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Cadence Reports Fourth Quarter and Fiscal Year 2013 Financial Results

SAN JOSE, Calif., Jan. 29, 2014 /PRNewswire/ -- Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the fourth quarter and fiscal year 2013.

(Logo: http://photos.prnewswire.com/prnh/20140102/SF39436LOGO)

Cadence reported fourth quarter 2013 revenue of $377 million, compared to revenue of $346 million reported for the same period in 2012. On a GAAP basis, Cadence recognized net income of $38 million, or $0.13 per share on a diluted basis, in the fourth quarter of 2013, compared to net income of $314 million, or $1.10 per share on a diluted basis, in the same period in 2012.  Revenue for 2013 totaled $1.460 billion, compared to revenue of $1.326 billion for 2012.  Net income for 2013 was $164 million, or $0.56 per share on a diluted basis, compared to net income of $440 million, or $1.57 per share on a diluted basis, for 2012.  GAAP net income for the fourth quarter of 2012 included a $220 million income tax benefit from releasing a valuation allowance against Cadence's deferred tax assets and a $37 million income tax benefit related to the settlement of a State of California examination of Cadence's state income tax returns for the tax years 2001 through 2003.

Using the non-GAAP measure defined below, net income in the fourth quarter of 2013 was $67 million, or $0.23 per share on a diluted basis, as compared to net income of $58 million, or $0.20 per share on a diluted basis, in the same period in 2012.  For 2013, non-GAAP net income was $252 million, or $0.86 per share on a diluted basis, compared to non-GAAP net income of $217 million, or $0.77 per share on a diluted basis, in 2012.

"In 2013, our talented development teams delivered six new innovative products, revenue grew 10 percent, and we completed three important acquisitions in the IP space," said Lip-Bu Tan, president and chief executive officer.  "Our differentiated design IP portfolio led to wins at over ten top tier customers, including head-to-head wins at advanced FinFET nodes."

"Our continuing focus on execution with customers and ecosystem partners, as well as product development, M&A and financial performance, drove strong revenue, cash flow and operating profits in Q4 and throughout 2013," added Geoff Ribar, senior vice president and chief financial officer.  "Even after the acquisition-related write-downs of deferred revenue, we still achieved our operating margin goal."  

Cadence also announced today that its Board of Directors has approved the repurchase of up to $100 million of its common stock under its stock repurchase program, and Cadence expects to repurchase up to $50 million of its common stock during each of fiscal years 2014 and 2015.  The actual timing and amount of the repurchases will be based on an evaluation of market conditions, share price and other factors.  The stock repurchase program may be suspended, modified or discontinued at any time.

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Business Outlook

For the first quarter of 2014, the company expects total revenue in the range of $373 million to $383 million. First quarter GAAP net income per diluted share is expected to be in the range of $0.08 to $0.10. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.18 to $0.20.

For 2014, the company expects total revenue in the range of $1.550 billion to $1.585 billion. On a GAAP basis, net income per diluted share for 2014 is expected to be in the range of $0.55 to $0.65. Using the non-GAAP measure defined below, net income per diluted share for 2014 is expected to be in the range of $0.92 to $1.02.

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, president and chief executive officer, and Geoff Ribar, senior vice president and chief financial officer, will host a fourth quarter and fiscal year 2013 financial results audio webcast today, January 29, 2014, 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 January 29, 2014 at 5 p.m. (Pacific) and ending March 14, 2014 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 fourth quarter and fiscal year 2013 financial results and Cadence's intention to repurchase shares of its common stock under its share repurchase program, 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 and 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. These forward-looking statements 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) the success of Cadence's 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; (iv) change in customer demands, including those resulting from consolidation among Cadence's customers and the possibility that the restructurings and other efforts to improve operational efficiency of Cadence's customers could result in delays in  purchases of Cadence's 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, including the potential inability to retain customers, key employees or vendors; (ix) the effects of Cadence's efforts to improve operational efficiency on Cadence's business, including strategic, customer and supplier relationships, and its ability to retain key employees; (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 most recent reports on Form 10-K and Form 10-Q, including Cadence's future filings.

