Cadence Caps Strong 2004 with Solid Q4 Execution.SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif. -- Cadence Design Systems (company) Cadence Design Systems - A company that sells electronic design automation software and services. http://cadence.com/. See also Verilog. , Inc. (NYSE NYSE See: New York Stock Exchange :CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. ) (Nasdaq:CDN) today reported strong results for the fourth quarter and the full year 2004. Fourth quarter revenues were $343 million, compared to $311 million for the same period last year. Full year revenues totaled $1.20 billion, an increase of 7 percent over 2003 total revenues of $1.12 billion. On a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis, Cadence cadence, in music, the ending of a phrase or composition. In singing the voice may be raised or lowered, or the singer may execute elaborate variations within the key. recognized net income of $60 million, or $0.20 per share, in the fourth quarter of 2004, compared to net income of $15 million, or $0.05 per share, in the same period last year. On a full year basis, Cadence net income for 2004 was $74 million, or $0.25 per share, compared to a net loss of $18 million and a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net loss per share of ($0.07) for the year 2003. In addition to using GAAP results in evaluating Cadence's business, management also believes it is useful to measure results using a non-GAAP measure of net income (loss), which excludes, as applicable, amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. and deferred stock compensation, in-process research and development charges, integration and other acquisition-related expenses, restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and equity in losses (income) from investments. Non-GAAP net income (loss) is adjusted by the amount of additional taxes or tax benefit that the company would accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. 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 our non-GAAP measure. Using this non-GAAP measure, net income in the fourth quarter 2004 was $80 million, or $0.26 per share, on a fully diluted basis as compared to $65 million, or $0.22 per share, on a fully diluted basis, in the same period last year. On a full year basis, non-GAAP net income for 2004 was $201 million, or $0.66 per share, compared to $140 million and $0.50 per share in 2003. "Cadence continued its consistent execution, in a challenging marketplace," said Mike Fister Fister is a small village near Stavanger in the Hjelmeland municipality on the south-western Norwegian coast. Fister has the highest average temperature in Norway. It is visited by many tourists each year. , Cadence president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Strong demand for wireless, consumer electronics and high-performance computing High-speed computing, which typically refers to supercomputers used in scientific research. plays to our specific strengths in analog mixed-signal and low-power In electronics, the term low-power means one of two things about a device:
Business Highlights of 2004 Cadence(R) SoC Encounter(TM) helped customers like ATI (ATI Technologies Inc., Markham Ontario, http://ati.amd.com) A leading manufacturer of graphics chips and display adapters. Founded in 1985 by K. Y. Ho, Benny Lau and Lee Lau, ATI chips and boards are widely used by OEMs. , Fujitsu (company) Fujitsu - A Japanese elecronics corporation. Fujitsu owns ICL, Amdahl Corporation, and DMR. Home USA, Japan. and Toshiba Toshiba Corporation (株式会社東芝 Kabushiki-gaisha Tōshiba , among others, design some of the largest, most aggressive digital chips currently in production. Toshiba taped out Refers to the completion of the design of a chip. The next stage is to put it into production. The term comes from the early days when designs were transferred to the fabricator via magnetic tape. a 90-nanometer, 24-million-gate chip and adopted Encounter as its standard digital design flow. During 2004, 58 new customers adopted Encounter RTL (Register Transfer Level) A high-level hardware description language (HDL) for defining digital circuits. The circuits are described as a collection of registers, Boolean equations, control logic such as "if-then-else" statements as well as complex event sequences; Compiler compiler Computer software that translates (compiles) source code written in a high-level language (e.g., C++) into a set of machine-language instructions that can be understood by a digital computer's CPU. , Cadence's digital global synthesis A combination, derivation or compilation. See logic synthesis. (programming, specification) synthesis - The process of deriving (efficient) programs from (clear) specifications. See also program transformation. product. Well over 400 customers around the world now verify (1) To prove the correctness of data. (2) In data entry operations, to compare the keystrokes of a second operator with the data entered by the first operator to ensure that the data were typed in accurately. See validate. their leading-edge designs with Encounter Conformal con·for·mal adj. 1. Mathematics Designating or specifying a mapping of a surface or region upon another surface so that all angles between intersecting curves remain unchanged. 2. (R), Cadence's digital formal verification
