Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results
for the second quarter of fiscal year 2011.
Cadence reported second quarter 2011 revenue of $283 million,
compared to revenue of $227 million reported for the same period in
2010. On a GAAP basis, Cadence recognized net income of $27
million, or $0.10 per share on a diluted basis in the second
quarter of 2011, compared to net income of $49 million, or $0.18
per share on a diluted basis in the same period in 2010. GAAP net
income for the second quarter of 2010 included $67 million in
acquisition-related tax benefits.
Using Cadence's non-GAAP measure, net income in the second
quarter of 2011 was $32 million, or $0.12 per share on a diluted
basis, as compared to net income of $18 million, or $0.07 per share
on a diluted basis in the same period in 2010.
"Demand for our products and services in the second quarter
continued to be strong with run rates on renewals increasing," said
Lip-Bu Tan, president and chief executive officer. "We saw
acceleration in adoption of our end-to-end digital solution at
advanced nodes and very positive response to our new Cadence System
Development Suite."
"The Cadence team produced excellent operating results in Q2 as
we met or exceeded expectations for our key operating metrics,"
added Geoff Ribar, senior vice president and chief financial
officer. "With the ongoing strength in our business we are
adjusting upward our outlook for fiscal 2011."
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, which excludes, as applicable,
amortization of intangible assets, stock-based compensation
expense, integration and acquisition-related costs,
acquisition-related income tax benefits, income tax benefits
related to the settlement of IRS examinations, shareholder
litigation costs and charges, gains or losses and expenses or
credits related to non-qualified deferred compensation plan assets,
executive and other employee 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 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 third quarter of 2011, the company expects total revenue
in the range of $280 million to $290 million. Third quarter GAAP
net income per diluted share is expected to be in the range of
$0.04 to $0.06. Net income per diluted share using the non-GAAP
measure defined below is expected to be in the range of $0.11 to
$0.13.
For the full year 2011, the company expects total revenue in the
range of $1,115 million to $1,135 million. On a GAAP basis, net
income per diluted share for fiscal year 2011 is expected to be in
the range of $0.20 to $0.26. Using the non-GAAP measure defined
below, net income per diluted share for fiscal year 2011 is
expected to be in the range of $0.41 to $0.47.
A schedule showing a reconciliation of the business outlook from
GAAP net income and diluted net income 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
Geoff Ribar, Cadence's senior vice president and chief financial
officer, will host a second quarter of fiscal year 2011 financial
results audio webcast today, July 28, 2011, at 2 p.m. (Pacific) / 5
p.m. (Eastern). Attendees are asked to register at the website at
least 10 minutes prior to the scheduled webcast. An archive of the
webcast will be available starting July 28, 2011 at 5 p.m.
(Pacific) and ending August 11, 2011 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, hardware, IP, and
services to design and verify advanced semiconductors, consumer
electronics, networking and telecommunications equipment, and
computer systems. The company is headquartered in San Jose,
California, with sales offices, design centers, and research
facilities around the world to serve the global electronics
industry. More information about the company 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 second
quarter 2011 results, as well as the information in the Business
Outlook section and the statements by Lip-Bu Tan and Geoff Ribar
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 its
previously announced 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
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 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 Cadence's 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 1,
2011, 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, 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 excluding, as applicable, amortization of
intangible assets, stock-based compensation expense, integration
and acquisition-related costs, acquisition-related income tax
benefits, income tax benefits related to the settlement of IRS
examinations, shareholder litigation costs and charges, gains or
losses and expenses or credits related to non-qualified deferred
compensation plan assets, executive and other employee 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 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 and charges related to shareholder
litigation because these costs and charges 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 the fourth quarter of fiscal year 2010, Cadence
commenced a restructuring program and expects to have paid
substantially all termination benefits and costs by the fourth
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 also 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 and other employee
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 second quarter of fiscal year 2011, Cadence's
non-GAAP net income also excluded the effect of an income tax
benefit associated with Cadence's effective settlement of an
Internal Revenue Services, or IRS, examination of Cadence's federal
income tax returns for the tax years 2003 through 2005. During the
third quarter of fiscal year 2010, Cadence's non-GAAP net income
also excluded the effect of an income tax benefit associated with
Cadence's effective settlement of an 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 benefits associated with these settlements because exclusion of
such tax benefits permits consistent evaluations of Cadence's
performance. 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 and fourth quarters of fiscal year 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 year 2011, Cadence's
non-GAAP net income also excluded the effect of an income tax
benefit associated with an acquisition Cadence completed during the
second quarter of 2011. During the second quarter of fiscal year
2010, Cadence's non-GAAP net income also excluded the effect 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 benefits associated with these acquisitions because
exclusion of such tax benefits permits consistent evaluation of
Cadence's performance. Cadence does not expect an
acquisition-related income tax benefit of the magnitude recorded in
the second quarter of 2010 to be recorded frequently.