GAAP to Non-GAAP Reconciliation

To supplement Cadence's financial results presented on a generally accepted accounting principles, or GAAP, basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence's performance.  One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP, and is calculated by taking GAAP net income and excluding, as applicable, amortization and sale of intangible assets and debt discount related to our convertible notes, stock-based compensation expense, acquisition and integration-related costs including changes in fair value of contingent consideration and retention expenses for employees added from our 2013 acquisitions, executive severance costs, investment gains or losses, income or expenses related to Cadence's non-qualified deferred compensation plan, restructuring and other significant items not directly related to Cadence's core business operations, and the income tax effect of non-GAAP pre-tax adjustments.

Cadence's management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company's core business operations and therefore provides useful supplemental information to Cadence's management and investors regarding the performance of the company's business operations, facilitates comparisons to the company's historical operating results and enhances investors' ability to review Cadence's business from the same perspective as Cadence's management. Cadence's management also uses non-GAAP net income 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.  Investors are encouraged to look at the GAAP results as the best measure of financial performance.

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



December 28, 2013


December 29, 2012



(unaudited)

(in thousands)





Net income on a GAAP basis


$

37,705



$

313,874


Amortization of acquired intangibles


12,422



7,649


Stock-based compensation expense


18,798



13,276


Non-qualified deferred compensation expenses


1,256



1,216


Restructuring and other charges


15,405



64


Integration and acquisition-related costs


8,903



2,187


Executive severance costs


216




Amortization of debt discount


5,515



5,354


Other income or expense related to investments and non-qualified deferred compensation plan assets*


(1,553)



(4,081)


Income tax benefit of valuation allowance release




(219,601)


Income tax benefit of State of California settlement




(36,564)


Income tax effect of non-GAAP adjustments


(31,775)



(25,363)


Net income on a non-GAAP basis


$

66,892



$

58,011




*

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 or expense.

 

Net Income Reconciliation


Years Ended



December 28, 2013


December 29, 2012



(unaudited)

(in thousands)





Net income on a GAAP basis


$

164,243



$

439,948


Amortization and sale of acquired intangibles


44,134



28,618


Stock-based compensation expense


66,285



47,561


Non-qualified deferred compensation expenses


3,293



4,453


Restructuring and other charges


17,999



113


Shareholder litigation costs




46


Integration and acquisition-related costs


31,972



9,278


Executive severance costs


961




Amortization of debt discount


22,315



20,846


Other income or expense related to investments and non-qualified deferred compensation plan assets*


(5,280)



(6,296)


Income tax benefit of valuation allowance release




(219,601)


Income tax benefit of State of California settlement




(36,564)


Income tax benefit due to a release of an uncertain tax position


(33,719)




Acquisition-related income tax benefit




(14,806)


Income tax effect of non-GAAP adjustments


(60,104)



(56,857)


Net income on a non-GAAP basis


$

252,099



$

216,739




*

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 or expense.

 

Diluted Net Income per Share Reconciliation


Three Months Ended



December 28, 2013


December 29, 2012



(unaudited)

(in thousands, except per share data)





Diluted net income per share on a GAAP basis


$

0.13



$

1.10


Amortization of acquired intangibles


0.04



0.03


Stock-based compensation expense


0.06



0.05


Non-qualified deferred compensation expenses


0.01




Restructuring and other charges


0.05




Integration and acquisition-related costs


0.03



0.01


Executive severance costs





Amortization of debt discount


0.02



0.02


Other income or expense related to investments and non-qualified deferred compensation plan assets*




(0.02)


Income tax benefit of valuation allowance release




(0.77)


Income tax benefit of State of California settlement




(0.13)


Income tax effect of non-GAAP adjustments


(0.11)



(0.09)


Diluted net income per share on a non-GAAP basis


$

0.23



$

0.20


Shares used in calculation of diluted net income per share — GAAP**


294,663



286,289


Shares used in calculation of diluted net income per share — non-GAAP**


294,663



286,289




*

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 or expense.



**

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.