In the context of hardware and software systems, formal verification product. Customers are leveraging Cadence's end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. platform strengths in analog, digital and RF to meet their needs in the growing wireless market. Customer productivity improved five to 10 times in analog circuit analog circuit, electronic circuit that operates with currents and voltages that vary continuously with time and have no abrupt transitions between levels. Generally speaking, analog circuits are contrasted with digital circuits, which function as though currents or optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. as a result of Cadence's integration of the NeoLinear technology into the Virtuoso(R) custom design platform. To meet the growing demand for concurrent At the same time. It implies that multiple processes are taking place simultaneously. See concurrent operation. hardware/software development, in Q4 Cadence introduced Palladium palladium, chemical element palladium [Gr. Pallas, goddess of wisdom], metallic chemical element; symbol Pd; at. no. 46; at. wt. 106.42; m.p. 1,554°C;; b.p. 2,970°C;; sp. gr. 12.02 at 20°C;; valence +2, +3, or +4. II, its most advanced emulator Hardware, software or a combination of the two that enables a computer to act like another computer and run applications written for that computer. In the past, it was often a hardware add-on that actually contained an instruction execution module for the emulated computer. . Palladium II achieves an industry first by reaching 256-million-gate capacity at the same time as providing increased throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. . "This quarter's performance culminates a strong year for Cadence," Fister said. "Due to time-to-market pressures and the increased complexity of semiconductors, customers are increasingly turning to Cadence for an integrated, end-to-end solution (jargon) end-to-end solution - (E2ES) A term that suggests that the supplier of an application program or system will provide all the hardware and/or software components and resouces to meet the customer's requirement and no other supplier need be involved. Compare: turn-key solution. across all design domains." Added Bill Porter Bill Porter may refer to:
Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in proud of our strong balance sheet and especially pleased with our cash generation, highlighted by $371 million in operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. for 2004." The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not include the impact of any mergers, acquisitions or other business combinations that may be completed after February February: see month. 3, 2005, other than Verisity, Ltd. Business Outlook For the first quarter of 2005, the company expects total revenue in the range of $280 million to $290 million. First quarter GAAP earnings per fully diluted share are expected to be in the range of $0.01 to $0.03. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of using our non-GAAP measure defined below are expected to be in the range of $0.13 to $0.15. For the full year 2005, the company expects total revenue in the range of $1.24 billion to $1.30 billion. On a GAAP basis, we expect net income per fully diluted share for fiscal 2005 in the range of $0.23 to $0.31. Using our non-GAAP measure defined below, we expect fully diluted earnings per share for fiscal 2005 to be in the range of $0.73 to $0.81. A schedule showing a reconciliation of the business outlook from GAAP net income (loss) and diluted net income (loss) per share to our non-GAAP net income (loss) and diluted net income (loss) per share is included with this release. Audio Webcast Scheduled Cadence Design Systems, Inc.'s Ray Bingham Bing·ham , George Caleb 1811-1879. American painter noted for his portraits and genre paintings of the American frontier. , executive chairman of the board, Mike Fister, president and chief executive officer, and Bill Porter, chief financial officer, will host a fourth quarter and full year 2004 Financial Results audio webcast today, Feb. 3, 2005, 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 (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. of the webcast will be available starting Feb. 3, 2005 at 5 p.m. Pacific time and ending at 5 p.m. Pacific time on Feb. 10, 2005. Webcast access is available at www.cadence.com/company/investor_relations. About Cadence Cadence is the world's largest supplier of electronic design technologies and engineering services. Cadence products and services are used to accelerate and manage the design of semiconductors, computer systems, networking equipment, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment, consumer electronics, and other electronics based products. With approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 4,900 employees and 2004 revenues of approximately $1.2 billion, Cadence has sales offices, design centers, and research facilities around the world. The company is headquartered in San Jose, Calif., and trades on both the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. and Nasdaq under the symbol CDN. More information is available at www.cadence.com. Cadence, the Cadence logo, Virtuoso, Conformal and Palladium are registered trademarks, and Encounter is a trademark of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners. The statements contained above regarding the company's fourth quarter 2004 results and results for the full year 2004, those contained in the Business Outlook section above and the statements by Mike Fister and Bill Porter 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 uncertainties and other factors, many of which are outside Cadence's control, including, among others: Cadence's ability to compete successfully in the design automation product and the commercial electronic design and methodology services industries; the mix of products and services sold and the timing of significant orders for its products; economic uncertainty; fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries in which Cadence does business; and the acquisition of other companies or the failure to successfully integrate those it acquires. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended January January: see month. 3, 2004 and Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended October October: see month. 2, 2004. 