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 Email Contact Media and Industry Analysts Nancy Szymanski Cadence Design Systems, Inc. 408-473-8382 Email Contact