Cadence's management believes that non-GAAP net income 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 and GAAP net income 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 Reconciliation Three Months Ended
----------------------
July 2, July 3,
2011 2010
---------- ----------
(unaudited)
(in thousands)
Net income on a GAAP basis $ 26,908 $ 48,607
Amortization of acquired intangibles 6,988 3,142
Stock-based compensation expense 10,341 10,435
Non-qualified deferred compensation expenses 1,186 1,192
Restructuring and other charges (credits) 751 (317)
Shareholder litigation costs 1,106 2,862
Executive and other employee severance costs 1,916 -
Integration and acquisition-related costs 1,005 2,469
Amortization of debt discount 6,566 5,248
Other income or expense related to investments
and non-qualified deferred compensation plan
assets* (9,229) 202
Loss on extinguishment of debt - 5,321
Acquisition-related income tax benefit (5,021) (66,707)
Income tax benefit of IRS settlement (5,680) -
Income tax effect of non-GAAP adjustments (4,859) 5,825
---------- ----------
Net income on a non-GAAP basis $ 31,978 $ 18,279
========== ==========
* 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 per Share Reconciliation Three Months Ended
----------------------
July 2, July 3,
2011 2010
---------- ----------
(unaudited)
(in thousands, except per share data)
Diluted net income per share on a GAAP basis $ 0.10 $ 0.18
Amortization of acquired intangibles 0.03 0.01
Stock-based compensation expense 0.04 0.04
Non-qualified deferred compensation expenses 0.01 0.01
Restructuring and other charges (credits) - -
Shareholder litigation costs - 0.01
Executive and other employee severance costs 0.01 -
Integration and acquisition-related costs - 0.01
Amortization of debt discount 0.02 0.02
Other income or expense related to investments
and non-qualified deferred compensation plan
assets* (0.03) -
Loss on extinguishment of debt - 0.02
Acquisition-related income tax benefit (0.02) (0.25)
Income tax benefit of IRS settlement (0.02) -
Income tax effect of non-GAAP adjustments (0.02) 0.02
---------- ----------
Diluted net income per share on a non-GAAP basis $ 0.12 $ 0.07
========== ==========
Shares used in calculation of diluted net income
per share --GAAP** 270,885 266,423
Shares used in calculation of diluted net income
per share --non-GAAP** 270,885 266,423
* 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 per share are
expected to be the same as shares used in the calculation of non-GAAP
net income 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 website.
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 September 16, 2011, 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 Third Quarter 2011 Earnings
Release is published, which is currently scheduled for October 26,
2011.
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
July 2, 2011 and January 1, 2011
(In thousands)
(Unaudited)
July 2, 2011 January 1, 2011
------------- ---------------
Current Assets:
Cash and cash equivalents $ 665,317 $ 557,409
Short-term investments 3,255 12,715
Receivables, net of allowances of $747 and
$7,604, respectively 150,241 191,893
Inventories 44,391 39,034
2015 notes hedges 222,085 -
Prepaid expenses and other 79,966 78,355
------------- ---------------
Total current assets 1,165,255 879,406
Property, plant and equipment, net of
accumulated depreciation of $640,380 and
$648,676, respectively 267,758 285,115
Goodwill 173,752 158,893
Acquired intangibles, net of accumulated
amortization of $77,436 and $105,158,
respectively 178,566 179,198
Installment contract receivables 10,622 23,380
2015 notes hedges - 130,211
Other assets 78,672 75,913
------------- ---------------
Total Assets $ 1,874,625 $ 1,732,116
============= ===============
Current Liabilities:
Convertible notes $ 433,857 $ 143,258
2015 notes embedded conversion derivative 222,085 -
Accounts payable and accrued liabilities 165,698 216,864
Current portion of deferred revenue 362,762 337,426
------------- ---------------
Total current liabilities 1,184,402 697,548
------------- ---------------
Long-Term Liabilities:
Long-term portion of deferred revenue 91,360 85,400
Convertible notes 128,928 406,404
2015 notes embedded conversion derivative - 130,211
Other long-term liabilities 138,619 135,899
------------- ---------------
Total long-term liabilities 358,907 757,914
------------- ---------------
Stockholders' Equity 331,316 276,654
------------- ---------------
Total Liabilities and Stockholders' Equity $ 1,874,625 $ 1,732,116
============= ===============
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three and Six Months Ended July 2, 2011 and July 3, 2010
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
-------------------------- --------------------------
July 2, 2011 July 3, 2010 July 2, 2011 July 3, 2010