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 Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets 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 (loss), which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . This measure consists of GAAP net income (loss) excluding, as applicable, amortization of intangible assets and deferred stock compensation, in-process research and development charges, integration and other acquisition-related expenses, restructuring charges (severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and benefits, excess facilities and asset-related restructuring charges) and equity in losses (income) from investments. Intangible assets consist primarily of purchased technology, backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. , patents, trademarks, distribution rights, customer contracts and related relationships and non-compete agreements. Non-GAAP net income (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. Management believes it is useful in measuring Cadence's operations to exclude amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. , deferred stock compensation, in-process research and development and acquisition-related expenses because these costs are primarily fixed at the time of an acquisition and generally cannot be changed by management in the short term. Management believes that it also is useful to exclude restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs. Cadence has dramatically reduced the size of its design services business and portions of its product and maintenance businesses over the past three years. As a result, in 2001, 2002 and 2003, Cadence's GAAP statements of operations have included significant charges relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc such restructurings. Cadence believes that in measuring its operations it is useful to exclude such restructuring costs because the company's level of restructuring activities is expected to significantly decrease in the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. Management also believes it is useful to exclude the equity in losses (income) from investments and investment write-downs, as these costs are not part of the company's direct cost of operations. Rather, these are non-operating costs that are included in other income (expense) and are part of the company's investment activities. Management believes that non-GAAP net income (loss) provides useful supplemental information to management and investors regarding the performance of the company's business operations and facilitates comparisons to our historical operating results. Management also uses this information internally for forecasting and budgeting. Non-GAAP financial measures should not be considered as a substitute for measures of financial performance prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. 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 table reconciles the specific items excluded from GAAP in the calculation of non-GAAP net income for the periods shown below:
Statement of Operations Reconciliation Quarter Ended
--------------------------------
January 1, 2005 January 3, 2004
--------------- ---------------
(in thousands)
Net income on a GAAP basis $ 59,795 $ 15,232
Amortization of intangible assets 24,750 27,029
Amortization of deferred stock
compensation 9,484 15,566
Restructuring and other charges 5,690 2,610
Integration and other
acquisition-related expenses 679 825
Equity in losses from investments 3,031 3,299
Tax effect (23,502) 694
--------------- ---------------
Net income on a non-GAAP basis $ 79,927 $ 65,255
=============== ===============
Statement of Operations Reconciliation Year Ended
--------------------------------
January 1, 2005 January 3, 2004
--------------- ---------------
(in thousands)
Net income on a GAAP basis $ 74,474 $ (17,566)
Amortization of intangible assets 103,962 106,122
Amortization of deferred stock
compensation 31,408 41,124
Legal settlements - (14,500)
Restructuring and other charges 15,090 66,836
In-process research and
development charges 9,000 7,500
Integration and other
acquisition-related expenses 2,990 825
Equity in losses from investments 22,434 11,595
Tax effect (58,580) (62,122)
--------------- ---------------
Net income on a non-GAAP basis $ 200,778 $ 139,814
=============== ===============
Statement of Operations Reconciliation
per Share Quarter Ended
--------------------------------
January 1, 2005 January 3, 2004
--------------- ---------------
(in thousands, except per share data)
Diluted net income per share on a GAAP
basis $ 0.20 $ 0.05
Amortization of intangible assets 0.08 0.09
Amortization of deferred stock
compensation 0.03 0.05
Restructuring and other charges 0.02 0.01
Integration and other
acquisition-related expenses - -
Equity in losses from investments 0.01 0.01
Tax effect (0.08) 0.01
--------------- ---------------
Diluted net income per share on a non-
GAAP basis $ 0.26 $ 0.22
=============== ===============
Shares used in calculation of net
income -- GAAP 303,858 301,203
Shares used in calculation of net
income -- non-GAAP (A) 303,858 301,203
Statement of Operations Reconciliation
per Share Year Ended
--------------------------------
January 1, 2005 January 3, 2004
--------------- ---------------
(in thousands, except per share data)
Diluted net income (loss) per share on
a GAAP basis $ 0.25 $ (0.07)
Amortization of intangible assets 0.34 0.38
Amortization of deferred stock
compensation 0.10 0.15
Legal settlements - (0.05)
Restructuring and other charges 0.05 0.24
In-process research and
development charges 0.03 0.03
Integration and other
acquisition-related expenses 0.01 -
Equity in losses from investments 0.07 0.04
Tax effect (0.19) (0.22)
--------------- ---------------
Diluted net income per share on a non-
GAAP basis $ 0.66 $ 0.50
=============== ===============
Shares used in calculation of net
income -- GAAP 305,774 266,794
Shares used in calculation of net
income -- non-GAAP (A) 305,774 282,866
(A) Shares used in the calculation of GAAP earnings per share are
expected to be the same as shares used in the calculation of
non-GAAP earnings per share except when the company reports a GAAP
loss and non-GAAP income, or GAAP income and a non-GAAP loss.