 

Diluted Net Income per Share Reconciliation


Years Ended



December 28, 2013


December 29, 2012



(unaudited)

(in thousands, except per share data)





Diluted net income per share on a GAAP basis


$

0.56



$

1.57


Amortization and sale of acquired intangibles


0.15



0.10


Stock-based compensation expense


0.23



0.17


Non-qualified deferred compensation expenses


0.01



0.02


Restructuring and other charges


0.06




Shareholder litigation costs





Integration and acquisition-related costs


0.11



0.03


Executive severance costs





Amortization of debt discount


0.08



0.07


Other income or expense related to investments and non-qualified deferred compensation plan assets*


(0.02)



(0.02)


Income tax benefit of valuation allowance release




(0.78)


Income tax benefit of State of California settlement




(0.13)


Income tax benefit due to a release of an uncertain tax position


(0.11)




Acquisition-related income tax benefit




(0.05)


Income tax effect of non-GAAP adjustments


(0.21)



(0.21)


Diluted net income per share on a non-GAAP basis


$

0.86



$

0.77


Shares used in calculation of diluted net income per share — GAAP**


294,564



280,667


Shares used in calculation of diluted net income per share — non-GAAP**


294,564



280,667




*

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 or expense.



**

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.

 

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 March 14, 2014, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the company's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute the company's current expectations. During the Quiet Period, the business outlook in these documents should be considered to be historical, speaking as of prior to the Quiet Period only and not subject to any update by the company.  During the Quiet Period, Cadence's representatives will not comment on Cadence's business outlook, financial results or expectations.  The Quiet Period will extend until the day when Cadence's first quarter 2014 earnings release is published, which is currently scheduled for April 21, 2014.

For more information, please contact:

Investors and Shareholders
Alan Lindstrom
Cadence Design Systems, Inc.
408-944-7100
[email protected]

Media and Industry Analysts
Anna del Rosario
Cadence Design Systems, Inc.
408-914-6884
[email protected]

 

Cadence Design Systems, Inc.

Condensed Consolidated Balance Sheets

December 28, 2013 and December 29, 2012

(In thousands)

(Unaudited)




















December 28, 2013


December 29, 2012












Current assets:









Cash and cash equivalents




$                   536,260


$                   726,357


Short-term investments




96,788


100,704


Receivables, net of allowances of $0 and $85, respectively




107,624


97,821


Inventories





50,220


36,163


2015 notes hedges




306,817


303,154


Prepaid expenses and other




123,382


127,036



Total current assets




1,221,091


1,391,235












Property, plant and equipment, net of accumulated depreciation of $568,494 and $635,450, respectively


238,715


244,439

Goodwill





456,905


233,266

Acquired intangibles, net of accumulated amortization of $139,820 and $104,351, respectively



311,693


184,938

Long-term receivables




3,672


7,559

Other assets





196,525


225,566

Total assets





$                2,428,601


$                2,287,003












Current liabilities:









Convertible notes




$                   324,826


$                   447,011


2015 notes embedded conversion derivative


306,817


303,154


Accounts payable and accrued liabilities



216,594


171,318


Current portion of deferred revenue



299,973


295,787



Total current liabilities




1,148,210


1,217,270












Long-term liabilities:









Long-term portion of deferred revenue



52,850


50,529


Other long-term liabilities




71,436


104,033



Total long-term liabilities




124,286


154,562












Stockholders' equity





1,156,105


915,171

Total liabilities and stockholders' equity



$                2,428,601


$                2,287,003

 

Cadence Design Systems, Inc.

Condensed Consolidated Income Statements

For the Three Months and Years Ended December 28, 2013 and December 29, 2012

(In thousands, except per share amounts)

(Unaudited)

































Three Months Ended


Years Ended







December 28,
2013


December 29,
2012


December 28,
2013


December 29,
2012














Revenue:











Product and maintenance


$    350,079


$    318,513


$    1,357,934


$    1,212,429


Services



26,643


27,072


102,182


113,995
















Total revenue



376,722


345,585


1,460,116


1,326,424














Costs and expenses:











Cost of product and maintenance

41,757


24,437


132,245


118,516


Cost of services



17,274


19,353


67,956


72,607


Marketing and sales


94,384


95,604


378,157


342,278


Research and development


135,465


118,382


534,022


454,085


General and administrative


29,481


27,712


121,314


112,076


Amortization of acquired intangibles

5,157


3,772


19,416


15,077


Restructuring and other charges 

15,405


64


17,999


113
















Total costs and expenses


338,923


289,324


1,271,109


1,114,752

















Income from operations

37,799


56,261


189,007


211,672















Interest expense



(9,208)


(8,902)


(37,581)


(34,742)


Other income, net


842


5,369


7,570


11,341

















Income before benefit for income taxes 

29,433


52,728


158,996


188,271















Benefit for income taxes


(8,272)


(261,146)


(5,247)


(251,677)

















Net income 


$    37,705


$    313,874


$     164,243


$      439,948



























Net income per share - basic


$        0.13


$          1.15


$           0.59


$            1.63














Net income per share - diluted


$        0.13


$          1.10


$           0.56


$            1.57














Weighted average common shares outstanding - basic

280,083


272,884


277,796


270,479














Weighted average common shares outstanding - diluted

294,663


286,289


294,564


280,667

 

Cadence Design Systems, Inc. 

Condensed Consolidated Statements of Cash Flows

For the Years Ended December 28, 2013 and December 29, 2012

(In thousands)

(Unaudited)









Years Ended



December 28,


December 29,



2013


2012






Cash and cash equivalents at beginning of period


$        726,357


$        601,602

Cash flows from operating activities:





   Net income


164,243


439,948

   Adjustments to reconcile net income to net cash provided by operating activities:





      Depreciation and amortization


98,308


89,217

      Amortization of debt discount and fees


25,384


23,513

      Stock-based compensation


66,285


47,561

      Gain on investments, net


(5,311)


(6,320)

      Deferred income taxes


(2,366)


(240,424)

      Provisions (recoveries) for losses (gains) on receivables, net


(85)


215

      Other non-cash items


4,017


3,315

      Changes in operating assets and liabilities, net of effect of acquired businesses:





         Receivables


(3,609)


45,630

         Inventories


(14,594)


5,245

         Prepaid expenses and other


30,368


(12,426)

         Other assets


(2,530)


(4,902)

         Accounts payable and accrued liabilities


41,727


17,523

         Deferred revenue


2,506


(69,662)

         Other long-term liabilities


(36,738)


(22,439)

            Net cash provided by operating activities


367,605


315,994






Cash flows from investing activities:





  Purchases of available-for-sale securities


(111,702)


(121,154)

  Proceeds from the sale of available-for-sale securities


77,621


18,338

  Proceeds from the maturity of available-for-sale securities


38,706


4,150

  Proceeds from the sale of long-term investments


6,234


74

  Purchases of property, plant and equipment


(44,929)


(35,966)

  Investment in venture capital partnerships and equity investments


-


(250)

  Cash paid in business combinations and asset acquisitions, net of cash acquired


(392,825)


(66,432)

           Net cash used for investing activities


(426,895)


(201,240)






Cash flows from financing activities:





  Proceeds from revolving credit facility


100,000


-

  Payment on revolving credit facility


(100,000)


-

  Payment of convertible notes


(144,639)


-

  Principal payments on receivable financing


(2,526)


(5,776)

  Payment of debt issuance costs


-


(1,372)

  Payment of acquisition-related contingent consideration


(677)


(39)

  Tax effect related to employee stock transactions allocated to equity


9,034


6,061

  Proceeds from issuance of common stock 


42,657


32,687

  Stock received for payment of employee taxes on vesting of restricted stock


(20,140)


(15,728)

           Net cash provided by (used for) financing activities


(116,291)


15,833






Effect of exchange rate changes on cash and cash equivalents


(14,516)


(5,832)






Increase (decrease) in cash and cash equivalents 


(190,097)


124,755






Cash and cash equivalents at end of period


$        536,260


$        726,357

 

Cadence Design Systems, Inc.

