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SOURCE: CADENCE DESIGN SYSTEMS, INC.
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October 28, 2009 16:05 ET
Cadence Reports Q3 2009 Financial Results
SAN JOSE, CA--(Marketwire - October 28, 2009) - Cadence Design Systems, Inc. (NASDAQ: CDNS)
today announced results for the third quarter 2009.
Cadence reported third quarter 2009 revenue of $216 million, compared to
revenue of $232 million reported for the same period in 2008. On a GAAP
basis, Cadence recognized a net loss of $14 million, or $(0.05) per share
on a diluted basis, in the third quarter of 2009, compared to a net loss of
$171 million, or $(0.67) per share on a diluted basis in the same period in
2008.
In addition to using GAAP results in evaluating 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,
in-process research and development charges, costs related to a withdrawn
acquisition proposal and losses on the sale of shares of the target company
stock, integration and acquisition-related 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, equity in losses (income)
from investments, write-down of investments, impairment charges related to
goodwill, intangible assets and fixed assets, and losses related to the
liquidation of a subsidiary. 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.
Using this non-GAAP measure, net income in the third quarter of 2009 was $7
million, or $0.03 per share on a diluted basis, as compared to a net loss
of $23 million, or $(0.09) per share on a diluted basis, in the same period
in 2008.
"The increased level of R&D engagement with customers is well received, and
we are winning with technologies that address our customers' need for
better design productivity, increased predictability of schedule and
results, and faster time-to-market," said Lip-Bu Tan, president and chief
executive officer.
Added Kevin S. Palatnik, senior vice president and chief financial officer,
"Third quarter results represent strong operational execution by the
Cadence team. Sequential revenue growth met expectations, operating
profitability improved significantly and we ended the quarter with more
than $570 million in cash."
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 2009, the company expects total revenue in the
range of $215 million to $225 million. Fourth quarter GAAP net loss per
diluted share is expected to be in the range of $(0.08) to $(0.06). Net
income per diluted share using the non-GAAP measure defined below is
expected to be in the range of $0.02 to $0.04.
For the full year 2009, the company expects total revenue in the range of
$845 million to $855 million. On a GAAP basis, net loss per diluted share
for fiscal 2009 is expected to be in the range of $(0.66) to $(0.64). Using
the non-GAAP measure defined below, net loss per diluted share for fiscal
2009 is expected to be in the range of $(0.10) to $(0.08).
A schedule showing a reconciliation of the business outlook from GAAP net
loss and diluted net loss per share to the non-GAAP net income or net loss
and diluted net income or net loss 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 2009 financial results audio webcast today, October
28, 2009, 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 28,
2009 at 5 p.m. (Pacific) and ending November 11, 2009 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. The
company 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 the company's third quarter 2009
results, as well as the comments in the Business Outlook section and the
statements by Lip-Bu Tan and Kevin S. Palatnik 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 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 the previously announced 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 announced
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; and (x) 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, please
refer to the company's filings with the Securities and Exchange Commission.
These include the company's Annual Report on Form 10-K for the year ended
January 3, 2009, the company's Quarterly Report on Form 10-Q for the period
ended July 4, 2009, and the company's future filings.
Adoption of accounting principles required by the "Debt with Conversion and
Other Options" subtopic of the FASB Accounting Standards Codification
On the first day of fiscal 2009, Cadence adopted new accounting principles
as required by the "Debt with Conversion and Other Options" subtopic of the
FASB Accounting Standards Codification. Accordingly, Cadence has adjusted
the applicable prior period balance sheets and statements of operations to
reflect the adjusted balance of the convertible notes and related items,
and to record the amortization of the discount on the convertible notes as
non-cash interest expense. A reconciliation of Cadence's as-adjusted
Condensed Consolidated Balance Sheets as of January 3, 2009 and its
as-adjusted Condensed Consolidated Statements of Operations for the three
months and nine months ended September 27, 2008 to their respective
statements as initially reported is included with this release.