Investors are encouraged to look at GAAP results as the best measure of financial performance. For example, amortization of intangibles or amortization of deferred stock compensation or in-process technology are important to consider because they may represent initial expenditures that under GAAP are reported across future fiscal periods. Likewise, deferred stock 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 metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. are important to financial performance generally. Though Cadence management finds its non-GAAP measure useful in evaluating the performance of Cadence's business, its 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 management typically uses its non-GAAP earnings and earnings per share measures in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with GAAP earnings and earnings per share measures, to address these limitations. Cadence believes that presenting its 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 management uses in its own evaluation of performance, and an additional base line for assessing the future earnings potential of the company. While the GAAP results are more complete, the company prefers to allow investors to have this supplemental measure since, with reconciliation to GAAP, it may provide additional insight into our 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 re·it·er·ate tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates To say or do again or repeatedly. See Synonyms at repeat. re·it the Business Outlook published in this press release. At the same time, Cadence will keep this press release, including the 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 March 18, 2005, Cadence will observe TO OBSERVE, civil law. To perform that which has been prescribed by some law or usage. Dig., 1, 3, 32. 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 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 update by the company. During the Quiet Period, Cadence representatives will not comment on Cadence's business outlook or its financial results or expectations. The Quiet Period will extend until the day when Cadence's First Quarter 2005 Earnings Release is published, currently scheduled for April 27, 2005.
Cadence Design Systems, Inc.
Consolidated Balance Sheets
January 1, 2005 and January 3, 2004
(In thousands)
January 1, 2005 January 3, 2004
--------------- ---------------
Current Assets:
Cash and cash equivalents $ 556,766 $ 384,525
Short-term investments 36,241 33,898
Receivables, net of allowance for
doubtful accounts of
$8,151 and $10,967, respectively 384,114 348,680
Inventories 20,481 16,926
Prepaid expenses and other 87,702 58,212
--------------- ---------------
Total current assets 1,085,304 842,241
Property, plant and equipment, net 390,367 403,847
Goodwill 995,065 922,797
Acquired intangibles, net 195,655 237,508
Installment contract receivables, net 96,038 121,627
Other assets 242,799 289,882
--------------- ---------------
Total Assets $ 3,005,228 $ 2,817,902
=============== ===============
Current Liabilities:
Accounts payable and accrued
liabilities 277,992 243,450
Current portion of deferred
revenue 270,966 238,478
--------------- ---------------
Total current liabilities 548,958 481,928
--------------- ---------------
Long-term Liabilities:
Long-term portion of deferred
revenue 20,847 16,287
Convertible notes 420,000 420,000
Other long-term liabilities 313,043 327,406
--------------- ---------------
Total long-term liabilities 753,890 763,693
--------------- ---------------
Stockholders' Equity 1,702,380 1,572,281
--------------- ---------------
Total Liabilities and Stockholders'
Equity $ 3,005,228 $ 2,817,902
=============== ===============
Cadence Design Systems, Inc.