As of January 29, 2014

Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share

(Unaudited)













Three Months Ending


Year Ending



March 29, 2014


January 3, 2015



Forecast


Forecast






Diluted net income per share on a GAAP basis

 $0.08 to $0.10 


 $0.55 to $0.65 







Amortization of acquired intangibles

0.04


0.16


Stock-based compensation expense

0.07


0.28


Integration and acquisition-related costs

0.02


0.05


Amortization of debt discount

0.01


0.06


Income tax effect of non-GAAP adjustments

(0.04)


(0.18)






Diluted net income per share on a non-GAAP basis

 $0.18 to $0.20 


 $0.92 to $1.02 
















Cadence Design Systems, Inc.

As of January 29, 2014

Impact of Non-GAAP Adjustments on Forward Looking Net Income 

(Unaudited)













Three Months Ending


Year Ending



March 29, 2014


January 3, 2015

($ in millions)

Forecast


Forecast






Net income on a GAAP basis

 $25 to $31 


 $167 to $197 







Amortization of acquired intangibles

12


50


Stock-based compensation expense

19


83


Integration and acquisition-related costs

6


15


Amortization of debt discount

4


18


Income tax effect of non-GAAP adjustments

(13)


(56)






Net income on a non-GAAP basis

 $53 to $59 


 $277 to $307 

 

Cadence Design Systems, Inc.

(Unaudited)



























Revenue Mix by Geography (% of Total Revenue)





















2012


2013

GEOGRAPHY


 Q1 

 Q2 

 Q3 

 Q4 

 Year 


 Q1 

 Q2 

 Q3 

 Q4 

 Year 














 Americas 


44%

46%

43%

45%

45%


44%

45%

48%

47%

46%

 Europe, Middle East and Africa 


19%

20%

20%

21%

20%


22%

21%

20%

20%

21%

 Japan 


18%

16%

17%

14%

16%


15%

13%

12%

14%

13%

 Asia 


19%

18%

20%

20%

19%


19%

21%

20%

19%

20%

Total


100%

100%

100%

100%

100%


100%

100%

100%

100%

100%








































Revenue Mix by Product Group (% of Total Revenue)





















2012


2013

PRODUCT GROUP


 Q1 

 Q2 

 Q3 

 Q4 

 Year 


 Q1 

 Q2 

 Q3 

 Q4 

 Year 














 Functional Verification, including Emulation

 Hardware and IP 


30%

33%

30%

30%

30%


26%

28%

31%

32%

29%

 Custom IC Design 


23%

22%

24%

24%

23%


25%

25%

25%

24%

25%

 Digital IC Design and Signoff 


23%

22%

23%

23%

23%


25%

23%

21%

21%

23%

 System Interconnect Design 


8%

8%

9%

9%

9%


10%

11%

10%

10%

10%

 Design for Manufacturing 


7%

6%

6%

6%

6%


7%

6%

6%

6%

6%

 Services 


9%

9%

8%

8%

9%


7%

7%

7%

7%

7%

Total


100%

100%

100%

100%

100%


100%

100%

100%

100%

100%



























Note: Product Group total revenue includes product and maintenance revenue















 



Cadence Design Systems, Inc.

Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures

For the Three Months Ended December 28, 2013

(In thousands)

(Unaudited)



































Three Months Ended













December 28, 2013











GAAP


Adjustments


Non-GAAP
















Revenue:












Product and maintenance



$            350,079


$                                    -


$                350,079




Services



26,643


-


26,643


















Total revenue



376,722


-


376,722
















Costs and expenses:











Cost of product and maintenance


41,757


(7,743)

 (A) 

34,014




Cost of services



17,274


(698)

 (A) 

16,576




Marketing and sales



94,384


(5,201)

 (A) 

89,183




Research and development


135,465


(15,666)

 (A) 

119,799




General and administrative


29,481


(7,130)

 (A) 

22,351




Amortization of acquired intangibles


5,157


(5,157)

 (A) 

-




Restructuring and other charges 


15,405


(15,405)


-


















Total costs and expenses


338,923


(57,000)


281,923



















Income from operations


37,799


57,000


94,799

















Interest expense



(9,208)


5,515

 (B) 

(3,693)




Other income (expense), net


842


(1,553)

(C)

(711)



















Income before provision (benefit) for income taxes

29,433


60,962


90,395

















Provision (benefit) for income taxes


(8,272)