------------ ------------ ------------ ------------
Revenue:
Product $ 157,938 $ 117,066 $ 299,757 $ 219,832
Services 29,477 25,258 57,282 51,178
Maintenance 95,855 84,740 192,333 177,992
------------ ------------ ------------ ------------
Total revenue 283,270 227,064 549,372 449,002
------------ ------------ ------------ ------------
Costs and Expenses:
Cost of product 20,074 7,123 34,268 12,415
Cost of services 20,616 21,556 40,691 43,481
Cost of maintenance 10,716 10,481 21,614 21,879
Marketing and sales 77,006 71,513 155,378 146,275
Research and
development 99,268 91,880 200,567 181,310
General and
administrative 25,377 17,058 44,679 39,892
Amortization of
acquired
intangibles 4,505 2,551 8,964 5,242
Restructuring and
other charges
(credits) 751 (317) 710 (1,391)
------------ ------------ ------------ ------------
Total costs and
expenses 258,313 221,845 506,871 449,103
------------ ------------ ------------ ------------
Income (loss)
from
operations 24,957 5,219 42,501 (101)
Interest expense (10,768) (7,972) (21,754) (15,403)
Other income
(expense), net 8,394 (3,100) 12,863 2,874
------------ ------------ ------------ ------------
Income (loss)
before
provision
(benefit) for
income taxes 22,583 (5,853) 33,610 (12,630)
Provision (benefit)
for income taxes (4,325) (54,460) 379 (49,452)
------------ ------------ ------------ ------------
Net income $ 26,908 $ 48,607 $ 33,231 $ 36,822
============ ============ ============ ============
Basic net income
per share $ 0.10 $ 0.19 $ 0.13 $ 0.14
============ ============ ============ ============
Diluted net income
per share $ 0.10 $ 0.18 $ 0.12 $ 0.14
============ ============ ============ ============
Weighted average
common shares
outstanding -
basic 263,191 262,163 262,362 262,380
============ ============ ============ ============
Weighted average
common shares
outstanding -
diluted 270,885 266,423 269,732 266,539
============ ============ ============ ============
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended July 2, 2011 and July 3, 2010
(In thousands)
(Unaudited)
Six Months Ended
--------------------------
July 2, 2011 July 3, 2010
------------ ------------
Cash and Cash Equivalents at Beginning of
Period $ 557,409 $ 569,115
------------ ------------
Cash Flows from Operating Activities:
Net income 33,231 36,822
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 46,283 41,333
Amortization of debt discount and fees 14,587 11,301
Loss on extinguishment of debt - 5,321
Stock-based compensation 19,698 20,807
Loss from equity method investments 65 73
Gain on investments, net (13,741) (6,935)
Write-down of investment securities - 1,500
Non-cash restructuring and other charges 136 216
Impairment of property, plant and
equipment - 427
Deferred income taxes (4,811) (69,266)
Provisions (recoveries) for losses
(gains) on trade and installment
contract receivables (5,885) (12,978)
Other non-cash items 2,518 3,124
Changes in operating assets and
liabilities, net of effect of acquired
businesses:
Receivables 2,455 (25,384)
Installment contract receivables 62,080 70,479
Inventories (6,987) (10,923)
Prepaid expenses and other 1,969 (13,778)
Other assets 1,479 1,397
Accounts payable and accrued
liabilities (48,650) 6,026
Deferred revenue 25,979 31,882
Other long-term liabilities (4,628) 4,257
------------ ------------
Net cash provided by operating
activities 125,778 95,701
------------ ------------
Cash Flows from Investing Activities:
Proceeds from the sale of available-for-sale
securities 9,588 -
Proceeds from the sale of long-term
investments 2,785 10,133
Purchases of property, plant and equipment (11,312) (18,765)
Purchases of software licenses - (2,517)
Investment in venture capital partnerships
and equity investments (608) (500)
Cash paid in business combinations and asset
acquisitions, net of cash acquired (22,865) (253,951)
------------ ------------
Net cash used for investing
activities (22,412) (265,600)
------------ ------------
Cash Flows from Financing Activities:
Principal payments on receivable sale
financing (2,829) (1,719)
Proceeds from issuance of 2015 Notes - 350,000
Payment of Convertible Senior Notes - (187,150)
Payment of 2015 Notes issuance costs - (9,800)
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 967 59
Proceeds from issuance of common stock 10,302 8,119
Stock received for payment of employee taxes
on vesting of restricted stock (7,389) (4,114)
Purchases of treasury stock - (39,997)
------------- ---------------
Net cash provided by financing
activities 1,051 76,493
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents 3,491 (106)
------------ ------------
Increase (decrease) in cash and cash
equivalents 107,908 (93,512)
------------ ------------
Cash and Cash Equivalents at End of Period $ 665,317 $ 475,603
============ ============
Cadence Design Systems, Inc.