Consolidated Statements of Operations
For the Quarters and Years Ended January 1, 2005 and January 3, 2004
(In thousands, except per share amounts)
Quarters Ended Years Ended
--------------------- ---------------------
January 1, January 3, January 1, January 3,
2005 2004 2005 2004
---------- ---------- ---------- ----------
(Unaudited)
Revenue:
Product $ 226,730 $ 202,319 $ 729,783 $ 663,513
Services 32,982 30,187 137,046 131,149
Maintenance 83,384 78,585 330,651 324,822
---------- ---------- ---------- ----------
Total revenue 343,096 311,091 1,197,480 1,119,484
---------- ---------- ---------- ----------
Costs and Expenses:
Cost of product 23,421 17,373 82,011 67,036
Cost of services 21,467 21,624 90,993 93,153
Cost of maintenance 13,236 13,061 53,049 56,460
Marketing and sales 87,806 79,586 325,937 326,579
Research and
development 87,713 82,444 351,254 340,121
General and
administrative 20,524 16,968 83,414 82,566
Amortization of
acquired intangibles 11,028 16,310 55,700 62,573
Amortization of
deferred stock
compensation 9,484 15,566 31,408 41,124
Legal settlements - - - (14,500)
Restructuring and other
charges 4,142 2,610 13,542 66,836
Write-off of acquired
in-process technology - - 9,000 7,500
---------- ---------- ---------- ----------
Total costs and
expenses 278,821 265,542 1,096,308 1,129,448
---------- ---------- ---------- ----------
Income (loss)
from operations 64,275 45,549 101,172 (9,964)
Interest expense (1,378) (1,296) (6,198) (5,002)
Other income (expense),
net 1,479 (5,400) (8,537) (15,599)
---------- ---------- ---------- ----------
Income (loss)
before provision
(benefit) for
income taxes 64,376 38,853 86,437 (30,565)
Provision (benefit) for
income taxes 4,581 23,621 11,963 (12,999)
---------- ---------- ---------- ----------
Net income
(loss) $ 59,795 $ 15,232 $ 74,474 $ (17,566)
========== ========== ========== ==========
Basic net income (loss)
per share $ 0.22 $ 0.06 $ 0.27 $ (0.07)
========== ========== ========== ==========
Diluted net income (loss)
per share $ 0.20 $ 0.05 $ 0.25 $ (0.07)
========== ========== ========== ==========
Weighted average common
shares outstanding 270,734 264,178 271,328 266,794
========== ========== ========== ==========
Weighted average common
and potential common
shares outstanding --
assuming dilution 303,858 301,203 305,774 266,794
========== ========== ========== ==========
Cadence Design Systems, Inc.
Consolidated Statements of Cash Flows
For the Years Ended January 1, 2005 and
January 3, 2004
(In thousands)
Year Ended
-----------------------
January 1, January 3,
2005 2004
----------- -----------
Cash and Cash Equivalents at Beginning of
Year $ 384,525 $ 371,327
----------- -----------
Cash Flows from Operating Activities:
Net income (loss) 74,474 (17,566)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 179,205 191,608
Amortization of deferred stock compensation 31,407 41,124
Equity in loss from investments, net 16,944 10,875
Gain on sale of investments (12,467) -
Write-off of long-term investment
securities 4,236 4,785
Write-off of acquired in-process
technology 9,000 7,500
Non-cash restructuring and other charges 4,142 18,438
Tax benefits from employee stock
transactions 17,260 14,875
Deferred income taxes (30,772) (60,048)
Proceeds from the sale of receivables 30,070 87,355
Provisions for losses on trade accounts
receivable and sales returns 775 11,428
Other non-cash items (1,070) 3,678
Changes in operating assets and
liabilities, net of effect of acquired and
disposed businesses:
Receivables (49,361) (1,326)
Inventories (3,555) (7,312)
Prepaid expenses and other (3,410) (6,820)
Installment contract receivables 20,556 (107,929)
Other assets 16,417 31,941
Accounts payable and accrued liabilities 193 (106,687)
Deferred revenue 34,878 14,642
Other long-term liabilities 31,791 40,440
----------- -----------
Net cash provided by operating activities 370,713 171,001
----------- -----------
Cash Flows from Investing Activities:
Proceeds from sale and maturities of short-
term investments -- available-for-sale 8,301 -
Proceeds from the sale of long-term
