation expense 0.04 0.05
Non-qualified deferred compensation expenses
(credits) (0.01) 0.01
Restructuring and other charges (credits) (0.01) -
Shareholder litigation costs 0.01 -
Executive severance costs 0.01 -
Integration and acquisition-related costs 0.02 -
Amortization of debt discount 0.02 0.02
Other income or expense related to investments
and non-qualified deferred compensation plan
assets* 0.01 (0.01)
Income tax benefit of IRS settlement (0.56) -
Income tax effect of non-GAAP adjustments - (0.01)
----------- -----------
Diluted net income per share on a non-GAAP basis $ 0.04 $ 0.03
=========== ===========
Shares used in calculation of diluted net income
(loss) per share --GAAP** 263,302 259,193
Shares used in calculation of diluted net income
per share --non-GAAP** 263,302 262,553
* 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.
** 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.
Investors are encouraged to look at the GAAP results as the best
measure of financial performance. For example, amortization of
intangibles is important to consider because it may represent an
initial expenditure that under GAAP is reported across future
fiscal periods. Likewise, stock-based compensation expense is an
obligation of the company that should be considered. Restructuring
charges can be triggered by acquisitions or product adjustments, as
well as overall company performance within a given business
environment. All of these metrics are important to financial
performance generally.
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 December 17, 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 Fourth Quarter and Fiscal Year 2010 Earnings Release is
published, which is currently scheduled for February 2, 2011.
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
October 2, 2010 and January 2, 2010
(In thousands)
(Unaudited)
October 2, 2010 January 2, 2010
--------------- ---------------
Current Assets:
Cash and cash equivalents $ 509,035 $ 569,115
Short-term investments 2,641 2,184
Receivables, net of allowances of $10,833
and $14,020, respectively 202,237 200,628
Inventories 28,486 24,165
Prepaid expenses and other 79,910 54,655
--------------- ---------------
Total current assets 822,309 850,747
Property, plant and equipment, net of
accumulated depreciation of $641,805 and
$637,107, respectively 290,103 311,502
Goodwill 158,893 -
Acquired intangibles, net of accumulated
amortization of $98,173 and $124,507,
respectively 185,866 28,841
Installment contract receivables, net of
allowances of $0 and $9,724, respectively 28,231 58,448
Other assets 220,546 161,049
--------------- ---------------
Total Assets $ 1,705,948 $ 1,410,587
=============== ===============
Current Liabilities:
Accounts payable and accrued liabilities $ 152,436 $ 150,207
Current portion of deferred revenue 308,591 247,691
--------------- ---------------
Total current liabilities 461,027 397,898
--------------- ---------------
Long-Term Liabilities:
Long-term portion of deferred revenue 96,439 92,298
Convertible notes 548,093 436,012
Other long-term liabilities 304,402 376,006
--------------- ---------------
Total long-term liabilities 948,934 904,316
--------------- ---------------
Stockholders' Equity 295,987 108,373
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 1,705,948 $ 1,410,587
=============== ===============
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended October 2, 2010 and October 3, 2009
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
---------------------- ----------------------
October 2, October 3, October 2, October 3,
2010 2009 2010 2009
---------- ---------- ---------- ----------
Revenue:
Product $ 118,221 $ 96,932 $ 338,053 $ 286,295
Services 23,945 26,669 75,123 83,684
Maintenance 95,768 92,521 273,760 262,374
---------- ---------- ---------- ----------
Total revenue 237,934 216,122 686,936 632,353
---------- ---------- ---------- ----------
Costs and Expenses:
Cost of product 10,757 6,405 23,172 23,828
Cost of services 19,102 21,139 62,583 69,602
Cost of maintenance 9,960 11,105 31,839 35,423
Marketing and sales 76,065 68,282 222,340 214,603
Research and development 97,275 88,049 278,585 273,394
General and
administrative 25,081 28,732 64,973 101,311
Amortization of acquired
intangibles 4,459 2,726 9,701 8,694
Restructuring and other
charges (credits) (1,682) (175) (3,073) 17,833