31,775

(D)

23,503



















Net income 



$              37,705


$                            29,187


$                  66,892
















Notes: 













(A) For the three months ended December 28, 2013 adjustments to GAAP are as follows for the line items specified:




Amortization

of acquired

intangibles

Stock-based

compensation

expense

Non-qualified

deferred

compensation

expenses

Integration

and

acquisition-

related costs

Executive

severance

costs

Total

adjustments

Cost of product and maintenance

$              7,265

$                 471

$                     7

$                    -

$                -

$           7,743

Cost of services

-

689

9

-

-

698

Marketing and sales

-

4,703

68

430

-

5,201

Research and development

-

9,605

683

5,378

-

15,666

General and administrative

-

3,330

489

3,095

216

7,130

Amortization of acquired intangibles

5,157

-

-

-

-

5,157

    Total

$            12,422

$            18,798

$              1,256

$             8,903

$           216

$          41,595


(B) Amortization of debt discount related to convertible notes

(C) Other income or expense related to investments and non-qualified deferred compensation plan assets

(D) Income tax effect of non-GAAP adjustments 

 


Cadence Design Systems, Inc.

Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures

For the Three Months Ended December 29, 2012

(In thousands)

(Unaudited)



































Three Months Ended













December 29, 2012











GAAP


Adjustments


Non-GAAP
















Revenue:












Product and maintenance



$            318,513


$                                    -


$                318,513




Services



27,072


-


27,072


















Total revenue



345,585


-


345,585
















Costs and expenses:











Cost of product and maintenance


24,437


(4,263)

 (E) 

20,174




Cost of services



19,353


(554)

 (E) 

18,799




Marketing and sales



95,604


(3,082)

 (E) 

92,522




Research and development


118,382


(8,725)

 (E) 

109,657




General and administrative


27,712


(3,932)

 (E) 

23,780




Amortization of acquired intangibles


3,772


(3,772)

 (E) 

-




Restructuring and other charges 


64


(64)


-


















Total costs and expenses


289,324


(24,392)


264,932



















Income from operations


56,261


24,392


80,653

















Interest expense



(8,902)


5,354

(F)

(3,548)




Other income, net



5,369


(4,081)

(G)

1,288



















Income before provision (benefit) for income taxes

52,728


25,665


78,393

















Provision (benefit) for income taxes


(261,146)


281,528

(H)

20,382



















Net income 



$            313,874


$                        (255,863)


$                  58,011
















Notes: 











(E) For the three months ended December 29, 2012 adjustments to GAAP are as follows for the line items specified:










Amortization

of acquired

intangibles

Stock-based

compensation

expense

Non-qualified

deferred

compensation

expenses

Integration

 and

acquisition-

related costs

Total

adjustments

Cost of product and maintenance

$            3,877

$                  375

$                    11

$                     -

$            4,263

Cost of services

-

538

16

-

554

Marketing and sales

-

2,907

110

65

3,082

Research and development

-

6,293

623

1,809

8,725

General and administrative

-

3,163

456

313

3,932

Amortization of acquired intangibles

3,772

-

-

-

3,772

    Total

$            7,649

$             13,276

$              1,216

$             2,187

$          24,328


(F) Amortization of debt discount related to convertible notes

(G) Other income or expense related to investments and non-qualified deferred compensation plan assets

(H) Income tax effect of non-GAAP adjustments 

 


Cadence Design Systems, Inc.

Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures

For the Year Ended December 28, 2013

(In thousands)

(Unaudited)































Year Ended











December 28, 2013









GAAP


Adjustments


Non-GAAP












Revenue:









Product and maintenance


$     1,357,934


$                                  -


$ 1,357,934


Services



102,182


-


102,182














Total revenue



1,460,116


-


1,460,116












Costs and expenses:









Cost of product and maintenance


132,245


(26,352)

 (I) 

105,893


Cost of services



67,956


(2,373)

 (I) 

65,583


Marketing and sales



378,157


(17,828)

 (I) 

360,329


Research and development


534,022


(53,403)

 (I) 

480,619


General and administrative


121,314


(27,273)

 (I) 