investments 9,900 3,274
Proceeds from sale of equipment 3,625 9,147
Purchases of property, plant and equipment (61,779) (82,881)
Purchases of software licenses (4,157) (33,507)
Investment in venture capital partnerships
and equity investments (22,773) (39,761)
Net cash paid in business combinations (115,170) (182,247)
----------- -----------
Net cash used for investing activities (182,053) (325,975)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from credit facility - 45,000
Principal payments on credit facility and
capital leases (372) (98,856)
Proceeds from issuance of convertible notes - 420,000
Payment of convertible notes issuance costs (1,920) (11,463)
Proceeds from sale of common stock warrants - 56,441
Purchase of call options - (134,637)
Proceeds from issuance of common stock 77,126 86,567
Purchases of treasury stock (94,103) (213,832)
----------- -----------
Net cash provided by (used for)
financing activities (19,269) 149,220
----------- -----------
Effect of exchange rate changes on cash 2,850 18,952
----------- -----------
Net increase in cash and cash equivalents 172,241 13,198
----------- -----------
Cash and Cash Equivalents at End of Year $ 556,766 $ 384,525
=========== ===========
Cadence Design Systems, Inc.
As of February 3, 2005
Impact of Non-GAAP Adjustments on Forward Looking
Diluted Net Income per Share
(Unaudited)
Year ended
Quarter ended December
April 2, 2005 31, 2005
-------------- --------------
Forecast Forecast
-------------- --------------
Diluted net income per share on a GAAP
basis $0.01 to $0.03 $0.23 to $0.31
Amortization of intangible assets 0.08 0.33
Amortization of deferred stock
compensation 0.02 0.09
Restructuring and other charges 0.06 0.06
In-process research and development
charges - 0.08
Stock-based compensation expense - 0.10
Integration and other acquisition-
related expenses - 0.01
Equity in losses from investments - 0.01
Tax effect (0.04) (0.18)
-------------- --------------
Diluted net income per share on a non-
GAAP basis $0.13 to $0.15 $0.73 to $0.81
============== ==============
Cadence Design Systems, Inc.
As of February 3, 2005
Impact of Non-GAAP Adjustments on Forward Looking Net Income
(Unaudited)
Year ended
Quarter ended December 31,
April 2, 2005 2005
--------------- --------------
($ in Millions) Forecast Forecast
--------------- --------------
Net income on a GAAP basis $3 to $9 $68 to $92
Amortization of intangible assets 23 102
Amortization of deferred stock
compensation 8 27
Restructuring and other charges 17 18
In-process research and development
charges - 25
Stock-based compensation expense - 32
Integration and other acquisition-
related expenses 1 4
Equity in losses from investments 1 4
Tax effect (13) (55)
--------------- --------------
Net income on a non-GAAP basis $40 to $46 $225 to $249
=============== ==============
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
2003 2004
------------------------ ------------------------
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
-------------- ------------------------ ------------------------
North America 55% 54% 59% 64% 58% 53% 57% 56% 45% 52%
Europe 17% 15% 19% 16% 17% 16% 19% 20% 30% 22%
Japan 20% 22% 13% 13% 17% 22% 14% 15% 14% 16%
Asia 8% 9% 9% 7% 8% 9% 10% 9% 11% 10%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Revenue Mix by Product Group (% of Total Revenue)
2003 2004
------------------------ ------------------------
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
------------------ ------------------------ ------------------------
Functional
Verification 20% 18% 18% 20% 19% 20% 20% 18% 19% 19%
Digital IC Design 24% 22% 27% 20% 23% 25% 21% 24% 27% 24%
Custom IC Design 27% 28% 27% 27% 27% 27% 24% 27% 27% 27%
Design for
Manufacturing 9% 10% 7% 13% 10% 6% 9% 12% 8% 9%
System
Interconnect 8% 9% 8% 10% 9% 10% 9% 8% 9% 9%
Services & Other 12% 13% 13% 10% 12% 12% 17% 11% 10% 12%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Note: Product Group total revenue includes Product + Maintenance
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