---------- ---------- ---------- ----------
Total costs and
expenses 241,017 226,263 690,120 744,688
---------- ---------- ---------- ----------
Loss from operations (3,083) (10,141) (3,184) (112,335)
Interest expense (10,476) (7,278) (25,879) (21,592)
Other income (expense),
net (2,907) 2,917 (33) (5,765)
---------- ---------- ---------- ----------
Loss before provision
(benefit) for income
taxes (16,466) (14,502) (29,096) (139,692)
Provision (benefit) for
income taxes (143,219) (455) (192,671) 11,969
---------- ---------- ---------- ----------
Net income (loss) $ 126,753 $ (14,047) $ 163,575 $ (151,661)
========== ========== ========== ==========
Basic net income (loss) per
share $ 0.49 $ (0.05) $ 0.63 $ (0.59)
========== ========== ========== ==========
Diluted net income (loss)
per share $ 0.48 $ (0.05) $ 0.62 $ (0.59)
========== ========== ========== ==========
Weighted average common
shares outstanding - basic 258,606 259,193 261,122 256,792
========== ========== ========== ==========
Weighted average common
shares outstanding -
diluted 263,302 259,193 265,383 256,792
========== ========== ========== ==========
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended October 2, 2010 and October 3, 2009
(In thousands)
(Unaudited)
Nine Months Ended
------------------------
October 2, October 3,
2010 2009
----------- -----------
Cash and Cash Equivalents at Beginning of Period $ 569,115 $ 568,255
----------- -----------
Cash Flows from Operating Activities:
Net income (loss) 163,575 (151,661)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 64,795 71,334
Amortization of debt discounts and fees 18,331 15,557
Loss on extinguishment of debt 5,321 -
Stock-based compensation 32,817 43,690
Loss from equity method investments 105 369
(Gain) loss on investments, net (5,133) 4,307
Gain on sale of property, plant and
equipment (799) -
Write-down of investment securities 1,500 5,207
Impairment of property, plant and equipment 491 6,603
Deferred income taxes (70,617) (6,520)
Proceeds from the sale of receivables, net - 5,827
Provisions (recoveries) for losses (gains)
on trade and installment contract
receivables (13,339) 18,668
Other non-cash items 2,259 (4,084)
Changes in operating assets and
liabilities, net of effect of acquired
businesses:
Receivables (44,422) 56,444
Installment contract receivables 97,818 122,302
Inventories (16,005) 2,846
Prepaid expenses and other (23,828) (4,041)
Other assets (32,223) 11,809
Accounts payable and accrued liabilities 3,308 (79,395)
Deferred revenue 45,229 (83,760)
Other long-term liabilities (87,054) (10,773)
----------- -----------
Net cash provided by operating
activities 142,129 24,729
----------- -----------
Cash Flows from Investing Activities:
Proceeds from the sale of available-for-sale
securities - 139
Proceeds from the sale of long-term investments 10,276 -
Proceeds from the sale of property, plant and
equipment 900 -
Purchases of property, plant and equipment (28,940) (30,504)
Purchases of software licenses (2,706) (774)
Investment in venture capital partnerships and
equity investments (3,000) (2,300)
Cash paid in business combinations and asset
acquisitions, net of cash acquired (256,117) (14,126)
----------- -----------
Net cash used for investing activities (279,587) (47,565)
----------- -----------
Cash Flows from Financing Activities:
Principal payments on receivable sale financing (3,540) (2,467)
Proceeds from issuance of 2015 Notes 350,000 -
Payment of Convertible Senior Notes (187,150) -
Payment of 2015 Notes issuance costs (10,419) -
Purchase of 2015 Notes Hedges (76,635) -
Proceeds from termination of Convertible Senior
Notes Hedges 280 -
Proceeds from sale of 2015 Warrants 37,450 -
Tax effect related to employee stock
transactions allocated to equity (9,624) -
Proceeds from issuance of common stock 13,269 27,862
Stock received for payment of employee taxes on
vesting of restricted stock (5,875) (4,055)
Purchases of treasury stock (39,997) -
----------- -----------
Net cash provided by financing
activities 67,759 21,340
----------- -----------
Effect of exchange rate changes on cash and cash
equivalents 9,619 3,858
----------- -----------
Increase (decrease) in cash and cash equivalents (60,080) 2,362
----------- -----------
Cash and Cash Equivalents at End of Period $ 509,035 $ 570,617
=========== ===========
Cadence Design Systems, Inc.