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, in-process research and development charges, costs related to a
withdrawn acquisition proposal and losses on the sale of shares of the
target company stock, integration and acquisition-related 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, equity in
losses (income) from investments, write-down of investments, impairment
charges related to goodwill, intangible assets and fixed assets, and losses
related to the liquidation of a subsidiary. 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, in-process
research and development charges 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 it enhances investors' ability to
review Cadence's business from the same perspective as Cadence's
management, which believes that stock-based compensation expense is not
directly attributable to the underlying performance of the company's
business operations. Cadence's management also believes that it is useful
to exclude restructuring charges and credits. During the second half of
fiscal 2008 and the first half of fiscal 2009, Cadence commenced
restructuring programs that it expects to complete in the first half of
2010. Cadence's management believes that in measuring the company's
operations, it is useful to exclude any such restructuring charges and
credits because Cadence does not undertake significant restructuring on a
regular basis, and exclusion of such charges permits consistent evaluations
of Cadence's performance before and after such actions are taken. Cadence's
management also believes it is useful to exclude executive severance costs
because these costs do not occur frequently. 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 and
expenses 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 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. Cadence's management also believes it is useful to exclude the
equity in losses (income) from investments and write-down 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
(expense) and are part of the company's investment activities. Finally,
Cadence's management also believes it is useful to exclude impairment
charges related to goodwill, intangible assets and fixed assets, and losses
related to the liquidation of a subsidiary because these do not occur on a
regular basis and are not part of the company's direct costs of operations.
During fiscal year 2008, Cadence's non-GAAP net loss also excluded the
impact of tax expense associated with recording a valuation allowance
against Cadence's deferred tax assets. Cadence's management believes it is
useful to exclude the tax expense associated with this valuation allowance
because Cadence does not expect changes in the valuation allowance of the
magnitude recorded in the fourth quarter of 2008 to be recorded frequently.
During fiscal year 2008, Cadence's non-GAAP net loss also excluded the
impact of tax expense associated with Cadence's repatriation of foreign
earnings. Cadence's management believes it is useful to exclude the tax
expense associated with the repatriation of foreign earnings because it
resulted from an event that is not expected to occur frequently.
During fiscal year 2008, Cadence's non-GAAP net loss also excluded costs
related to a withdrawn acquisition proposal and losses on the sale of
shares of the target company stock which Cadence acquired as part of the
proposed acquisition. Cadence's management believes that in measuring
Cadence's operations it is useful to exclude the costs and the losses
associated with this proposed acquisition because these items are not
directly related to Cadence's operating performance and resulted from
events that are not expected to occur frequently.
Cadence's management believes that non-GAAP net income or net loss provides
useful supplemental information to Cadence's management and investors
regarding the performance of the company's business operations and
facilitates comparisons to the company's historical operating results.
Cadence's management also uses this information internally for forecasting
and budgeting. Non-GAAP financial measures should not be considered as a
substitute for or superior to measures of financial performance prepared in
accordance with GAAP. Investors and potential investors are encouraged to
review the reconciliation of non-GAAP financial measures contained within
this press release with their most directly comparable GAAP financial
results.
The following tables reconcile the specific items excluded from GAAP net
loss and GAAP net loss per diluted share in the calculation of non-GAAP net
income or net loss and non-GAAP net income or net loss per diluted share
for the periods shown below:
Net Income (Loss) Reconciliation Three Months Ended
------------------------
October 3, September 27,
2009 2008
---------- ------------
(As
Adjusted)*
(unaudited)
(in thousands)
Net loss on a GAAP basis $ (14,047) $ (170,656)
Amortization of acquired intangibles 4,391 10,754
Stock-based compensation expense 14,455 14,634
Non-qualified deferred compensation expenses 3,752 188
Restructuring and other charges (credits) (175) 48,120
Cost related to a withdrawn acquisition
proposal - 3,153
Integration and acquisition-related costs 155 234
Amortization of debt discount 4,837 4,024
Equity in losses from investments, write-down
of investments, gains and losses on
non-qualified deferred compensation plan
assets - recorded in Other income (expense),
net (2,913) 2,798
Losses on the sale of shares of withdrawn
acquisition target company stock - 9,379
Income tax related to repatriation of foreign
earnings - 71,047
Income tax effect of non-GAAP adjustments (3,055) (16,352)
---------- ------------
Net income (loss) on a non-GAAP basis $ 7,400 $ (22,677)
========== ============
* Adjusted for the retrospective adoption of new accounting principles as
required by the "Debt with Conversion and Other Options" subtopic of the
FASB Accounting Standards Codification.