94,041


Amortization of acquired intangibles


19,416


(19,416)

 (I) 

-


Restructuring and other charges


17,999


(17,999)


-














Total costs and expenses


1,271,109


(164,644)


1,106,465















Income from operations


189,007


164,644


353,651













Interest expense



(37,581)


22,315

 (J) 

(15,266)


Other income, net



7,570


(5,280)

(K)

2,290















Income before provision (benefit) for income taxes

158,996


181,679


340,675













Provision (benefit) for income taxes


(5,247)


93,823

(L)

88,576















Net income 



$        164,243


$                           87,856


$    252,099












Notes: 









(I) For the year ended December 28, 2013 adjustments to GAAP are as follows for the line items specified:






Amortization

and sale of

acquired

intangibles

Stock-based

compensation

expense

Non-qualified

deferred

compensation

expenses

Integration

and

acquisition-

related costs

Executive

severance

costs

Total

adjustments

Cost of product and maintenance

$         24,718

$              1,596

$                   38

$                    -

$                -

$          26,352

Cost of services

-

2,321

52

-

-

2,373

Marketing and sales

-

15,642

239

1,467

480

17,828

Research and development

-

32,999

1,700

18,704

-

53,403

General and administrative

-

13,727

1,264

11,801

481

27,273

Amortization of acquired intangibles

19,416

-

-

-

-

19,416

    Total

$         44,134

$            66,285

$              3,293

$           31,972

$           961

$        146,645


(J) Amortization of debt discount related to convertible notes

(K) Other income or expense related to investments and non-qualified deferred compensation plan assets

(L) Income tax effect of non-GAAP adjustments 

 


Cadence Design Systems, Inc.

Supplemental Reconciliation of Certain GAAP to Non-GAAP Measures

For the Year Ended December 29, 2012

(In thousands)

(Unaudited)































Year Ended











December 29, 2012









GAAP


Adjustments


Non-GAAP












Revenue:









Product and maintenance


$     1,212,429


$                                  -


$ 1,212,429


Services



113,995


-


113,995














Total revenue



1,326,424


-


1,326,424












Costs and expenses:









Cost of product and maintenance


118,516


(14,905)

 (M) 

103,611


Cost of services



72,607


(1,957)

 (M) 

70,650


Marketing and sales



342,278


(11,247)

 (M) 

331,031


Research and development


454,085


(29,860)

 (M) 

424,225


General and administrative


112,076


(16,910)

 (M) 

95,166


Amortization of acquired intangibles


15,077


(15,077)

 (M) 

-


Restructuring and other charges


113


(113)


-














Total costs and expenses


1,114,752


(90,069)


1,024,683















Income from operations


211,672


90,069


301,741













Interest expense



(34,742)


20,846

 (N) 

(13,896)


Other income, net



11,341


(6,296)

(O)

5,045















Income before provision (benefit) for income taxes

188,271


104,619


292,890













Provision (benefit) for income taxes


(251,677)


327,828

(P)

76,151















Net income 



$        439,948


$                       (223,209)


$    216,739












Notes: 









(M) For the year ended December 29, 2012 adjustments to GAAP are as follows for the line items specified:






Amortization

of acquired

intangibles

Stock-based

compensation

expense

Non-qualified

deferred

compensation

expenses

Integration

and

acquisition-

related costs

 

Shareholder

litigation

costs

Total

adjustments

Cost of product and maintenance

$          13,541

$               1,317

$                    47

$                     -

$                   -

$          14,905

Cost of services

-

1,889

68

-

-

1,957

Marketing and sales

-

10,193

492

562

-

11,247

Research and development

-

21,516

2,144

6,200

-

29,860

General and administrative

-

12,646

1,702

2,516

46

16,910

Amortization of acquired intangibles

15,077

-

-

-

-

15,077

    Total

$          28,618

$             47,561

$               4,453

$             9,278

$                46

$          89,956


(N) Amortization of debt discount related to convertible notes

(O) Other income or expense related to investments and non-qualified deferred compensation plan assets

(P) Income tax effect of non-GAAP adjustments 

 

 

 

SOURCE Cadence Design Systems, Inc.

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