As of October 27, 2010
Impact of Non-GAAP Adjustments on Forward Looking Diluted
Net Income (Loss) Per Share
(Unaudited)
Three Months Ending Year Ending
January 1, 2011 January 1, 2011
------------------- -------------------
Forecast Forecast
------------------- -------------------
Diluted net income (loss) per
share on a GAAP basis $(0.06) to $(0.04) $0.55 to $0.57
Amortization of acquired
intangibles 0.03 0.08
Stock-based compensation
expense 0.04 0.16
Non-qualified deferred
compensation expenses - -
Restructuring and other charges
(credits) - (0.01)
Shareholder litigation costs - 0.02
Executive severance costs - 0.01
Integration and
acquisition-related costs 0.02 0.05
Amortization of debt discount 0.02 0.08
Other income or expense related
to investments and non-qualified
deferred compensation plan assets* - (0.01)
Loss on extinguishment of debt - 0.02
Acquisition-related income tax
benefit - (0.25)
Income tax benefit of IRS
settlement - (0.56)
Income tax effect of non-GAAP
adjustments (0.02) 0.02
------------------- -------------------
Diluted net income per share on a
non-GAAP basis $0.03 to $0.05 $0.16 to $0.18
=================== ===================
* Includes, as applicable, equity in losses or income from investments,
write-down of investments, gains or losses on sale of investments and
gains or losses on non-qualified deferred compensation plan assets
recorded in Other income (expense), net.
Cadence Design Systems, Inc.
As of October 27, 2010
Impact of Non-GAAP Adjustments on Forward Looking Net Income (Loss)
(Unaudited)
Three Months Ending Year Ending
January 1, 2011 January 1, 2011
------------------- -------------------
($ in Millions) Forecast Forecast
------------------- -------------------
Net income (loss) on a GAAP basis $(15) to $(10) $148 to $153
Amortization of acquired
intangibles 7 21
Stock-based compensation
expense 11 44
Non-qualified deferred
compensation expenses - 1
Restructuring and other charges
(credits) - (3)
Shareholder litigation costs - 4
Executive severance costs - 2
Integration and
acquisition-related costs 4 12
Amortization of debt discount 6 23
Other income or expense related
to investments and non-qualified
deferred compensation plan assets* - (4)
Loss on extinguishment of debt - 5
Acquisition-related income tax
benefit - (67)
Income tax benefit of IRS
settlement - (148)
Income tax effect of non-GAAP
adjustments (5) 5
------------------- -------------------
Net income on a non-GAAP basis $8 to $13 $43 to $48
=================== ===================
* 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)
2009 2010
---------------------------- ----------------
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2 Q3
---- ---- ---- ---- ---- ---- ---- ----
Americas 42% 48% 43% 51% 46% 40% 46% 43%
Europe 24% 21% 20% 24% 22% 22% 23% 20%
Japan 19% 17% 23% 12% 18% 23% 14% 20%
Asia 15% 14% 14% 13% 14% 15% 17% 17%
Total 100% 100% 100% 100% 100% 100% 100% 100%
Revenue Mix by Product Group (% of Total Revenue)
2009 2010
---------------------------- ----------------
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1 Q2 Q3
---- ---- ---- ---- ---- ---- ---- ----
Functional Verification 20% 23% 21% 22% 22% 22% 26% 25%
Digital IC Design 19% 24% 19% 22% 21% 21% 21% 23%
Custom IC Design 26% 25% 28% 28% 27% 27% 26% 24%
Design for Manufacturing 9% 5% 9% 7% 7% 9% 6% 8%
System Interconnect 12% 10% 11% 11% 11% 9% 10% 10%
Services & Other 14% 13% 12% 10% 12% 12% 11% 10%
Total 100% 100% 100% 100% 100% 100% 100% 100%
Note: Product Group total revenue includes Product + Maintenance
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For more information, please contact: Investors and Shareholders
Jennifer Jordan Cadence Design Systems, Inc. 408-944-7100
investor_relations@cadence.com Media and Industry Analysts Lynne
Cox Cadence Design Systems, Inc. 408-914-6016
publicrelations@cadence.com
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