Diluted Net Income (Loss) per Share
Reconciliation Three Months Ended
-------------------------
October 3, September 27,
2009 2008
----------- ------------
(As
Adjusted)*
(unaudited)
(in thousands, except per share data)
Diluted net loss per share on a GAAP basis $ (0.05) $ (0.67)
Amortization of acquired intangibles 0.02 0.04
Stock-based compensation expense 0.05 0.06
Non-qualified deferred compensation expenses 0.01 -
Restructuring and other charges (credits) - 0.19
Costs related to a withdrawn acquisition
proposal - 0.01
Amortization of debt discount 0.02 0.02
Equity in losses from investments, write-down
of investments, gains and losses on
non-qualified deferred compensation plan
assets - recorded in Other income (expense),
net (0.01) 0.01
Losses on the sale of shares of withdrawn
acquisition target company stock - 0.04
Income tax related to repatriation of foreign
earnings - 0.28
Income tax effect of non-GAAP adjustments (0.01) (0.07)
----------- ------------
Diluted net income (loss) per share on a
non-GAAP basis $ 0.03 $ (0.09)
=========== ============
Shares used in calculation of diluted net loss
per share - GAAP (A) 259,193 252,915
Shares used in calculation of diluted net income
(loss) per share - non-GAAP (A) 262,553 252,915
(A) Shares used in the calculation of GAAP net income (loss) per share are
expected to be the same as shares used in the calculation of non-GAAP net
income (loss) per share, except when the company reports a GAAP net loss
and non-GAAP net income, or GAAP net income and a non-GAAP net loss.
* Adjusted for the retrospective adoption of new accounting principles as
required by the "Debt with Conversion and Other Options" subtopic of the
FASB Accounting Standards Codification.
Investors are encouraged to look at the GAAP results as the best measure of
financial performance. For example, amortization of intangibles or
in-process technology are important to consider because they may represent
initial expenditures that under GAAP are 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 measure useful in
evaluating the performance of Cadence's business, reliance on this measure
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's management believes that presenting the non-GAAP measure of
earnings and earnings per share provides investors with an additional tool
for evaluating the performance of the company's business, which Cadence's
management uses in its own evaluation of performance, and an additional
baseline for assessing the future earnings potential of the company. While
the GAAP results are more complete, Cadence's management prefers to allow
investors to have this supplemental measure since it may provide additional
insights into the company's financial results.
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 18, 2009, 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 2009 Earnings Release is published, which
is currently scheduled for February 3, 2010.
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
October 3, 2009 and January 3, 2009
(In thousands)
(Unaudited)
October 3, 2009 January 3, 2009
--------------- ---------------
(As Adjusted)*
Current Assets:
Cash and cash equivalents $ 570,617 $ 568,255
Short-term investments 4,756 3,840
Receivables, net of allowances of $15,208
and $7,524, respectively 195,468 298,665
Inventories 25,626 28,465
Prepaid expenses and other 64,694 54,765
--------------- ---------------
Total current assets 861,161 953,990
Property, plant and equipment, net of
accumulated depreciation of $630,155 and
$625,010, respectively 313,398 354,852
Acquired intangibles, net of accumulated
amortization of $122,677 and
$134,688, respectively 33,438 49,082
Installment contract receivables, net of
allowances of $9,724 and $0, respectively 64,859 160,742
Other assets 141,361 161,187
--------------- ---------------
Total Assets $ 1,414,217 $ 1,679,853
=============== ===============
Current Liabilities:
Accounts payable and accrued liabilities 159,728 261,099
Current portion of deferred revenue 245,528 303,111
--------------- ---------------
Total current liabilities 405,256 564,210
--------------- ---------------
Long-Term Liabilities:
Long-term portion of deferred revenue 108,941 130,354
Convertible notes 431,072 416,572
Other long-term liabilities 372,756 382,004
--------------- ---------------
Total long-term liabilities 912,769 928,930
--------------- ---------------
Stockholders' Equity 96,192 186,713
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 1,414,217 $ 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 and Nine Months Ended October 3, 2009 and September 27, 2008
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------------- --------------------------
October 3, September 27, October 3, September 27,
2009 2008 2009 2008
------------ ------------ ------------ ------------
(As (As
Adjusted)* Adjusted)*
Revenue:
Product $ 96,932 $ 107,572 $ 286,295 $ 422,365
Services 26,669 32,873 83,684 98,763
Maintenance 92,521 92,043 262,374 290,151
------------ ------------ ------------ ------------
Total revenue 216,122 232,488 632,353 811,279
------------ ------------ ------------ ------------
Costs and Expenses:
Cost of product 6,405 11,829 23,828 39,241
Cost of services 21,139 25,677 69,602 78,083
Cost of
maintenance 11,105 13,910 35,423 42,889
Marketing and
sales 68,282 91,075 214,603 274,016
Research and
development 88,049 112,486 273,394 357,929