As of July 28, 2011
Impact of Non-GAAP Adjustments on Forward Looking Diluted
Net Income Per Share
(Unaudited)
Three Months Ending Year Ending
October 1, 2011 December 31, 2011
------------------- -------------------
Forecast Forecast
------------------- -------------------
Diluted net income per share on a
GAAP basis $0.04 to $0.06 $0.20 to $0.26
Amortization of acquired
intangibles 0.03 0.10
Stock-based compensation
expense 0.04 0.16
Non-qualified deferred
compensation expenses - 0.01
Restructuring and other charges - -
Shareholder litigation costs - -
Executive and other employee
severance costs - 0.01
Integration and
acquisition-related costs - 0.01
Amortization of debt discount 0.03 0.10
Other income or expense related
to investments and non-qualified
deferred compensation plan assets* - (0.05)
Acquisition-related income tax
benefit - (0.02)
Income tax benefit of IRS
settlement - (0.02)
Income tax effect of non-GAAP
adjustments (0.03) (0.09)
------------------- -------------------
Diluted net income per share on a
non-GAAP basis $0.11 to $0.13 $0.41 to $0.47
=================== ===================
* Includes, as applicable, equity in losses or income from investments,
write-down of investments, gains or losses on sale of investments and
gains or losses on non-qualified deferred compensation plan assets
recorded in Other income (expense), net.
Cadence Design Systems, Inc.
As of July 28, 2011
Impact of Non-GAAP Adjustments on Forward Looking Net Income
(Unaudited)
Three Months Ending Year Ending
October 1, 2011 December 31, 2011
------------------- -------------------
($ in Millions) Forecast Forecast
------------------- -------------------
Net income on a GAAP basis $12 to $18 $55 to $71
Amortization of acquired
intangibles 7 27
Stock-based compensation
expense 12 44
Non-qualified deferred
compensation expenses - 3
Restructuring and other charges - 1
Shareholder litigation costs - 1
Executive and other employee
severance costs - 2
Integration and
acquisition-related costs - 2
Amortization of debt discount 7 26
Other income or expense related
to investments and non-qualified
deferred compensation plan assets* - (14)
Acquisition-related income tax
benefit - (5)
Income tax benefit of IRS
settlement - (6)
Income tax effect of non-GAAP
adjustments (8) (24)
------------------- -------------------
Net income on a non-GAAP basis $30 to $36 $112 to $128
=================== ===================
* 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)
2010 2011
---------------------------- ----------
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2
---- ---- ---- ---- ---- ---- ----
Americas 40% 46% 43% 45% 43% 44% 47%
Europe 22% 23% 20% 23% 22% 21% 20%
Japan 23% 14% 20% 14% 18% 19% 17%
Asia 15% 17% 17% 18% 17% 16% 16%
Total 100% 100% 100% 100% 100% 100% 100%
Revenue Mix by Product Group (% of Total Revenue)
2010 2011
---------------------------- ----------
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1 Q2
---- ---- ---- ---- ---- ---- ----
Functional Verification and
Design IP 22% 26% 25% 22% 24% 28% 33%
Digital IC Design 21% 21% 23% 26% 23% 24% 21%
Custom IC Design 27% 26% 24% 27% 26% 20% 22%
Design for Manufacturing 9% 6% 8% 7% 7% 8% 6%
System Interconnect 9% 10% 10% 8% 9% 10% 8%
Services & Other 12% 11% 10% 10% 11% 10% 10%
Total 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
Alan Lindstrom Cadence Design Systems, Inc. 408-944-7100
investor_relations@cadence.com Media and Industry Analysts Nancy
Szymanski Cadence Design Systems, Inc. 408-473-8382
publicrelations@cadence.com
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