General and
administrative 28,732 32,937 101,311 105,608
Amortization of
acquired
intangibles 2,726 5,626 8,694 17,206
Restructuring and
other charges
(credits) (175) 48,120 17,833 47,765
Write-off of
acquired
in-process
technology - - - 600
------------ ------------ ------------ ------------
Total costs and
expenses 226,263 341,660 744,688 963,337
------------ ------------ ------------ ------------
Loss from
operations (10,141) (109,172) (112,335) (152,058)
Interest expense (7,278) (7,042) (21,592) (20,696)
Other income
(expense), net 2,917 (7,714) (5,765) (3,701)
------------ ------------ ------------ ------------
Loss before
provision
(benefit)
for income
taxes (14,502) (123,928) (139,692) (176,455)
Provision
(benefit) for
income taxes (455) 46,728 11,969 46,155
------------ ------------ ------------ ------------
Net loss $ (14,047) $ (170,656) $ (151,661) $ (222,610)
============ ============ ============ ============
Basic and diluted
net loss per share $ (0.05) $ (0.67) $ (0.59) $ (0.87)
============ ============ ============ ============
Weighted average
common shares
outstanding -
basic and diluted 259,193 252,915 256,792 256,119
============ ============ ============ ============
* 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 Nine Months Ended October 3, 2009 and September 27, 2008
(In thousands)
(Unaudited)
Nine Months Ended
------------------------------
October 3, September 27,
2009 2008
-------------- --------------
(As Adjusted)*
Cash and Cash Equivalents at Beginning of
Period $ 568,255 $ 1,062,920
-------------- --------------
Cash Flows from Operating Activities:
Net loss (151,661) (222,610)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 71,334 96,037
Amortization of debt discount and fees 15,557 13,323
Stock-based compensation 43,690 57,678
Equity in loss from investments, net 369 823
Loss on investments, net 4,307 11,440
(Gain) loss on sale and leaseback of
land and buildings (122) 350
Write-down of investment securities 5,207 10,666
Write-off of acquired in-process
technology - 600
Tax benefit of call options - 2,994
Impairment of property, plant and
equipment 6,603 2,004
Deferred income taxes (6,520) (11,094)
Proceeds from the sale of
receivables, net 5,827 48,124
Provisions for losses on trade and
installment contract receivables and
sales returns 18,668 462
Other non-cash items (3,962) (3,119)
Changes in operating assets and
liabilities, net of effect of
acquired businesses:
Receivables 56,444 21,489
Installment contract receivables 122,302 46,198
Inventories 2,846 5,486
Prepaid expenses and other (4,041) (3,421)
Other assets 11,809 (1,849)
Accounts payable and accrued
liabilities (79,395) (41,582)
Deferred revenue (83,760) (32,243)
Other long-term liabilities (10,773) 35,972
-------------- --------------
Net cash provided by operating
activities 24,729 37,728
-------------- --------------
Cash Flows from Investing Activities:
Proceeds from the sale of
available-for-sale securities 139 53,783
Purchases of available-for-sale
securities - (62,447)
Proceeds from the sale of long-term
investments - 3,250
Purchases of property, plant and
equipment (30,504) (81,112)
Purchases of software licenses (774) (1,199)
Investment in venture capital
partnerships and equity investments (2,300) (4,053)
Cash paid in business combinations and
asset acquisitions, net of cash
acquired, and acquisition of
intangibles (14,126) (20,621)
-------------- --------------
Net cash used for investing
activities (47,565) (112,399)
-------------- --------------
Cash Flows from Financing Activities:
Proceeds from receivable sale financing - 17,970
Principal payments on receivable sale
financing (2,467) -
Payment of convertible notes due 2023 - (230,207)
Tax benefit from employee stock
transactions - 427
Proceeds from issuance of common stock 27,862 48,116
Stock received for payment of employee
taxes on vesting of restricted stock (4,055) (3,693)
Purchases of treasury stock - (273,950)
-------------- --------------
Net cash provided by (used for)
financing activities 21,340 (441,337)
-------------- --------------
Effect of exchange rate changes on cash and
cash equivalents 3,858 4,841
-------------- --------------
Increase (decrease) in cash and cash
equivalents 2,362 (511,167)
-------------- --------------
Cash and Cash Equivalents at End of Period $ 570,617 $ 551,753
============== ==============
* 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 October 28, 2009
Impact of Non-GAAP Adjustments on Forward Looking Diluted
Net Loss Per Share
(Unaudited)
Three Months Ending Year Ending
January 2, 2010 January 2, 2010
------------------- -------------------
Forecast Forecast
------------------- -------------------
Diluted net loss per share on a
GAAP basis $(0.08) to $(0.06) $(0.66) to $(0.64)
Amortization of acquired
intangibles 0.02 0.08
Stock-based compensation
expense 0.05 0.22
Non-qualified deferred
compensation expenses
(credits) - (0.02)
Restructuring and other charges 0.01 0.08
Equity in losses from
investments, write-down of
investments, gains and losses
on non-qualified deferred
compensation plan assets - 0.04
Amortization of debt discount 0.02 0.07
Income tax effect of non-GAAP
adjustments - 0.09
------------------- -------------------
Diluted net income (loss) per
share on a non-GAAP basis $0.02 to $0.04 $(0.10) to $(0.08)
=================== ===================
Cadence Design Systems, Inc.
As of October 28, 2009
Impact of Non-GAAP Adjustments on Forward Looking Net Loss
(Unaudited)
Three Months Ending Year Ending
January 2, 2010 January 2, 2010
------------------- -------------------
($ in Millions) Forecast Forecast
------------------- -------------------
Net loss on a GAAP basis $(19) to $(15) $(171) to $(167)
Amortization of acquired
intangibles 4 20
Stock-based compensation
expense 13 56
Non-qualified deferred
compensation expenses
(credits) - (4)
Restructuring and other charges 2 20
Integration and
acquisition-related costs - 1
Equity in losses from
investments, write-down of
investments, gains and losses
on non-qualified deferred
compensation plan assets - 10
Amortization of debt discount 5 19
Income tax effect of non-GAAP
adjustments 1 24
------------------- -------------------
Net income (loss) on a non-GAAP
basis $6 to $10 $(25) to $(21)
=================== ===================
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
==== ==== ====
Americas 42% 48% 43%
Europe 24% 21% 20%
Japan 19% 17% 23%
Asia 15% 14% 14%
Total 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
==== ==== ====
Functional
Verification 20% 23% 21%
Digital IC
Design 19% 24% 19%
Custom IC
Design 26% 25% 28%
Design for
Manufacturing 9% 5% 9%
System
Interconnect 12% 10% 11%
Services &
Other 14% 13% 12%
Total 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 and Nine Months Ended September 27, 2008
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended September 27, 2008
-----------------------------------------
As
Previously As
Reported Adjustments Adjusted
----------- ----------- -----------
Revenue $ 232,488 $ - $ 232,488
Costs and expenses 341,660 - 341,660
----------- ----------- -----------
Loss from operations (109,172) - (109,172)
----------- ----------- -----------
Interest expense (3,180) (3,862) (G) (7,042)
Other expense, net (7,714) - (7,714)
----------- ----------- -----------
Loss before provision for
income taxes (120,066) (3,862) (123,928)
Provision for income taxes 49,000 (2,272) (H) 46,728
----------- ----------- -----------
Net loss $ (169,066) $ (1,590) $ (170,656)
=========== =========== ===========
Basic and diluted net loss per
share $ (0.67) $ (0.67)
=========== ===========
Nine Months Ended September 27, 2008
-----------------------------------------
As
Previously As
Reported Adjustments Adjusted
----------- ----------- -----------
Revenue $ 811,279 $ - $ 811,279
Costs and expenses 963,337 - 963,337
----------- ----------- -----------
Loss from operations (152,058) - (152,058)
----------- ----------- -----------
Interest expense (9,055) (11,641) (G) (20,696)
Other expense, net (3,701) - (3,701)
----------- ----------- -----------
Loss before provision for
income taxes (164,814) (11,641) (176,455)
Provision for income taxes 50,269 (4,114) (H) 46,155
----------- ----------- -----------
Net loss $ (215,083) $ (7,527) $ (222,610)
=========== =========== ===========
Basic and diluted net loss per
share $ (0.84) $ (0.87)
=========== ===========
(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.